REG - Experian plc - Full-year financial report
17/05/2023 07:17
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RNS Number : 6398Z Experian plc 17 May 2023
news
release
Delivering strong and resilient growth
7am, 17 May 2023 ─ Experian plc, the global information services company,
today issues its financial report for the year ended 31 March 2023.
Brian Cassin, Chief Executive Officer, commented:
"We delivered very strong results in FY23, reflecting a combination of new
business wins, new products and expansion into higher growth markets. We saw
growth in every region, in many cases outperforming our underlying markets
substantially. Total revenue growth from ongoing activities was 6% at actual
exchange rates and 8% at constant exchange rates, and organic revenue growth
was 7%. Benchmark EBIT margin expansion was at the top end of our
expectations, helping us to deliver Benchmark earnings per share up 9%.
"For the year ahead, we anticipate another year of growth due to the breadth
and the resilience of our portfolio, and significant structural growth
opportunities. Despite the uncertain economic climate, we expect to deliver
organic revenue growth in the range of 4% to 6% and modest margin accretion,
all at constant exchange rates and on an ongoing basis."
Benchmark and Statutory financial highlights
2023 2022 Actual rates growth % Constant rates growth % Organic growth %(2)
US$m
US$m
Benchmark¹
Revenue - ongoing activities(3) 6,587 6,216 6 8 7
Benchmark EBIT - ongoing activities(3,4) 1,802 1,653 9 9 n/a
Total Benchmark EBIT 1,794 1,645 9 9 n/a
Benchmark EPS USc135.1 USc124.5 9 9 n/a
Statutory
Revenue 6,619 6,288 5 8 n/a
Operating profit 1,265 1,416 (11) n/a n/a
Profit before tax 1,174 1,447 (19) n/a n/a
Basic EPS USc84.2 USc127.5 (34) n/a n/a
Total dividend USc54.75 USc51.75 6 n/a n/a
1. See Appendix 1 (page 14) and note 5 to the financial statements for
definitions of non-GAAP measures.
2. Organic revenue growth is at constant currency.
3. Revenue and Benchmark EBIT for the year ended 31 March 2022 have been
re-presented for the reclassification to exited business activities of certain
Business-to-Business (B2B), detail is provided in notes 6(a) and 7 to the
financial statements.
4. See page 15 for reconciliation of Benchmark EBIT from ongoing
activities to Profit before tax.
Highlights
· A year of very strong progress. Q4 organic revenue growth was 7%,
to give 7% for the year, taking total revenue growth from ongoing activities
to 8% at constant exchange rates.
· Consumer Services organic revenue up 11%. We now serve 168
million free members, up 23 million year-on-year across an expanded range of
products and services.
· B2B organic revenue growth of 6% driven by new business wins,
superior data and new product performance.
· All regions contributed to organic growth, with significant
expansion in Latin America, good performances across North America and the UK
and Ireland (UK&I), and improvement in EMEA/Asia Pacific.
· Benchmark EBIT rose 9% to US$1,802m.
· Benchmark EBIT margin uplift at the top end of our expectations.
Ongoing Benchmark EBIT margin of 27.4%, compared to FY22 reported Benchmark
EBIT margin of 26.2% and re-presented prior-year comparative margin of 26.6%.
Benchmark EPS uplift of 9%, Benchmark operating cash flow conversion of 98%
and Return on Capital employed of 16.5%.
· Statutory profit before tax of US$1,174m down from US$1,447m,
predominantly due to a non-cash charge for the impairment of goodwill of
US$179m in EMEA, a decrease in net gain from associate disposals of US$89m and
an increase to the fair value of contingent consideration. Basic EPS decreased
from USc127.5 to USc84.2 reflecting the lower profit before tax and an
increased tax charge.
· Second interim dividend up 6% to USc37.75 per ordinary share.
Experian
Nadia Ridout-Jamieson Investor
queries
+44 (0)20 3042 4220
Nick Jones Media queries
Teneo
Graeme Wilson, Louise Male and Jessica
Reid
+44 (0)20 7353 4200
There will be a presentation today at 9.30am (UK time) to analysts and
investors via webcast. To view the slides and listen in online please go to
www.experianplc.com (http://www.experianplc.com) for the link.
Experian will update on first quarter trading for FY24 on 13 July 2023.
Roundings
Certain financial data has been rounded within this announcement. As a result
of this rounding, the totals of data presented may vary slightly from the
actual arithmetic totals of such data.
Forward-looking statements
Certain statements made in this announcement are forward-looking statements.
Such statements are based on current expectations and are subject to a number
of risks and uncertainties that could cause actual events or results to differ
materially from any expected future events or results referred to in these
forward-looking statements. See note 30 for further information on risks and
uncertainties facing Experian.
Company website
Neither the content of the Company's website, nor the content of any website
accessible from hyperlinks on the Company's website (or any other website), is
incorporated into, or forms part of, this announcement.
About Experian
Experian is the world's leading global information services company. During
life's big moments - from buying a home or a car, to sending a child to
college, to growing a business by connecting with new customers - we empower
consumers and our clients to manage their data with confidence. We help
individuals to take financial control and access financial services,
businesses to make smarter decisions and thrive, lenders to lend more
responsibly, and organisations to prevent identity fraud and crime.
We have 22,000 people operating across 32 countries and every day we're
investing in new technologies, talented people, and innovation to help all our
clients maximise every opportunity. With corporate headquarters in Dublin,
Ireland, we are listed on the London Stock Exchange (EXPN) and are a
constituent of the FTSE 100 Index.
Learn more at www.experianplc.com (http://www.experianplc.com) or visit our
global content hub at our global news blog for the latest news and insights
from the Group.
Strategic report
Part 1 - Chief Executive Officer's review
We delivered a very strong performance in FY23, despite a challenging economic
backdrop in many of our markets. It was driven by growth across all of our
regions. Our past investments in data, technology, new products, client
service and talent have enhanced our competitive position, resulting in
significant new business wins. At the same time, the expansion of our product
portfolio has positioned many of our businesses to address higher growth
opportunities and over the years we have expanded existing vertical markets
and entered new segments. This is reflected in the strong organic growth we
saw in FY23, despite deceleration in some of our volume-based
businesses. This progress also reflects our focus on improving the
foundations of our business, a very strong culture of innovation and a
powerful social mission to help people thrive financially. It is also down to
the hard work of our 22,000 people around the world who strive every day to
make it happen. All of this has helped us to sustain our growth trajectory,
offsetting the effects of the slower macroeconomic backdrop.
Very powerful structural growth trends drive our extensive growth
opportunities. With large and growing addressable markets, we have many
opportunities for long term growth. In the near term, businesses need to
improve productivity, deliver better digital experiences and build stronger
customer relations, at the same time as improving risk management, assuring
compliance and fighting fraud. Despite short-term pressures, clients continue
to invest in these areas. Advances in technology continue at pace and will
accelerate this. The power of our unique, proprietary datasets, and the
significant advances we have made in the range and sophistication of our
products, has and will continue to allow us to develop new ways to help
customers to achieve their goals, and we believe these trends will expand our
opportunity set. Our progress is illustrated by our strong client Net Promoter
Score performance in every region, best-in-class employee engagement, and an
increasing number of awards recognising this, such as Fortune's America's Most
Innovative Companies.
So, while the coming year will likely see headwinds in the global economy, we
are very confident in the strategic position of our business, in the
resilience of our portfolio, and we are excited about the opportunities ahead.
Full-year financial highlights
· Revenue growth was in line with our expected performance range.
Total revenue growth from ongoing activities was 6% at actual exchange rates
and 8% at constant currency. Organic revenue growth was 7%. Organic revenue
growth is determined on a constant currency basis and for ongoing activities.
· All four of our regions contributed positively to our
performance. Organic revenue growth was 7% in North America, 16% in Latin
America and 5% in UK&I. EMEA/Asia Pacific organic revenue growth was 3%.
· By quarter, organic revenue growth was 8% in Q1, 8% in Q2, 6% in
Q3 and 7% in Q4.
· B2B organic revenue growth was 6%. We saw strong client adoption
of our data-centric products, powerful analytics and world-leading platforms
as we help our clients with their shift to digital, to optimise profitability
and better manage risk.
· In Consumer Services organic revenue was up 11% with growth
driven by marketplaces and memberships. We now have 168 million free consumer
members globally.
· We delivered strong Benchmark EBIT growth, up 9% at both constant
and actual exchange rates.
· The underlying margin improvement was at the top end of our
expectations, Benchmark EBIT margin for ongoing activities was 27.4%, compared
to 26.2% in FY22 and a re-presented prior-year comparative margin of 26.6%.
This represented 30 basis points underlying uplift, and a 50 basis points
uplift from foreign exchange translation.
· We delivered strong growth in Benchmark earnings per share, which
increased by 9%. Basic EPS was USc84.2 (2022: USc127.5), predominantly due to
a goodwill impairment in EMEA of US$179m due to higher interest rates and
macroeconomic weakness in our European markets, and an increase to the fair
value of contingent consideration.
· We had another year of strong cash flow conversion. We converted
98% Benchmark EBIT into Benchmark operating cash flow. Benchmark operating
cash flow was US$1.8bn.
· ROCE was 16.5%, up 80 basis points on the prior year.
· We ended the year with Net debt to Benchmark EBITDA at 1.8x,
compared to our target range of 2.0-2.5x and we have no debt refinancing due
until September 2024. Around 90% of our current debt is at fixed interest
rates for the next two years.
Strategic highlights
Our performance in FY23 represented further progress on our strategic
evolution. Our strategy is focused on enhancing the depth, breadth, quality
and uniqueness of our datasets, to which we add advanced analytics and other
sophisticated software solutions to address a range of client requirements,
all built on the foundations of outstanding talent, great technology and
world-class innovation. Our solutions address a wider range of client needs
across identity, credit, fraud, compliance and marketing, and include
capabilities such as strategy design, originations, ongoing customer
management and collections. All of our new platforms are cloud-based and
leverage advanced technologies to deliver the best outcomes for our clients
and consumers. Increasingly, they are integrated capabilities that combine
with our datasets. More and more of these solutions in the future will address
end-to-end capabilities, for example being able to move seamlessly from
initial strategy design to an executable credit decision in one platform. This
brings together the power of our data, with our industry-leading platforms to
create unique and differentiated solutions.
A key component of our strategy is to grow and deepen our relationships with
consumers, and we are now well on our way to becoming an unrivalled platform
for consumer finance.
These actions have positioned Experian to address large, growing markets
which, we estimate at over US$150bn in scale. Some notable data points in FY23
highlight the progress we are making:
· Over US$1.0bn of Group revenue added from new product capability
since FY18.
· We've added to the richness and extent of our data assets, with
new expanded sources and user-permissioned data to help our clients manage
credit risk, fraud prevention and transaction categorisation. For example, we
have processed over 188 billion consumer-permissioned transactions in our
global bureaux and are adding new sources of data such as buy-now-pay-later
records.
· Ascend continues its growth trajectory, now with 491 clients
globally and Total Contract Value of US$471m. We are bringing more of our data
and software platforms together and are further embedding analytics across
Experian's broader products and services to deliver more solutions to clients
which are uniquely Experian.
· Our expansion into Verifications and Employer Services is
progressing well. North America has achieved revenues of over US$160m and a
record count of 47 million, and we have established access to records
representing 77% of the UK PAYE workforce and have nascent positions in other
markets.
· We continue to grow consumer memberships, deepen customer
relations and deliver new products to both our free and premium members. Free
memberships have grown to 168 million. On a like-for-like basis, consumer
membership was 145 million, up 16% year-on-year, and our total now includes 13
million members from Spanish Latin America.
· The implementation of positive data and other regulatory reforms
in Brazil are expanding the addressable market and enhancing growth
opportunities. We now have c.200 positive data solutions in market and are
delivering significant growth across data, scores, attributes, fraud, software
platforms and much more.
· Consumer Services now addresses half the Brazilian adult
population. It has moved into profitability, and we are extending our presence
into new services such as e-wallet to add functionality.
· We are successfully repositioning Targeting to address the larger
addressable market of digital identity resolution to support marketers. Nearly
60% of North America Targeting revenues now arise from digital products
compared to 26% in FY19.
· We have further expanded our vertical market presence with strong
growth in North America Automotive and Health, Agribusiness in Brazil, and as
mentioned above, Verification and Employer Services.
· We have an extensive roadmap of new product introductions planned
in the UK&I in FY24 to leverage our global capabilities and build on a
strong year for B2B new business performance in the region.
· The first phase of our transformation in EMEA/Asia Pacific is on
track with improving profitability. In the second phase, we are focused on
improving growth with stronger, new product introductions.
· Our technology transformation is advancing rapidly, we have
signed an agreement with Amazon Web Services (AWS) to be our preferred cloud
provider globally, which will accelerate the rate of product innovation still
further.
Other financial developments
Benchmark profit before tax (PBT) was US$1,670m, up 9% at actual exchange
rates, after a net interest expense of US$124m (2022: US$110m). Benchmark net
finance expense increased modestly despite the large increase in market rates
thanks to our forward rate fixing program meaning the average interest rate on
our Net debt was broadly stable at around 3%. For FY24, we expect net interest
expense to be in the range of US$125-130m.
The Benchmark tax rate was 26.0% (2022: 25.7%). For FY24, we expect a rate of
around 26-27%, taking into account expected profit mix for the year and an
increase in the UK corporate tax rate.
Our Benchmark EPS was USc135.1c, an increase of 9% at both constant and actual
exchange rates. For FY24, we expect weighted average number of ordinary shares
(WANOS) of c.914m.
Foreign exchange translation was neutral to Benchmark EPS. For FY24, we expect
a foreign exchange translation effect of c. 0% to +1% impact on revenue and
Benchmark EBIT, assuming recent foreign exchange rates prevail.
Non-benchmark items:
· Statutory PBT was US$1,174m, down US$273m, as a result of
increased non-benchmark costs.
· Macroeconomic conditions have contributed to a non-cash
impairment of goodwill of US$179m, partially offset by a gain on financing
fair value remeasurements of US$51m.
· We have incurred a charge of US$45m for increased contingent
consideration due to over-performance on prior acquisitions.
· We have also continued to execute on our plans to streamline our
geographic and operational footprint in EMEA/Asia Pacific and associated
global functions. In connection with this programme in FY23, we have provided
for costs of US$69m, including US$53m of restructuring and US$16m of onerous
global support costs for exited businesses.
Reconciliation of statutory to Benchmark measures for the year ended 31 March
2023
Statutory Non-benchmark and other items Benchmark
Investment- Goodwill impairment Amortisation of acquisition intangibles Non-cash financing items Exceptional items(2)
related items(1)
US$m US$m US$m US$m US$m US$m US$m
6,587 6,587 Ongoing
32 32 Exited
Revenue 6,619 6,619 Revenue
1,273 92 179 192 66 1,802 Ongoing
(8) (8) Exited
Operating profit 1,265 92 179 192 66 1,794 Benchmark EBIT
Profit before tax 1,174 109 179 192 (50) 66 1,670 Benchmark PBT
Basic EPS USc 84.2 10.2 19.7 15.4 (4.5) 10.1 135.1 Benchmark EPS USc
1. Investment-related items include the Group's share of continuing
associates' Benchmark post-tax results.
2. Exceptional items are analysed in note 8 to the financial statements.
Capital allocation and liquidity
· Cash generation was strong with 98% conversion of Benchmark EBIT
into Benchmark operating cash flow (2022: 109%). Benchmark operating cash flow
was US$1.8bn, down (3)% at actual exchange rates.
· We continued to invest in data, technology and new products
through capital expenditure, which represented 9% of total revenue. We plan to
sustain strong levels of investment to support our growth, and for FY24 we
expect capital expenditure to represent c.9% of total revenue.
· We invested US$480m in acquisitions and US$15m in investments in
support of our strategic initiatives. Acquisitions were principally in income
verification and employee services, and included CIC Plus, Inc. (CIC Plus) in
North America, and Pay Dashboard Ltd and the Work Report in UK&I.
· We are announcing a second interim dividend of USc37.75 per
share, up 6%. This will be paid on 21 July 2023 to shareholders on the
register at the close of business on 23 June 2023. Taking our full-year
dividend to USc54.75 per share, up 6%.
· We have completed our FY23 share repurchase programme for a net
cash consideration of US$175m, which offsets deliveries under employee share
plans. We are also announcing that we will commence a net US$150m share
repurchase programme in FY24, which will again offset deliveries under
employee share plans.
· Our bonds, including derivatives, totalled US$3.9bn as at 31
March 2023 and had an average remaining tenor of five years. Undrawn
committed bank borrowing facilities were US$2.4bn as at 31 March 2023 (2022:
US$2.6bn).
· At 31 March 2023, Net debt to Benchmark EBITDA was 1.8x, compared
to our target leverage range of 2.0-2.5x. We have no refinancing commitments
until September 2024. Around 90% of our current debt is at fixed interest
rates for the next two years and 67% fixed for at least four years.
Environmental, Social and Governance (ESG)
The current cost pressures faced by consumers makes gaining access to fair,
affordable credit all the more important. We are focused on our mission and
purpose to encourage broader financial inclusion and to help people to take
control of their finances. This is a defining ethos of our business, and we
take great pride in it, doing what we can to make a positive difference to
society.
· Around 13 million consumers have now connected to Experian Boost,
empowering millions to improve their credit scores and improve their financial
lives. Experian Go launched in the USA in January 2022, enabling 'credit
invisibles' to establish their financial identity in minutes, and over 130,000
US consumers have since connected to the platform. We were delighted that
Experian Go was recognised as a 2023 BIG Innovation Award winner.
· Since 2013, our social innovation products, specifically
developed to deliver societal benefits and improve financial health, have
reached 106 million people, exceeding our target of 100 million people two
years early.
· Our United for Financial Health programme to improve financial
education among disadvantaged communities has now connected with 113 million
people since launch, exceeding our target of 100 million people a year early.
· We pride ourselves on our 'people first' culture. This year we
were listed in Fortune's 2023 '100 Best Companies to Work For' for the fourth
consecutive year, 95% of our employees agreed that Experian is committed to
creating a diverse, equitable and inclusive culture, and we were ranked 21st
in Equileap's 'Top 100 Globally for Gender Equality' for 2023.
· Following recent appointments to our Board, it is now 45% women
and includes two ethnically diverse Board members. Our Board meets the
recommendations of the FTSE Women Leaders Review on gender diversity and the
Parker Review on ethnic diversity.
· As part of our journey to be carbon neutral by 2030 in our own
operations, we have reduced our Scope 1 and 2 emissions by 38% this year,
reaching a 65% reduction since our 2019 base year. 62% of our electricity is
now renewable. In order to reduce our Scope 3 emissions, we are continuing to
engage with our suppliers and have improved our emissions calculations
methodology. We are pleased to be recognised again in the Financial Times'
Europe Climate Leaders 2023 for our success in reducing our carbon emissions.
Our commitment to help tackle climate change is also reflected in our CDP
rating of 'A-', placing us in the Leadership category and among the top 24% of
professional services companies. We are working to complete our Net Zero
Transition Plan in line with the UK's Transition Plan Taskforce draft
Disclosure Framework.
Part 2 - Regional highlights for the year ended 31 March 2023
Year-on-year % change in organic¹ revenue - for the twelve months ended 31 Benchmark
March 2023
EBIT
margin²
% of Group revenue³ Data Decisioning B2B Consumer Services Total Total
North America 67 4 7 5 11 7 33.1%
Latin America 15 12 16 13 32 16 31.0%
UK and Ireland 12 7 7 7 (4) 5 21.7%
EMEA/Asia Pacific 6 - 13 3 n/a 3 3.3%
Total global 100 5 8 6 11 7 27.4%
1. At constant exchange rates.
2. At actual exchange rates.
3. Percentage of Group revenue from ongoing activities calculated
based on FY23 revenue at actual exchange rates.
North America
Growth in North America was good. Revenue was US$4,432m, with total revenue
growth at constant currency of 8% and organic revenue growth of 7%.
Acquisition growth included CIC Plus, in employment services, and Gabi in
Consumer Services.
In B2B, organic revenue growth was 5% driven by innovation, a diversified
portfolio, and competitive outperformance.
Consumer and Business Information Services delivered low-single digit organic
growth overall, and high-single digit organic growth when mortgage is
excluded. This was despite mixed external conditions in the USA which caused
some of our lending clients to adopt a more cautious stance by tightening
their credit criteria. Our growth was due to strong new business
outperformance in the year with our differentiated data assets, real-time data
delivery capability, analytics and Experian Ascend major contributory factors.
Ascend continues on a positive trajectory and we continue to expand the range
of products on the platform. Ascend Ops is the latest innovation and will
sustain momentum. Experian PowerCurve also had a good year, particularly in
collections and analytics. We also made significant progress in Employer and
Verification Services, adding to our data count, now at 47 million US
individuals, and securing new clients across verification services and for
Experian Verify.
We saw growth in automotive, where we have a range of products which combine
Experian's credit and marketing capabilities, as the industry seeks to
stimulate car purchases and auto lenders adjust to recessionary risk models.
In Targeting, which had a very strong year, we are successfully delivering on
our strategy to reposition towards digital marketing. We are serving higher
growth segments of the market having expanded our position in digital identity
and data connectivity and enablement. We also performed well in Health,
despite a strong prior year comparable. We were delighted to be recognised as
Best in KLAS, a US Health industry award, for our claims and contract
management solutions.
Consumer Services delivered organic revenue growth of 11%. We are deepening
and growing our member relationships by helping consumers to manage their
financial health. This year we introduced a range of new features, including
new ways to boost your credit score using rental information and bill
negotiation to help with savings. We are proud that Experian is now a top 15
US finance app (in the Apple App Store) with a 4.8 star rating. Our membership
base has grown to 62 million, up by ten million year-on-year. We now provide
offers across several active verticals, which means more ways for consumers to
engage with Experian in order to manage their finances. Marketplace delivered
another strong year of growth, driven by cards and loans expansion, even as
credit market conditions got somewhat tougher and lenders reduced credit
market supply. New services for lenders have been an important factor in
helping us to outperform in the current environment: Experian Activate enables
lenders to target their offers more precisely and to help them secure higher
conversion rates. We also benefit from the growing diversity of our business
model. The contribution from our insurance vertical is growing rapidly, while
premium membership and partner solutions also contributed positively.
Benchmark EBIT rose 6% to US$1,467m. The Benchmark EBIT margin reduced 40
basis points to 33.1%. Margins reflected the mix of growth, investments in our
verification services and our insurance marketplace and our innovations across
our scaling verticals.
Latin America
Latin America delivered strongly, with revenue of US$947m representing organic
revenue growth of 16% and total revenue growth at constant currency of 18%.
Acquisitions contributing to our performance included Sinacofi, our new bureau
in Chile, and PagueVeloz in Consumer Services in Brazil.
In B2B, organic revenue growth was 13%.
Credit markets in Brazil continue to undergo significant change brought about
by regulatory reforms, creating new opportunities for our business all driven
by the expansion of the market. We have established over 200 sources of
positive data, covering 82% of the credit active population, and are seeing
strong demand for positive data solutions, including improved scores, more
predictive analytics and sophisticated software platforms. Ascend is
progressing well, with adoption by existing and new clients. PowerCurve
performed well and we are growing strongly in fraud prevention. We are adding
and growing relationships with small and medium enterprises, and our
agribusiness vertical, which is still at an early stage of its development,
grew very strongly.
Spanish Latin America delivered strong growth, reflecting bureau volume
strength, uptake of new richer datasets and advanced analytics. We are also
rolling out the Ascend platform and have benefited from good demand for our
fraud and identity management products.
In Consumer Services, organic revenue growth was 32%. We continue to build our
brand in Brazil with the ambition of becoming one of the most recognised
financial services brands. We added 10 million consumer memberships
year-on-year to take our total free membership base to 81 million. Our app now
ranks at number two of Brazil's top financial services apps (per data.ai). We
are enhancing our ecosystem of consumer offers to encourage engagement and
enhance the value of our services to our consumer members. Revenue growth
reflected further progress in our debt resolution service, Limpa Nome, as we
added new partners and settled more debts on the platform, plus increased
usage of our credit marketplace and premium services. We are also developing
services for consumers more widely across Latin America and our membership
count for Spanish Latin America has reached 13 million.
Benchmark EBIT in Latin America was US$294m, up 30% at constant exchange
rates. The Benchmark EBIT margin from ongoing activities at actual exchange
rates was 31.0%, up by 280 basis points. While we continue to invest in
developing new market opportunities, the margin uplift reflects revenue growth
drop-through and improving margin in Consumer Services as the business scales.
UK and Ireland
The UK and Ireland delivered a good performance overall. Revenue was US$784m,
with both total and organic revenue growth at constant exchange rates of 5%.
In B2B, organic revenue was up 7%, a great performance in a year that included
periods of extreme economic instability. Our market position in the UK has
strengthened, driven by investments we have made to extend data superiority
and to add new product capability. As a result, we secured new business wins
across a broad range of industry segments including financial services,
energy, utilities and telecommunications. While lenders have tightened credit
criteria, affordability and eligibility products performed well, and we are
helping our clients to cope with the cost-of-living crisis, as well as to meet
new regulatory obligations under the Financial Conduct Authority's new
Consumer Duty. Fraud and identity management also performed well, with strong
win rates and new business bookings, while Targeting also contributed
positively. While we expect economic conditions in the UK to remain fairly
soft, we are confident we will emerge strongly when the economic cycle turns.
Our confidence is underpinned by a compelling pipeline of new product
introductions, which include new Ascend modules, products to support fairness
in lending and new capabilities to conduct income and employment verification.
In Consumer Services, organic revenue was down (4)%. While consumer demand for
credit held up relatively well, volumes in our credit marketplace were
affected in the second half of the year by the reduction in credit supply. Our
premium subscription services were also affected negatively as we lapped a
strong prior year comparable. We are investing in new capabilities to attract
and retain members, and introducing a new Credit Lock feature this year. We
plan further new feature introductions in the months to come. Free memberships
were 12 million.
Benchmark EBIT from ongoing activities was US$170m, up 1% at constant exchange
rates. The Benchmark EBIT margin from ongoing activities was 21.7% (2022:
22.2%). The reductions reflect start-up investment in our income and
employment verification initiative, the commencement of the implementation
phase of our UK&I technology migration plan and lower growth in Consumer
Services.
EMEA/Asia Pacific
In EMEA/Asia Pacific, revenue from ongoing activities was US$424m, with both
total and organic growth at constant exchange rates of 3%.
The transformation of our EMEA/Asia Pacific operations is progressing well. We
have reduced costs and are exiting from non-core activities. We are focused on
realising our full potential in markets where we have scale by utilising our
extensive data assets and leveraging Experian global platforms. We made
progress this year despite macroeconomic headwinds in some markets.
· Australia & New Zealand - made good progress positioning
Ascend and Experian One, with positive contributions in data.
· DACH (Germany, Austria and Switzerland) - delivered a weaker
performance due to economic headwinds and lower volumes.
· India - delivered strongly with a strong contribution from our
bureau.
· Italy - performed strongly due to new product innovations and
higher bureau volumes from new business.
· South Africa - delivered well, with good progress in decisioning,
despite macroeconomic headwinds.
· Spain - performed well despite a strong prior-year comparative,
with strong growth from Consumer Information volumes and Open Banking.
Our actions have led to an improved Benchmark EBIT trajectory, which for
ongoing activities was US$14m, up 8%. The Benchmark EBIT margin for ongoing
activities improved to 3.3% from 2.9%.
In the full year ended 31 March 2023, the non-core markets accounted for
revenue of US$32m and Benchmark EBIT of US$(8)m. Due to higher interest rates
and macroeconomic weakness in our European markets we have impaired goodwill
in EMEA by US$179m.
FY24 modelling considerations
Organic revenue growth 4-6%
Benchmark EBIT margin¹ Modest margin improvement
Foreign exchange c.0 to +1% on revenue and Benchmark EBIT
Net interest c.US$125-130m
Benchmark tax rate 26-27%
WANOS² c.914m
Capital expenditure c.9% of revenue
OCF³ conversion >90%
Share repurchases US$150m
1. At constant exchange rates.
2. Weighted average number of shares.
3. Benchmark operating cash flow.
Group financial results
Business mix including % change in organic revenue year-on-year for the year
ended 31 March 2023
Segment Business unit % of Group revenue¹ Organic revenue growth %²
Q1 Q2 Q3 Q4 FY
North America 67% 7% 8% 5% 7% 7%
Data CI / BI bureaux 23% 3% 2% (2)% 2% 1%
- CI / BI bureaux, excluding mortgage 21% 11% 10% 5% 6% 8%
- Mortgage 2% (31)% (38)% (42)% (21)% (33)%
Automotive 5% 4% 11% 7% 7% 7%
Targeting 4% 11% 16% 14% 15% 14%
Decisioning Health 8% 5% 8% 4% 10% 7%
DA / Other 5% 7% 9% 7% 5% 7%
Consumer Consumer Services 22% 13% 11% 9% 10% 11%
Latin America 15% 18% 18% 16% 13% 16%
Data CI / BI bureaux 9% 14% 15% 11% 10% 12%
Other 0% 5% 42% (3)% 9% 12%
Decisioning DA / Other 3% 20% 22% 14% 10% 16%
Consumer Consumer Services 3% 42% 18% 40% 29% 32%
UK and Ireland 12% 5% 6% 6% 2% 5%
Data CI / BI bureaux 5% 9% 10% 7% 3% 7%
Targeting / Auto 1% 3% 3% 9% 11% 7%
Decisioning DA / Other 3% 2% 6% 15% 4% 7%
Consumer Consumer Services 3% 0% 0% (8)% (7)% (4)%
EMEA/Asia Pacific(3) 6% 3% 4% 1% 5% 3%
Total global 100% 8% 8% 6% 7% 7%
1. Percentage of Group revenue from ongoing activities calculated based on
FY23 revenue at actual exchange rates.
2. Ongoing activities, at constant exchange rates.
3. Organic growth rates for EMEA/Asia Pacific have been re-presented for
the reclassification to exited business activities of certain B2B businesses.
CI = Consumer Information, BI = Business Information, DA = Decision Analytics.
Revenue by region
Year ended 31 March 2023 2022¹ Growth %
US$m US$m
Total at actual exchange rates Total at constant exchange rates Organic at constant exchange rates
North America
Data 2,142 2,033 5 4
Decisioning 837 784 7 7
Business-to-Business 2,979 2,817 6 5
Consumer Services 1,453 1,305 11 11
Total ongoing activities 4,432 4,122 8 8 7
Exited business activities - -
Total North America 4,432 4,122
Latin America
Data 606 528 14 12
Decisioning 176 149 17 16
Business-to-Business 782 677 14 13
Consumer Services 165 114 42 32
Total ongoing activities 947 791 20 18 16
Exited business activities - -
Total Latin America 947 791
UK and Ireland
Data 391 409 8 7
Decisioning 229 244 7 7
Business-to-Business 620 653 7 7
Consumer Services 164 194 (4) (4)
Total ongoing activities 784 847 (7) 5 5
Exited business activities - -
Total UK and Ireland 784 847
EMEA/Asia Pacific
Data 301 333 - -
Decisioning 123 123 13 13
Total ongoing activities 424 456 (7) 3 3
Exited business activities 32 72
Total EMEA/Asia Pacific 456 528
Total revenue - ongoing activities 6,587 6,216 6 8 7
Total revenue - exited business activities 32 72
Revenue 6,619 6,288 5 8
1. The results for the year ended 31 March 2022 have been re-presented for
the reclassification to exited business activities of certain B2B businesses,
detail is provided in notes 6(a) and 7 to the financial statements.
See Appendix 1 (page 14) and note 5 to the financial statements for
definitions of non-GAAP measures.
See Appendix 3 (page 15) for analyses of revenue, Benchmark EBIT and Benchmark
EBIT margin from ongoing activities by business segment.
Income statement, earnings and Benchmark EBIT margin analysis
Year ended 31 March 2023 2022¹ Growth %
US$m US$m
Total at actual exchange rates Total at constant exchange rates
Benchmark EBIT by geography
North America 1,467 1,381 6 6
Latin America 294 223 32 30
UK and Ireland 170 188 (10) 1
EMEA/Asia Pacific 14 13 8 8
Benchmark EBIT before Central Activities 1,945 1,805 8 9
Central Activities - central corporate costs (143) (152)
Benchmark EBIT from ongoing activities 1,802 1,653 9 9
Exited business activities (8) (8)
Benchmark EBIT 1,794 1,645 9 9
Net interest (124) (110)
Benchmark PBT 1,670 1,535 9 9
Exceptional items (66) 21
Amortisation of acquisition intangibles (192) (174)
Impairment of goodwill (179) -
Acquisition and disposal expenses (46) (47)
Adjustment to the fair value of contingent consideration (45) (26)
Non-benchmark share of post-tax loss of associates (18) (31)
Interest on uncertain tax provisions (1) 1
Financing fair value remeasurements 51 168
Profit before tax 1,174 1,447 (19)
Tax charge (401) (296)
Profit after tax 773 1,151 (33)
Benchmark earnings
Benchmark PBT 1,670 1,535 9 9
Benchmark tax charge (434) (394)
Total Benchmark earnings 1,236 1,141
Owners of Experian plc 1,235 1,138 9 9
Non-controlling interests 1 3
Benchmark EPS USc135.1 USc124.5 9 9
Basic EPS USc84.2 USc127.5 (34)
Weighted average number of ordinary shares 914 914
Benchmark EBIT margin - ongoing activities
North America 33.1% 33.5%
Latin America 31.0% 28.2%
UK and Ireland 21.7% 22.2%
EMEA/Asia Pacific 3.3% 2.9%
Benchmark EBIT margin 27.4% 26.6%
1. Benchmark results for the year ended 31 March 2022 have been re-presented
for the reclassification to exited business activities of certain B2B, detail
is provided in notes 6(a) and 7 to the financial statements.
See Appendix 1 (page 14) and note 5 to the financial statements for
definitions of non-GAAP measures.
See Appendix 3 (page 15) for analyses of revenue, Benchmark EBIT and Benchmark
EBIT margin from ongoing activities by business segment.
Group financial review
Key statutory measures
We achieved a strong performance in FY23. Growth was in line with our
expectations notwithstanding a dampened global economy, reflecting the
resilience of our business. Revenue increased by 5% to US$6,619m (2022:
US$6,288m).
Operating profit for the year ended 31 March 2023 was US$1,265m (2022:
US$1,416m). The decrease was predominantly from a non-cash charge of US$179m
(2022: US$nil) for goodwill impairment, driven by increased discount rates and
macroeconomic weakness in our European markets. The net gain from associate
disposals of US$1m (2022: US$90m) was much reduced, and we incurred a charge
of US$45m (2022: US$26m) for increased contingent consideration due to
over-performance on prior acquisitions. The net loss on disposal of operations
was US$1m (2022: US$43m). Restructuring and other exceptional costs totalled
US$66m (2022: US$26m). The movements in Benchmark EBIT at constant currency
are discussed in the Chief Executive Officer's review and Regional highlights
on pages three to nine.
Net finance expense increased by US$133m, largely from a decrease in financing
fair value remeasurement credits of US$117m. Profit before tax declined to
US$1,174m (2022: US$1,447m), and the tax charge for the year increased to
US$401m (2022: US$296m). The tax charge was impacted by the non-deductibility
of the goodwill impairment and an increase in tax on other expenses not
deductible of US$46m. The impairment of associate investments, acquisition and
disposal expenses and some financing fair value remeasurements are not
allowable for tax purposes. The effective rate of tax based on profit before
tax increased from 20.5% in the year ended 31 March 2022 to 34.2% in the
current financial year.
Cash generated from operations increased to US$2,358m (2022: US$2,270m)
reflecting performance and strong control of working capital. Tax payments
increased to US$525m (2022: US$366m). Net borrowing inflows were US$192m
(2022: outflows of US$12m). Acquisition spend reduced by US$427m in the year,
offset by increased payments for the settlement of put options of US$129m.
Cash outflows in respect of net share purchases totalled US$175m (2022:
US$149m), and undrawn committed bank borrowing facilities were US$2.4bn at 31
March 2023 (2022: US$2.6bn).
Basic EPS decreased to 84.2 US cents (2022: 127.5 US cents). The reduction
reflects a lower profit before tax, no repeat of the prior year profit from
discontinued operations and an increased effective tax rate.
At 31 March 2023, net assets totalled US$3,964m (2022: US$4,007m). Capital
employed, as defined in note 5(q) to the financial statements, was US$8,102m
(2022: US$8,145m). Return on capital employed for the year ended 31 March 2023
increased to 16.5% (2022: 15.7%), reflecting Benchmark EBIT growth from
revenue progression and our continued focus on operating efficiency.
There was a decrease in equity of US$43m from US$4,007m at 31 March 2022 with
movements detailed in the Group statement of changes in equity on page 21.
Key movements in equity during the year included:
· Profit for the financial year of US$773m.
· Currency translation losses of US$203m.
· Post-employment benefit remeasurement losses of US$23m.
· A reduction in the fair value of investments revalued through
Other comprehensive income (OCI) of US$58m.
· Employee share awards and options cost of US$129m.
· Ordinary dividends of US$482m and a movement of US$175m in
connection with net share purchases.
The UK subsidiary undertaking responsible for distributing dividends under the
Group's Income Access Share arrangements has significant distributable
reserves, which at 31 March 2023 were US$8.6bn (2022: US$10.3bn).
Risks and uncertainties
The eight principal risks and uncertainties faced by the Group are summarised
in note 30 to the financial statements.
Appendices
1. Non-GAAP financial information
We have identified and defined certain measures that we believe assist the
understanding of our performance. These measures are not defined under IFRS
and they may not be directly comparable with other companies' adjusted
performance measures. These non-GAAP measures are not intended to be a
substitute for any IFRS measures of performance, but we consider them to be
key measures used within the business for assessing the underlying performance
of our ongoing businesses.
As a result of our restructuring programme in EMEA/Asia Pacific we have
refined the definition of Exceptional items, set out in note 5(l) to the
financial statements, to include onerous global support costs associated with
the closure of significant operations, to improve assessment of underlying
operating performance as such costs are eliminated through restructuring
activity.
The table below summarises our non-GAAP measures and there is a fuller
explanation in note 5 to the financial statements.
Benchmark PBT Profit before amortisation and impairment charges, acquisition expenses,
Exceptional items, financing fair value remeasurements, tax (and interest
thereon) and discontinued operations. It includes the Group's share of
continuing associates' Benchmark post-tax results.
Benchmark EBIT Benchmark PBT before net interest expense.
Benchmark EBITDA Benchmark EBIT before depreciation and amortisation.
Exited business activities The results of businesses sold, closed or identified for closure during a
financial year.
Ongoing activities The results of businesses that are not disclosed as exited business
activities.
Constant exchange rates Results and growth calculated after translating both years' performance at the
prior year's average exchange rates.
Total growth This is the year-on-year change in the performance of Experian's activities at
actual exchange rates.
Organic revenue growth This is the year-on-year change in the revenue of ongoing activities,
translated at constant exchange rates, excluding acquisitions until the first
anniversary of their consolidation.
Benchmark earnings Benchmark PBT less attributable tax and non-controlling interests.
Total Benchmark earnings Benchmark PBT less attributable tax.
Benchmark EPS Benchmark earnings divided by the weighted average number of ordinary shares.
Exceptional items Exceptional items include those arising from the profit or loss on disposal of
businesses, closure costs of significant operations (including associated
onerous global support costs), costs of significant restructuring programmes,
and other financially significant one-off items.
Benchmark operating cash flow Benchmark EBIT plus amortisation, depreciation and charges for share-based
incentive plans, less net capital expenditure and adjusted for changes in
working capital, principal lease payments and the Group's share of the
Benchmark profit or loss retained in continuing associates.
Cash flow conversion Benchmark operating cash flow expressed as a percentage of Benchmark EBIT.
Net debt and Net funding Net debt is borrowings (and the fair value of derivatives hedging borrowings)
excluding accrued interest, less cash and cash equivalents. Net funding is
borrowings (and the fair value of the effective portion of derivatives hedging
borrowings) excluding accrued interest, less cash held in Group Treasury.
Return on capital employed (ROCE) Benchmark EBIT less tax at the Benchmark rate divided by average capital
employed, in continuing operations, over the year. Capital employed is net
assets less non-controlling interests and right-of-use assets, plus or minus
the net tax liability or asset and plus Net debt.
Information on certain of our non-GAAP measures is set out in the further
appendices. Reconciliations of Benchmark EBIT and Benchmark PBT to profit
before tax, revenue from ongoing activities, and Benchmark EPS are set out in
Appendix 3, and in notes 6(e) and 12 to the financial statements,
respectively.
2. Foreign currency
Foreign exchange - average rates
The principal exchange rates used to translate revenue and Benchmark EBIT into
the US dollar are shown in the table below.
2023 2022 Movement against the US dollar
US dollar : Brazilian real 5.16 5.34 3%
Pound sterling : US dollar 1.20 1.37 (12)%
Euro : US dollar 1.04 1.16 (10)%
US dollar : Colombian peso 4,469 3,834 (17)%
US dollar : South African rand 17.00 14.85 (14)%
The impact of foreign currency movements on revenue from ongoing activities is
set out in note 6(e) to the financial statements.
Appendices (continued)
2. Foreign currency (continued)
Foreign exchange - closing rates
The principal exchange rates used to translate assets and liabilities into the
US dollar at the year-end dates are shown in the table below.
2023 2022
US dollar : Brazilian real 5.08 4.78
Pound sterling : US dollar 1.24 1.31
Euro : US dollar 1.09 1.11
US dollar : Colombian peso 4,623 3,757
US dollar : South African rand 17.71 14.56
3. Revenue, Benchmark EBIT and Benchmark EBIT margin by business segment
Year ended 31 March Growth %
Total at constant exchange rates Organic at constant exchange rates
2023 2022(1)
US$m US$m
Revenue
Data 3,440 3,303 6 5
Decisioning 1,365 1,300 8 8
Business-to-Business 4,805 4,603 7 6
Consumer Services 1,782 1,613 12 11
Ongoing activities 6,587 6,216 8 7
Exited business activities 32 72 n/a
Total 6,619 6,288 8
Benchmark EBIT
Business-to-Business 1,529 1,431 8
Consumer Services 416 374 12
Business segments 1,945 1,805 9
Central Activities - central corporate costs (143) (152) n/a
Ongoing activities 1,802 1,653 9
Exited business activities (8) (8) n/a
Total Benchmark EBIT 1,794 1,645 9
Net interest expense (124) (110) n/a
Benchmark PBT 1,670 1,535
Exceptional items (Appendix 4) (66) 21 n/a
Other adjustments made to derive Benchmark PBT(2) (430) (109) n/a
Profit before tax 1,174 1,447 n/a
Benchmark EBIT margin - ongoing activities
Business-to-Business 31.8% 31.1%
Consumer Services 23.3% 23.2%
Total Benchmark EBIT margin(3) 27.4% 26.6%
1. Revenue of US$51m and Benchmark EBIT of US$(13)m for FY22 have been
re-presented for the reclassification to exited business activities of certain
B2B businesses. See notes 6(a) and 7 to the financial statements.
2. See note 8 to the financial statements.
3. Benchmark EBIT margin for ongoing activities is calculated by dividing
Benchmark EBIT for ongoing activities by revenue from ongoing activities.
Appendices (continued)
4. Exceptional items and other adjustments made to derive Benchmark PBT
2023 2022
Year ended 31 March US$m US$m
Exceptional items:
Net loss on disposal of operations 1 43
Net profit on disposal of associates (1) (90)
Restructuring costs 53 20
Onerous global support costs 16 -
Legal provisions movements (3) 6
Net charge/(credit) for Exceptional items 66 (21)
Other adjustments made to derive Benchmark PBT:
Amortisation of acquisition intangibles 192 174
Impairment of goodwill 179 -
Acquisition and disposal expenses 46 47
Adjustment to the fair value of contingent consideration 45 26
Non-benchmark share of post-tax loss of associates 18 31
Interest on uncertain tax provisions 1 (1)
Financing fair value remeasurements (51) (168)
Net charge for other adjustments made to derive Benchmark PBT 430 109
Net charge for Exceptional items and other adjustments made to derive 496
Benchmark PBT
88
An explanation for the exclusion of such items from our definition of
Benchmark PBT is given in note 5(a) to the financial statements.
5. Reconciliation of net investment
2023 2022
Year ended 31 March US$m US$m
Capital expenditure as reported in the Group cash flow statement 627 508
Disposal of property, plant and equipment - (23)
Profit on disposals of property, plant and equipment - 4
Net capital expenditure 627 489
Acquisitions 480 781
Purchase of investments 15 32
Disposal of operations and investments (3) (23)
Distributions from investments - (2)
Repayment of promissory note and interest - (110)
Net investment 1,119 1,167
6. Cash tax reconciliation
2023 2022
Year ended 31 March % %
Tax charge on Benchmark PBT 26.0 25.7
Tax relief on goodwill amortisation (2.0) (2.4)
Timing differences on US innovation and development expenditure 2.5 -
Benefit of brought forward tax losses - (1.7)
Other(1) 4.9 2.2
Tax paid as a percentage of Benchmark PBT 31.4 23.8
1. 'Other' in FY23 includes tax due on fair value gains on the re-measurement
of derivatives, and phasing of tax payments. 'Other' included the phasing of
tax payments in FY22.
Appendices (continued)
7. Cash flow and Net debt summary(1)
2023 2022
Year ended 31 March US$m US$m
Benchmark EBIT 1,794 1,645
Amortisation and depreciation charged to Benchmark EBIT 482 484
Benchmark EBITDA 2,276 2,129
Impairment of non-current assets charged to Benchmark EBIT 1 -
Net capital expenditure (Appendix 5) (627) (489)
Decrease in working capital 30 58
Principal lease payments (57) (57)
Benchmark loss retained in associates 1 10
Charge for share incentive plans 129 149
Benchmark operating cash flow(2) 1,753 1,800
Net interest paid (118) (121)
Tax paid (525) (366)
Dividends paid to non-controlling interests (1) (2)
Benchmark free cash flow 1,109 1,311
Acquisitions (480) (781)
Purchase of investments (15) (32)
Disposal of operations and investments - ongoing activities 3 23
Distributions from investments - 2
Repayment of promissory note and interest - 110
Movement in Exceptional and other non-benchmark items (39) (19)
Ordinary dividends paid (482) (444)
Net cash inflow - continuing operations 96 170
Net debt at 1 April (3,950) (4,026)
Discontinued operations - 1
Net share purchases (175) (149)
Non-cash lease obligation additions and disposals (29) (35)
Principal lease payments 57 57
Foreign exchange and other movements (29) 32
Net debt at 31 March (4,030) (3,950)
1. For Group cash flow statement see page 22.
2. A reconciliation of Cash generated from operations to Benchmark
operating cash flow is provided in note 17(g) to the financial statements.
Group income statement
for the year ended 31 March 2023
2023 2022
Benchmark(1) Non-benchmark(2) Benchmark(1) Non-benchmark(2)
Total Total
US$m US$m US$m US$m US$m US$m
Revenue (note 6(a)) 6,619 - 6,619 6,288 - 6,288
Labour costs (2,341) (40) (2,381) (2,302) (11) (2,313)
Data and information technology costs (1,070) - (1,070) (1,000) - (1,000)
Amortisation and depreciation charges (482) (192) (674) (484) (174) (658)
Marketing and customer acquisition costs (570) - (570) (503) - (503)
Other operating charges (363) (296) (659) (357) (88) (445)
Total operating expenses (4,826) (528) (5,354) (4,646) (273) (4,919)
Net profit on disposal of operations and associates - - - - 47 47
Operating profit/(loss) 1,793 (528) 1,265 1,642 (226) 1,416
Finance income 13 50 63 15 169 184
Finance expense (137) - (137) (125) - (125)
Net finance (expense)/income (note 9(a)) (124) 50 (74) (110) 169 59
Share of post-tax (loss)/profit of associates 1 (18) (17) 3 (31) (28)
Profit/(loss) before tax (note 6(a)) 1,670 (496) 1,174 1,535 (88) 1,447
Tax (charge)/credit (note 10(a)) (434) 33 (401) (394) 98 (296)
Profit/(loss) for the financial year from continuing operations 1,236 (463) 773 1,141 10 1,151
Profit for the financial year from discontinued operations (note 11) - - - - 16 16
Profit/(loss) for the financial year 1,236 (463) 773 1,141 26 1,167
Attributable to:
Owners of Experian plc 1,235 (465) 770 1,138 27 1,165
Non-controlling interests 1 2 3 3 (1) 2
Profit/(loss) for the financial year 1,236 (463) 773 1,141 26 1,167
Total Benchmark EBIT(1) 1,794 1,645
US cents US cents US cents US cents US cents US cents
Earnings/(loss) per share (note 12(a))
Basic 135.1 (50.9) 84.2 124.5 3.0 127.5
Diluted 134.1 (50.5) 83.6 123.6 2.9 126.5
Earnings/(loss) per share from continuing operations (note 12(a))
Basic 135.1 (50.9) 84.2 124.5 1.2 125.7
Diluted 134.1 (50.5) 83.6 123.6 1.2 124.8
Benchmark PBT per share(1,3) 182.7 167.9
Full-year dividend per share(1) 54.75 51.75
1. Total Benchmark EBIT, Benchmark PBT per share and Full-year
dividend per share are non-GAAP measures, defined in note 5 to the financial
statements.
2. The loss before tax for non-benchmark items of US$496m (2022:
US$88m) comprises a net charge for Exceptional items of US$66m (2022: net
credit of US$21m) and net charges for other adjustments made to derive
Benchmark PBT of US$430m (2022: US$109m). Further information is given in note
8 to the financial statements.
3. Benchmark PBT per share is calculated by dividing Benchmark PBT
of US$1,670m (2022: US$1,535m) by the weighted average number of ordinary
shares of 914 million (2022: 914 million). The amount is stated in US cents
per share.
Group statement of comprehensive income
for the year ended 31 March 2023
2023 2022
US$m US$m
Profit for the financial year 773 1,167
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss:
Remeasurement of post-employment benefit assets and obligations (note 16(b)) (23) 121
Changes in the fair value of investments revalued through OCI (58) 5
Deferred tax credit/(charge) 5 (22)
Items that will not be reclassified to profit or loss (76) 104
Items that are or may be reclassified subsequently to profit or loss:
Currency translation (losses)/gains (203) 35
Cumulative currency translations in respect of divestments reclassified to - 14
profit or loss
Fair value loss on cash flow hedge (38) (24)
Hedging loss reclassified to profit or loss 30 26
Items that are or may be reclassified subsequently to profit or loss (211) 51
Other comprehensive (expense)/income for the financial year(1) (287) 155
Total comprehensive income for the financial year 486 1,322
Attributable to:
Owners of Experian plc 489 1,320
Non-controlling interests (3) 2
Total comprehensive income for the financial year 486 1,322
1. Amounts reported within Other comprehensive income (OCI) are in
respect of continuing operations and, except as reported for post-employment
benefit assets and obligations and changes in the fair value of investments
revalued through OCI, there is no associated tax. Currency translation items,
not reclassified to profit or loss, are recognised in the hedging or
translation reserve within other reserves and in non-controlling interests.
Other items within OCI are recognised in retained earnings.
Group balance sheet
at 31 March 2023
2023 2022
Notes US$m US$m
Non-current assets
Goodwill 14 5,575 5,737
Other intangible assets 15 2,289 2,214
Property, plant and equipment 15 382 415
Investments in associates 12 4
Deferred tax assets 37 46
Post-employment benefit assets 16(a) 174 216
Trade and other receivables 140 133
Financial assets revalued through OCI 313 375
Other financial assets 148 81
9,070 9,221
Current assets
Trade and other receivables 1,519 1,409
Current tax assets 50 37
Other financial assets 7 7
Cash and cash equivalents - excluding bank overdrafts 17(f) 202 179
1,778 1,632
Assets classified as held-for-sale 24 16 41
1,794 1,673
Current liabilities
Trade and other payables (1,955) (1,744)
Borrowings (156) (57)
Current tax liabilities (135) (109)
Provisions (56) (33)
Other financial liabilities (6) (22)
(2,308) (1,965)
Liabilities classified as held-for-sale 24 (3) -
(2,311) (1,965)
Net current liabilities (517) (292)
Total assets less current liabilities 8,553 8,929
Non-current liabilities
Trade and other payables (186) (248)
Borrowings (3,943) (4,039)
Deferred tax liabilities (223) (353)
Post-employment benefit obligations 16(a) (39) (52)
Provisions (3) (4)
Financial liabilities revalued through OCI (24) -
Other financial liabilities (171) (226)
(4,589) (4,922)
Net assets 3,964 4,007
Equity
Called-up share capital 20 96 96
Share premium account 20 1,799 1,780
Retained earnings 20,447 20,157
Other reserves (18,413) (18,064)
Attributable to owners of Experian plc 3,929 3,969
Non-controlling interests 35 38
Total equity 3,964 4,007
Group statement of changes in equity
for the year ended 31 March 2023
Called-up share capital Share premium account Retained earnings Other reserves Attributable to owners of Experian plc Non-controlling interests Total equity
(Note 20) (Note 20)
US$m US$m US$m US$m US$m US$m US$m
At 1 April 2022 96 1,780 20,157 (18,064) 3,969 38 4,007
Comprehensive income:
Profit for the financial year - - 770 - 770 3 773
Other comprehensive expense for the financial year - - (76) (205) (281) (6) (287)
Total comprehensive income/(expense) - - 694 (205) 489 (3) 486
Transactions with owners:
Employee share incentive plans:
- value of employee services - - 129 - 129 - 129
- shares issued on vesting - 19 - - 19 - 19
- purchase of shares by employee trusts - - - (45) (45) - (45)
- other vesting of awards and exercises of share options - - (36) 50 14 - 14
- related tax charge - - (9) - (9) - (9)
- other payments - - (5) - (5) - (5)
Purchase of shares held as treasury shares - - - (149) (149) - (149)
Transactions with non-controlling interests - - (1) - (1) 1 -
Dividends paid - - (482) - (482) (1) (483)
Transactions with owners - 19 (404) (144) (529) - (529)
At 31 March 2023 96 1,799 20,447 (18,413) 3,929 35 3,964
Called-up share capital Share premium account Retained earnings Other reserves Attributable to owners of Experian plc Non-controlling interests Total equity
(Note 20) (Note 20)
US$m US$m US$m US$m US$m US$m US$m
At 1 April 2021 96 1,756 19,207 (17,978) 3,081 38 3,119
Comprehensive income:
Profit for the financial year - - 1,165 - 1,165 2 1,167
Other comprehensive income for the financial year - - 118 37 155 - 155
Total comprehensive income - - 1,283 37 1,320 2 1,322
Transactions with owners:
Employee share incentive plans:
- value of employee services - - 149 - 149 - 149
- shares issued on vesting - 24 - - 24 - 24
- purchase of shares by employee trusts - - - (61) (61) - (61)
- other vesting of awards and exercises of share options - - (40) 49 9 - 9
- other payments - - (4) - (4) - (4)
Purchase of shares held as treasury shares - - - (111) (111) - (111)
Transactions with non-controlling interests - - 6 - 6 - 6
Dividends paid - - (444) - (444) (2) (446)
Transactions with owners - 24 (333) (123) (432) (2) (434)
At 31 March 2022 96 1,780 20,157 (18,064) 3,969 38 4,007
Group cash flow statement
for the year ended 31 March 2023
2023 2022
Notes US$m US$m
Cash flows from operating activities
Cash generated from operations 17(a) 2,358 2,270
Interest paid (126) (127)
Interest received 8 6
Dividends received from associates 2 13
Tax paid (525) (366)
Net cash inflow from operating activities - continuing operations 1,717 1,796
Net cash inflow from operating activities - discontinued operations 11 - 1
Net cash inflow from operating activities 1,717 1,797
Cash flows from investing activities
Purchase of other intangible assets 17(c) (563) (445)
Purchase of property, plant and equipment (64) (63)
Sale of property, plant and equipment - 23
Purchase of other financial assets (15) (32)
Sale of other financial assets 3 12
Distributions received on financial assets held as investments - 2
Acquisition of subsidiaries, net of cash acquired 17(d) (309) (736)
Disposal of investment in associates 8(c) 1 12
Repayment of promissory note and interest by associate - 110
Disposal of operations (1) (1)
Net cash flows used in investing activities (948) (1,118)
Cash flows from financing activities
Cash inflow in respect of shares issued 17(e) 19 24
Cash outflow in respect of share purchases 17(e) (194) (173)
Other payments on vesting of share awards (5) (4)
Settlement of put options held over shares in subsidiaries 17(d) (133) (4)
Transactions in respect of non-controlling interests 17(d) - (1)
New borrowings 193 571
Repayment of borrowings (1) (583)
Principal lease payments (57) (57)
Net payments for cross-currency swaps and foreign exchange contracts (61) (16)
Net receipts from equity swaps - 2
Dividends paid (483) (446)
Net cash flows used in financing activities (722) (687)
Net increase/(decrease) in cash and cash equivalents 47 (8)
Cash and cash equivalents at 1 April 176 170
Exchange movements on cash and cash equivalents (25) 14
Cash and cash equivalents at 31 March 17(f) 198 176
Notes to the financial statements
for the year ended 31 March 2023
1. Corporate information
Experian plc (the Company) is the ultimate parent company of the Experian
group of companies (Experian or the Group). Experian is the leading global
information services group. The Company is incorporated and registered in
Jersey as a public company limited by shares and is resident in Ireland. The
Company's registered office is at 22 Grenville Street, St Helier, Jersey, JE4
8PX, Channel Islands. The Company's ordinary shares are traded on the London
Stock Exchange's Regulated Market and have a Premium Listing.
2. Basis of preparation
The financial information set out in this preliminary announcement does not
constitute the Group's statutory financial statements, which comprise the
Annual Report and audited financial statements for the years ended 31 March
2023 and 31 March 2022, but is derived from the statutory financial statements
for the year ended 31 March 2023. The Group's statutory financial statements
for the year ended 31 March 2023 will be made available to shareholders in
June 2023 and delivered to the Jersey Registrar of Companies in due course.
The auditor has reported on those financial statements and has given an
unqualified report which does not contain a statement under Article 113B(3) or
Article 113B(6) of the Companies (Jersey) Law 1991. The Group's statutory
financial statements for the year ended 31 March 2022 have been delivered to
the Jersey Registrar of Companies. The auditor reported on those financial
statements and gave an unqualified report which did not contain a statement
under Article 113B(3) or Article 113B(6) of the Companies (Jersey) Law 1991.
The Group's statutory financial statements for the year ended 31 March 2023
have been:
· prepared in accordance with the Companies (Jersey) Law 1991 and both
UK-adopted International Accounting Standards (UK-IFRS) and International
Financial Reporting Standards (IFRS or IFRSs) as adopted for use in the
European Union (the EU) and IFRS Interpretations Committee interpretations
(together EU-IFRS). The financial statements also comply with IFRS as issued
by the International Accounting Standards Board (IASB). UK-IFRS, EU-IFRS and
IFRS as issued by the IASB all differ in certain respects from each other,
however the differences have no material impact for the periods presented;
· prepared on the going concern basis and under the historical cost
convention, as modified for the revaluation of certain financial assets and
financial liabilities;
· presented in US dollars, the most representative currency of the
Group's operations, and generally rounded to the nearest million;
· prepared using the principal exchange rates set out on pages 14 and
15; and
· designed to voluntarily include disclosures in line with those parts
of the UK Companies Act 2006 applicable to companies reporting under that law.
Other than those disclosed in this preliminary announcement, no significant
events impacting the Group have occurred between 31 March 2023 and 16 May 2023
when this preliminary announcement was approved for issue.
This preliminary announcement has been prepared in accordance with the Listing
Rules of the UK Financial Conduct Authority, using the accounting policies
applied in the preparation of the Group's statutory financial statements for
the year ended 31 March 2023. Those policies were published in full in the
Group's statutory financial statements for the year ended 31 March 2022 and
are available on the corporate website, at www.experianplc.com
(http://www.experianplc.com) .
Going concern
Our going concern assessment focuses on immediately available sources of
liquidity to fund our anticipated trading pattern, plus anticipated
acquisition spend, returns to shareholders and capital investment, ensuring we
always maintain a comfortable margin of headroom in case of the unexpected. We
also perform a review of indicators typical of emerging going concern issues,
and have identified none.
The directors believe that the Group and the Company are well placed to manage
their financing and other business risks satisfactorily, and have a reasonable
expectation that the Group and the Company will have adequate resources to
continue their operational existence for at least 12 months from the date of
signing these financial statements. The directors therefore consider it
appropriate to adopt the going concern basis of accounting in preparing the
financial statements. In reaching this conclusion, the directors noted the
Group's strong cash performance in the year, and its resilience in the face of
a viability reverse stress-test scenario.
Notes to the financial statements (continued)
for the year ended 31 March 2023
3. Climate-related matters
As an information services business, our main environmental impact is the
carbon footprint generated from our operations and value chain. The majority
of our footprint is made up of greenhouse gas emissions from purchased goods
and services, upstream leased assets including third-party data centres and
capital goods, with emissions from our direct operations making up
approximately 5%.
We are committed to reducing our carbon emissions and to becoming carbon
neutral in our own operations by 2030. We continue to develop our plans to
decarbonise our business further and reduce energy consumption at our data
centres and across the Group. We have reduced our Scope 1 and 2 emissions by
65% since 2019.
We recognise the importance of identifying and effectively managing the
physical and transitional risks that climate change poses to our operations
and consider the impact of climate-related matters, including legislation, on
our business. The climate change scenario analyses undertaken this year in
line with Task Force on Climate-related Financial Disclosures (TCFD)
recommendations did not identify any material impact on the Group's financial
results or on going concern or viability.
4. Recent accounting developments
There have been no accounting standards, amendments or interpretations
effective for the first time in these financial statements which have had a
material impact on the financial statements.
There are a number of new standards and amendments to existing standards
applicable for Experian from 1 April 2023 with earlier application permitted;
however, the Group has elected not to adopt them early in preparing these
financial statements. Accounting developments are routinely reviewed by the
Group and its financial reporting systems are adapted as appropriate.
5. Use of non-GAAP measures in the financial statements
As detailed below, the Group has identified and defined certain measures that
it uses to understand and manage its performance. The measures are not defined
under IFRS and they may not be directly comparable with other companies'
adjusted performance measures. These non-GAAP measures are not intended to be
a substitute for any IFRS measures of performance but management considers
them to be key measures used within the business for assessing the underlying
performance of the Group's ongoing businesses.
Management no longer uses Benchmark PBT per share as a measure for assessing
underlying performance; this definition has therefore been removed from our
non-GAAP measures.
As a result of our restructuring programme in EMEA/Asia Pacific we have
refined the definition of Exceptional items to include onerous global support
costs associated with the closure of significant operations, to aid assessment
of underlying operating performance as such costs are eliminated through
restructuring activity.
(a) Benchmark profit before tax (Benchmark PBT) (note 6(a))
Benchmark PBT is disclosed to indicate the Group's underlying profitability.
It is defined as profit before amortisation and impairment of acquisition
intangibles, impairment of goodwill, acquisition expenses, adjustments to
contingent consideration, Exceptional items, financing fair value
remeasurements, tax (and interest thereon) and discontinued operations. It
includes the Group's share of continuing associates' Benchmark post-tax
results.
An explanation of the basis on which we report Exceptional items is provided
below. Other adjustments, in addition to Exceptional items, made to derive
Benchmark PBT are explained as follows:
· Charges for the amortisation and impairment of acquisition
intangibles are excluded from the calculation of Benchmark PBT because these
charges are based on judgments about their value and economic life and bear no
relation to the Group's underlying ongoing performance. Impairment of goodwill
is similarly excluded from the calculation of Benchmark PBT.
· Acquisition and disposal expenses (representing the incidental costs
of acquisitions and disposals, one-time integration costs and other corporate
transaction expenses) relating to successful, active or aborted acquisitions
and disposals are excluded from the definition of Benchmark PBT as they bear
no relation to the Group's underlying ongoing performance or to the
performance of any acquired businesses. Adjustments to contingent
consideration are similarly excluded from the definition of Benchmark PBT.
· Charges and credits for financing fair value remeasurements within
finance expense in the Group income statement are excluded from the definition
of Benchmark PBT. These include retranslation of intra-Group funding, and that
element of the Group's derivatives that is ineligible for hedge accounting,
together with gains and losses on put options in respect of acquisitions.
Amounts recognised generally arise from market movements and accordingly bear
no direct relation to the Group's underlying performance.
Notes to the financial statements (continued)
for the year ended 31 March 2023
5. Use of non-GAAP measures in the financial statements (continued)
(b) Benchmark earnings before interest and tax (Benchmark EBIT) and margin (Benchmark EBIT margin)
(note 6(a))
Benchmark EBIT is defined as Benchmark PBT before the net interest expense
charged therein and accordingly excludes Exceptional items as defined below.
Benchmark EBIT margin is Benchmark EBIT from ongoing activities expressed as a
percentage of revenue from ongoing activities.
(c) Benchmark earnings before interest, tax, depreciation and amortisation (Benchmark EBITDA)
Benchmark EBITDA is defined as Benchmark EBIT before the depreciation and
amortisation charged therein.
(d) Exited business activities
Exited business activities are businesses sold, closed or identified for closure during a financial year. These are treated as exited business activities for both revenue and Benchmark EBIT purposes. The results of exited business activities are disclosed separately with the results of the prior period re-presented in the segmental analyses as appropriate. This measure differs from the definition of discontinued operations in IFRS 5.
(e) Ongoing activities
The results of businesses trading at 31 March 2023, that are not disclosed as exited business activities, are reported as ongoing activities.
(f) Constant exchange rates
To highlight our organic performance, we discuss our results in terms of
growth at constant exchange rates, unless otherwise stated. This represents
growth calculated after translating both years' performance at the prior
year's average exchange rates.
(g) Total growth (note 6(e))
This is the year-on-year change in the performance of our activities at actual
exchange rates. Total growth at constant exchange rates removes the
translational foreign exchange effects arising on the consolidation of our
activities and comprises one of our measures of performance at constant
exchange rates.
(h) Organic revenue growth (note 6(e))
This is the year-on-year change in the revenue of ongoing activities,
translated at constant exchange rates, excluding acquisitions until the first
anniversary of their consolidation.
(i) Benchmark earnings and Total Benchmark earnings (note 12)
Benchmark earnings comprises Benchmark PBT less attributable tax and
non-controlling interests. The attributable tax for this purpose excludes
significant tax credits and charges arising in the year which, in view of
their size or nature, are not comparable with previous years, together with
tax arising on Exceptional items and on other adjustments made to derive
Benchmark PBT. Benchmark PBT less attributable tax is designated as Total
Benchmark earnings.
(j) Benchmark earnings per share (Benchmark EPS) (note 12(a))
Benchmark EPS comprises Benchmark earnings divided by the weighted average
number of issued ordinary shares, as adjusted for own shares held.
(k) Benchmark tax charge and rate (note 10(b))
The Benchmark tax charge is the tax charge applicable to Benchmark PBT. It
differs from the tax charge by tax attributable to Exceptional items and other
adjustments made to derive Benchmark PBT, and exceptional tax charges. A
reconciliation is provided in note 10(b) to these financial statements. The
Benchmark effective rate of tax is calculated by dividing the Benchmark tax
charge by Benchmark PBT.
(l) Exceptional items (note 8(a))
The separate reporting of Exceptional items gives an indication of the Group's
underlying performance. Exceptional items include those arising from the
profit or loss on disposal of businesses, closure costs of significant
operations (including onerous global support costs associated with these
operations), costs of significant restructuring programmes and other
financially significant one-off items. All other restructuring costs are
charged against Benchmark EBIT, in the segments in which they are incurred.
(m) Full-year dividend per share (note 13(a))
Full-year dividend per share comprises the total of dividends per share
announced in respect of the financial year.
Notes to the financial statements (continued)
for the year ended 31 March 2023
5. Use of non-GAAP measures in the financial statements (continued)
(n) Benchmark operating and Benchmark free cash flow
Benchmark operating cash flow is Benchmark EBIT plus amortisation, depreciation and charges in respect of share-based incentive plans, less capital expenditure net of disposal proceeds and adjusted for changes in working capital, principal lease payments and the Group's share of the Benchmark profit or loss retained in continuing associates. Benchmark free cash flow is derived from Benchmark operating cash flow by excluding net interest, tax paid in respect of continuing operations and dividends paid to non-controlling interests.
(o) Cash flow conversion
Cash flow conversion is Benchmark operating cash flow expressed as a
percentage of Benchmark EBIT.
(p) Net debt and Net funding (note 18)
Net debt is borrowings (and the fair value of derivatives hedging borrowings)
excluding accrued interest, less cash and cash equivalents and other highly
liquid bank deposits with original maturities greater than three months. Net
funding is borrowings (and the fair value of the effective portion of
derivatives hedging borrowings) excluding accrued interest, less cash held in
Group Treasury.
(q) Return on capital employed (ROCE)
ROCE is defined as Benchmark EBIT less tax at the Benchmark rate divided by a
three-point average of capital employed, in continuing operations, over the
year. Capital employed is net assets less non-controlling interests and
right-of-use assets, further adjusted to add or deduct the net tax liability
or asset and to add Net debt.
Notes to the financial statements (continued)
for the year ended 31 March 2023
6. Segment information
(a) Income statement
North Latin UK and Ireland EMEA/ Total operating segments Central Total continuing operations
America America Asia Pacific(1) Activities
Year ended 31 March 2023 US$m US$m US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 4,432 947 784 424 6,587 - 6,587
Exited business activities - - - 32 32 - 32
Total 4,432 947 784 456 6,619 - 6,619
Reconciliation from Benchmark EBIT to profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 1,497 294 158 (6) 1,943 (141) 1,802
Transfer pricing and other allocation adjustments (30) - 12 20 2 (2) -
Ongoing activities 1,467 294 170 14 1,945 (143) 1,802
Exited business activities - - - (8) (8) - (8)
Total 1,467 294 170 6 1,937 (143) 1,794
Net interest expense included in Benchmark PBT (4) (1) (1) (1) (7) (117) (124)
(note 9(b))
Benchmark PBT 1,463 293 169 5 1,930 (260) 1,670
Exceptional items (note 8(a)) 4 - - (70) (66) - (66)
Impairment of goodwill (note 14) - - - (179) (179) - (179)
Amortisation of acquisition intangibles (124) (21) (8) (39) (192) - (192)
Acquisition and disposal expenses (18) (4) (7) (17) (46) - (46)
Adjustment to the fair value of contingent (48) (5) 8 - (45) - (45)
consideration
Non-benchmark share of post-tax loss of associates - - (18) - (18) - (18)
Interest on uncertain tax provisions - - - - - (1) (1)
Financing fair value remeasurements - - - - - 51 51
Profit/(loss) before tax 1,277 263 144 (300) 1,384 (210) 1,174
North Latin UK and Ireland EMEA/ Total operating segments Central Total continuing operations
America America Asia Pacific(1) Activities
Year ended 31 March 2022(2) US$m US$m US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 4,122 791 847 456 6,216 - 6,216
Exited business activities - - - 72 72 - 72
Total 4,122 791 847 528 6,288 - 6,288
Reconciliation from Benchmark EBIT to profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 1,418 221 179 (10) 1,808 (155) 1,653
Transfer pricing and other allocation adjustments (37) 2 9 23 (3) 3 -
Ongoing activities 1,381 223 188 13 1,805 (152) 1,653
Exited business activities - - (4) (4) (8) - (8)
Total 1,381 223 184 9 1,797 (152) 1,645
Net interest expense included in Benchmark PBT (4) (1) (1) (2) (8) (102) (110)
(note 9(b))
Benchmark PBT 1,377 222 183 7 1,789 (254) 1,535
Exceptional items (note 8(a)) 6 - - (80) (74) 95 21
Amortisation of acquisition intangibles (110) (23) (7) (34) (174) - (174)
Acquisition and disposal expenses (21) (7) (1) (18) (47) - (47)
Adjustment to the fair value of contingent (8) (20) 4 (2) (26) - (26)
consideration
Non-benchmark share of post-tax loss of associates - - (26) - (26) (5) (31)
Interest on uncertain tax provisions - - - - - 1 1
Financing fair value remeasurements - - - - - 168 168
Profit/(loss) before tax 1,244 172 153 (127) 1,442 5 1,447
1. EMEA/Asia Pacific represents all other operating segments.
2. Revenue of US$51m and Benchmark EBIT of US$(13)m for the year ended 31
March 2022 have been re-presented for the reclassification to exited business
activities of certain B2B businesses.
Additional information by operating segment, including that on total and
organic growth at constant exchange rates, is provided within pages 3 to 12.
Notes to the financial statements (continued)
for the year ended 31 March 2023
6. Segment information (continued)
(b) Revenue by country - continuing operations
2023 2022
US$m US$m
USA 4,429 4,121
Brazil 839 692
UK 780 843
Other 571 632
6,619 6,288
Revenue is primarily attributable to countries other than Ireland. No single
client accounted for 10% or more of revenue in the current or prior year.
Revenue from the USA, Brazil and the UK in aggregate comprises 91% (2022: 90%)
of Group revenue. Other comprises a number of other countries, none of which
have revenue that is individually material.
(c) Disaggregation of revenue from contracts with customers
North Latin UK and Ireland EMEA/ Total operating segments
America America Asia Pacific
Year ended 31 March 2023 US$m US$m US$m US$m US$m
Revenue from external customers
Data 2,142 606 391 301 3,440
Decisioning 837 176 229 123 1,365
Business-to-Business 2,979 782 620 424 4,805
Consumer Services 1,453 165 164 - 1,782
Total ongoing activities 4,432 947 784 424 6,587
North Latin UK and Ireland EMEA/ Total operating segments
America America Asia Pacific
Year ended 31 March 2022(1) US$m US$m US$m US$m US$m
Revenue from external customers
Data 2,033 528 409 333 3,303
Decisioning 784 149 244 123 1,300
Business-to-Business 2,817 677 653 456 4,603
Consumer Services 1,305 114 194 - 1,613
Total ongoing activities 4,122 791 847 456 6,216
1. Revenue for the year ended 31 March 2022 of US$51m has been
re-presented for the reclassification to exited business activities of certain
B2B businesses.
Total revenue comprises revenue from ongoing activities as well as revenue
from exited business activities. Revenue in respect of exited business
activities of US$32m (2022: US$72m) comprised EMEA/Asia Pacific Data and
Decisioning revenue of US$7m (2022: US$18m) and US$25m (2022: US$54m)
respectively.
Data is predominantly transactional revenue with a portion from licence fees.
Decisioning revenue is derived from:
• software and system sales, and includes recurring licence fees,
consultancy and implementation fees, and transactional charges;
• credit score fees which are primarily transactional; and
• analytics income comprising a mix of consultancy and professional
fees as well as transactional revenue.
Consumer Services revenue primarily comprises monthly subscription and one-off fees, and referral fees for credit products and white-label partnerships.
Notes to the financial statements (continued)
for the year ended 31 March 2023
6. Segment information (continued)
(d) Revenue by business segment
The additional analysis of revenue from external customers provided to the
chief operating decision-maker and accordingly reportable under IFRS 8
'Operating Segments' is given within note 7. This is supplemented by voluntary
disclosure of the profitability of groups of service lines. For ease of
reference, we continue to use the term 'business segments' when discussing the
results of groups of service lines.
(e) Reconciliation of revenue from ongoing activities
North Latin UK and Ireland EMEA/ Total ongoing activities
America America Asia Pacific
US$m US$m US$m US$m US$m
Revenue for the year ended 31 March 2022(1) 4,122 791 847 456 6,216
Adjustment to constant exchange rates - (3) 3 2 2
Revenue at constant exchange rates for the year ended 31 March 2022 4,122 788 850 458 6,218
Organic revenue growth 272 125 39 15 451
Revenue from acquisitions 38 19 3 - 60
Revenue at constant exchange rates for the year ended 31 March 2023 4,432 932 892 473 6,729
Adjustment to actual exchange rates - 15 (108) (49) (142)
Revenue for the year ended 31 March 2023 4,432 947 784 424 6,587
Organic revenue growth at constant exchange rates 7% 16% 5% 3% 7%
Revenue growth at constant exchange rates 8% 18% 5% 3% 8%
1. Revenue of US$51m for the year ended 31 March 2022 has been
re-presented for the reclassification to exited business activities of certain
B2B businesses.
The table above demonstrates the application of the methodology set out in
note 5 in determining organic and total revenue growth at constant exchange
rates. Revenue at constant exchange rates is reported for both years using the
average exchange rates applicable for the year ended 31 March 2022.
(f) Balance sheet
(i) Net assets/(liabilities) North Latin UK and Ireland EMEA/ Total operating segments Central Total
America America Asia Pacific Activities and other Group
At 31 March 2023 US$m US$m US$m US$m US$m US$m US$m
Goodwill 3,662 724 700 489 5,575 - 5,575
Investments in associates 3 - 9 - 12 - 12
Right-of-use assets 72 16 14 20 122 6 128
Assets classified as held-for-sale - - - 4 4 12 16
Other assets 2,406 686 530 505 4,127 1,006 5,133
Total assets 6,143 1,426 1,253 1,018 9,840 1,024 10,864
Lease obligations (89) (19) (14) (21) (143) (5) (148)
Liabilities classified as held-for-sale - - - (3) (3) - (3)
Other liabilities (1,307) (327) (304) (189) (2,127) (4,622) (6,749)
Total liabilities (1,396) (346) (318) (213) (2,273) (4,627) (6,900)
Net assets/(liabilities) 4,747 1,080 935 805 7,567 (3,603) 3,964
North Latin UK and Ireland EMEA/ Total operating segments Central Total
America America Asia Pacific Activities and other Group
At 31 March 2022 US$m US$m US$m US$m US$m US$m US$m
Goodwill 3,546 760 694 737 5,737 - 5,737
Investments in associates 4 - - - 4 - 4
Right-of-use assets 83 14 24 27 148 5 153
Assets classified as held-for-sale - - 29 - 29 12 41
Other assets 2,191 674 528 619 4,012 947 4,959
Total assets 5,824 1,448 1,275 1,383 9,930 964 10,894
Lease obligations (105) (17) (25) (30) (177) (3) (180)
Other liabilities (1,129) (327) (300) (364) (2,120) (4,587) (6,707)
Total liabilities (1,234) (344) (325) (394) (2,297) (4,590) (6,887)
Net assets/(liabilities) 4,590 1,104 950 989 7,633 (3,626) 4,007
Notes to the financial statements (continued)
for the year ended 31 March 2023
6. Segment information (continued)
(f) Balance sheet (continued)
(ii) Central Activities and other comprises:
2023 2022
Assets Liabilities Net assets/ Assets Liabilities Net assets/
(liabilities) (liabilities)
US$m US$m US$m US$m US$m US$m
Central Activities 731 (175) 556 682 (155) 527
Net debt(1) 206 (4,094) (3,888) 199 (3,973) (3,774)
Tax 87 (358) (271) 83 (462) (379)
1,024 (4,627) (3,603) 964 (4,590) (3,626)
1. Net debt comprises amounts reported within Central Activities plus
lease obligations in operating segments, net of interest of US$142m (2022:
US$176m).
(iii) Capital employed
2023 2022
US$m US$m
North America 4,747 4,590
Latin America 1,080 1,104
UK and Ireland 935 950
EMEA/Asia Pacific 805 989
Total operating segments 7,567 7,633
Central Activities 556 527
Add: lease obligations in operating segments 143 177
Less: accrued interest on lease obligations in operating segments (1) (1)
Less: right-of-use assets (128) (153)
Less: non-controlling interests (35) (38)
Capital employed attributable to owners 8,102 8,145
The three-point average capital employed figure of US$8,060m (2022:
US$7,774m), used in our calculation of ROCE, is determined by calculating the
arithmetic average of capital employed at 31 March 2023, 30 September 2022 and
31 March 2022.
Notes to the financial statements (continued)
for the year ended 31 March 2023
7. Information on business segments (including non-GAAP disclosures)
Business-to-Business Consumer Services Total business segments Central Total
Activities continuing operations
Year ended 31 March 2023 US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 4,805 1,782 6,587 - 6,587
Exited business activities 32 - 32 - 32
Total 4,837 1,782 6,619 - 6,619
Reconciliation from Benchmark EBIT to profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 1,517 426 1,943 (141) 1,802
Transfer pricing and other allocation adjustments 12 (10) 2 (2) -
Ongoing activities 1,529 416 1,945 (143) 1,802
Exited business activities (8) - (8) - (8)
Total 1,521 416 1,937 (143) 1,794
Net interest expense included in Benchmark PBT (note 9(b)) (5) (2) (7) (117) (124)
Benchmark PBT 1,516 414 1,930 (260) 1,670
Exceptional items (note 8(a)) (66) - (66) - (66)
Impairment of goodwill (note 14) (179) - (179) - (179)
Amortisation of acquisition intangibles (159) (33) (192) - (192)
Acquisition and disposal expenses (23) (23) (46) - (46)
Adjustment to the fair value of contingent consideration (45) - (45) - (45)
Non-benchmark share of post-tax loss of associates - (18) (18) - (18)
Interest on uncertain tax provisions - - - (1) (1)
Financing fair value remeasurements - - - 51 51
Profit/(loss) before tax 1,044 340 1,384 (210) 1,174
Business-to-Business Consumer Services Total business segments Central Total
Activities continuing operations
Year ended 31 March 2022(1) US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 4,603 1,613 6,216 - 6,216
Exited business activities 72 - 72 - 72
Total 4,675 1,613 6,288 - 6,288
Reconciliation from Benchmark EBIT to profit before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 1,422 386 1,808 (155) 1,653
Transfer pricing and other allocation adjustments 9 (12) (3) 3 -
Ongoing activities 1,431 374 1,805 (152) 1,653
Exited business activities (5) (3) (8) - (8)
Total 1,426 371 1,797 (152) 1,645
Net interest expense included in Benchmark PBT (note 9(b)) (6) (2) (8) (102) (110)
Benchmark PBT 1,420 369 1,789 (254) 1,535
Exceptional items (note 8(a)) (74) - (74) 95 21
Amortisation of acquisition intangibles (145) (29) (174) - (174)
Acquisition and disposal expenses (34) (13) (47) - (47)
Adjustment to the fair value of contingent consideration (26) - (26) - (26)
Non-benchmark share of post-tax loss of associates - (26) (26) (5) (31)
Interest on uncertain tax provisions - - - 1 1
Financing fair value remeasurements - - - 168 168
Profit before tax 1,141 301 1,442 5 1,447
1. Revenue of US$51m and Benchmark EBIT of US$(13)m for the year ended 31
March 2022 have been re-presented for the reclassification to exited business
activities of certain B2B businesses.
Additional information by business segment, including that on total and
organic growth at constant exchange rates, is provided within pages 3 to 12
and within Appendix 3 on page 15.
Notes to the financial statements (continued)
for the year ended 31 March 2023
8. Exceptional items and other adjustments made to derive Benchmark PBT -
continuing operations
(a) Net charge for Exceptional items and other adjustments made to derive Benchmark PBT
2023 2022
Notes US$m US$m
Exceptional items:
Net loss on disposal of operations 8(b), 14(a), 23 1 43
Net profit on disposal of associates 8(c) (1) (90)
Restructuring costs 8(d) 53 20
Onerous global support costs(1) 8(e) 16 -
Legal provisions movements(1) 8(f) (3) 6
Net charge/(credit) for Exceptional items 66 (21)
Other adjustments made to derive Benchmark PBT:
Amortisation of acquisition intangibles 192 174
Impairment of goodwill(1) 14 179 -
Acquisition and disposal expenses(2) 46 47
Adjustment to the fair value of contingent consideration(1) 25(c) 45 26
Non-benchmark share of post-tax loss of associates(3) 18 31
Interest on uncertain tax provisions 9(c) 1 (1)
Financing fair value remeasurements 9(c) (51) (168)
Net charge for other adjustments made to derive Benchmark PBT 430 109
Net charge for Exceptional items and other adjustments made to derive 496
Benchmark PBT
88
By income statement caption:
Labour costs 40 11
Amortisation and depreciation charges 192 174
Other operating charges 296 88
Loss on disposal of operations 1 43
Net profit on disposal of associates (1) (90)
Within operating profit 528 226
Within share of post-tax loss of associates 18 31
Within finance expense (50) (169)
Net charge for Exceptional items and other adjustments made to derive 496 88
Benchmark PBT
1. Included in other operating charges.
2. Acquisition and disposal expenses represent professional fees and
expenses associated with completed, ongoing and terminated acquisition and
disposal processes, as well as the integration and separation costs associated
with completed deals. Of the total, US$7m (2022: US$9m) is recorded within
labour costs in the Group income statement, and US$39m (2022: US$38m) is
included within other operating charges.
3. Includes impairment of investment in associate.
(b) Net loss on disposal of operations
The net loss on disposal of operations comprises costs incurred following the
cessation of our activities in Russia in the year ended 31 March 2022 of US$3m
(2022: US$43m) and a gain of US$2m (2022: US$nil) on the disposal of interests
in two small subsidiaries in EMEA/Asia Pacific.
(c) Net profit on disposal of associates
On 18 November 2020, the Group disposed of its 18.6% interest in Finicity
Corporation. During the year further consideration of US$1m (2022: US$12m) was
received in respect of earnout arrangements, the payout of which was not
anticipated at 31 March 2021.
On 4 February 2022, Vector CM Holdings (Cayman) L.P., an associate
undertaking, completed a merger with the CM Group involving its Cheetah
Digital business. As a result of the merger, the Group no longer has
significant influence over Vector and accordingly our interest in this company
was recognised as a trade investment from that date. We recorded a fair value
gain on the disposal in FY22 of US$95m, and the promissory note and associated
interest due to Experian of US$110m were also repaid.
In the year ended 31 March 2022, we recognised a disposal of our Russian
associate, United Credit Bureau, and wrote off the investment, recording a
loss of US$17m.
Notes to the financial statements (continued)
for the year ended 31 March 2023
8. Exceptional items and other adjustments made to derive Benchmark PBT -
continuing operations (continued)
(d) Restructuring costs
Costs of US$53m (2022: US$20m) were recognised in the year associated with a
strategic review and restructuring, primarily in EMEA/Asia Pacific. We
continue to execute on our strategy to concentrate on strategic markets where
we can drive scale while also enhancing operating efficiency.
The charge includes a loss on disposal and asset write-downs and impairments
of US$23m (2022: US$nil), and US$21m (2022: US$2m) is labour related. The
associated cash outflow was US$20m (2022: US$14m).
(e) Onerous global support costs
The charge in the year comprises costs that are directly attributable to
exited businesses or incurred solely to support sub-scale, multi-country
markets, and will be removed as we complete restructuring activity in
EMEA/Asia Pacific.
(f) Legal provisions movements
Movements have occurred in provisions held for a number of historical legal
claims, some of which are in the process of being settled. The credit in the
year ended 31 March 2023 reflects legal costs in North America of US$26m,
offset by insurance recoveries of US$29m.
Notes to the financial statements (continued)
for the year ended 31 March 2023
9. Net finance expense/(income)
(a) Net finance expense/(income) included in profit before tax
2023 2022
US$m US$m
Interest income:
Bank deposits, short-term investments and loan notes (9) (14)
Interest on pension plan assets (4) (1)
Interest income (13) (15)
Net non-benchmark finance income (note 9(c)) (50) (169)
Finance income (63) (184)
Finance expense:
Interest expense 137 125
Net finance expense/(income) included in profit before tax 74 (59)
(b) Net interest expense included in Benchmark PBT
2023 2022
US$m US$m
Interest income (13) (15)
Interest expense 137 125
Net interest expense included in Benchmark PBT 124 110
(c) Analysis of net non-benchmark finance income
2023 2022
US$m US$m
Foreign exchange losses/(gains) on Brazilian real intra-Group funding(1) 16 (43)
Foreign currency losses on cross-currency swaps designated as a 30 26
cash flow hedge - transfer from OCI
Other financing fair value gains(2) (97) (151)
Interest on uncertain tax provisions 1 (1)
(50) (169)
1. A Group company whose functional currency is not the Brazilian real
provides Brazilian real intra-Group funding to Serasa S.A.. Foreign exchange
gains or losses on this funding are recognised in the Group income statement.
2. Other financing fair value gains primarily relate to our portfolio
of interest rate swaps used for managing the proportion of fixed rate debt, as
well as US$30m (2022: US$26m) of fair value gains on borrowings which are in a
cash flow hedge relationship.
10. Tax - ongoing activities
(a) Tax charge and effective rate of tax
2023 2022
US$m US$m
Tax charge(1) 401 296
Profit before tax 1,174 1,447
Effective rate of tax based on profit before tax 34.2% 20.5%
1. The tax charge comprises a current tax charge of
US$521m (2022: US$314m) and a deferred tax credit of US$120m (2022: US$18m).
In the normal course of business, the Group has a number of open tax returns
with various tax authorities with whom it is in active dialogue. At 31 March
2023, the Group held current and deferred tax liabilities of US$102m (2022:
US$293m) in respect of uncertain tax positions.
During the current and prior year, Experian was in discussions with the US
Internal Revenue Service and His Majesty's Revenue and Customs in the UK to
seek clarity on transfer pricing and financing related issues. The net
decrease in recognised provisions during the year was driven by the agreement
of the Group's most significant uncertain tax position. In the year ended 31
March 2022, the net decrease in recognised provisions followed the agreement
of open tax issues in North America, and adjustments made to provisions on the
utilisation of historical UK tax losses.
Liabilities relating to these open and judgmental matters are based on an
assessment as to whether additional taxes will be due, after taking into
account external advice where appropriate. While the timing of developments in
resolving these matters is inherently uncertain, the Group does not expect to
materially increase its uncertain tax provisions in the next 12 months.
However if an opportunity arose to resolve the matters for less than the
amounts provided, a settlement may be made with a corresponding reduction in
the provision.
Notes to the financial statements (continued)
for the year ended 31 March 2023
10. Tax - ongoing activities (continued)
(b) Reconciliation of the tax charge to the Benchmark tax charge
2023 2022
US$m US$m
Tax charge 401 296
Tax relief on Exceptional items and other adjustments made to derive Benchmark 33 98
PBT
Benchmark tax charge 434 394
Benchmark PBT 1,670 1,535
Benchmark tax rate 26.0% 25.7%
(c) Tax recognised in Other comprehensive income and directly in equity
Other comprehensive expense of US$287m (2022: income of US$155m) is stated
after a deferred tax credit of US$5m (2022: charge of US$22m), relating to
remeasurement gains on post-employment benefit assets and obligations, and
changes in the fair value of investments revalued through OCI.
A tax charge relating to employee share incentive plans of US$9m (2022:
US$nil) is recognised in equity and reported as appropriate within
transactions with owners. This amount comprised a current tax charge of US$5m
(2022: US$1m) and a deferred tax charge of US$4m (2022: credit of US$1m).
11. Discontinued operations
There have been no material divestments of subsidiaries during the year ended
31 March 2023. The profit from discontinued operations in the year ended 31
March 2022 of US$16m comprised the release of historical tax provisions
relating to the disposal of the Group's comparison shopping and lead
generation businesses in FY13, and our email/cross-channel marketing business
(CCM) in FY18.
The cash inflow from operating activities of US$nil (2022: US$1m) relates to
the disposal of CCM.
12. Earnings per share disclosures
(a) Earnings per share (EPS)
Basic Diluted
2023 2022 2023 2022
US cents US cents US cents US cents
Continuing and discontinued operations 84.2 127.5 83.6 126.5
Less: profit from discontinued operations - (1.8) - (1.7)
Continuing operations 84.2 125.7 83.6 124.8
Add/(deduct): Exceptional items and other adjustments made to derive Benchmark 50.9 (1.2) 50.5 (1.2)
PBT, net of related tax
Benchmark EPS (non-GAAP measure) 135.1 124.5 134.1 123.6
(b) Analysis of earnings
(i) Attributable to owners of Experian plc
2023 2022
US$m US$m
Continuing and discontinued operations 770 1,165
Less: profit from discontinued operations - (16)
Continuing operations 770 1,149
Add/(deduct): Exceptional items and other adjustments made to derive Benchmark 465 (11)
PBT,
net of related tax
Benchmark earnings attributable to owners of Experian plc (non-GAAP measure) 1,235 1,138
(ii) Attributable to non-controlling interests
2023 2022
US$m US$m
Profit for the financial year attributable to non-controlling interests 3 2
(Deduct)/add: Exceptional items and other adjustments made to derive Benchmark (2) 1
PBT,
net of related tax
Benchmark earnings attributable to non-controlling interests (non-GAAP 1 3
measure)
Notes to the financial statements (continued)
for the year ended 31 March 2023
12. Earnings per share disclosures (continued)
(c) Reconciliation of Total Benchmark earnings to profit for the financial
year
2023 2022
US$m US$m
Total Benchmark earnings (non-GAAP measure) 1,236 1,141
Profit from discontinued operations - 16
Exceptional items and other adjustments made to derive Benchmark PBT, net of (465) 11
related tax:
- attributable to owners of Experian plc
- attributable to non-controlling interests 2 (1)
Profit for the financial year 773 1,167
(d) Weighted average number of ordinary shares
2023 2022
million million
Weighted average number of ordinary shares 914 914
Add: dilutive effect of share incentive awards, options and share purchases 7 7
Diluted weighted average number of ordinary shares 921 921
13. Dividends on ordinary shares
(a) Dividend information
2023 2022
US cents US$m US cents US$m
per share per share
Amounts recognised and paid during the financial year:
First interim - paid in February 2023 (2022: February 2022) 17.00 155 16.00 147
Second interim - paid in July 2022 (2022: July 2021) 35.75 327 32.50 297
Dividends paid on ordinary shares 52.75 482 48.50 444
Full-year dividend for the financial year 54.75 499 51.75 474
A second interim dividend in respect of the year ended 31 March 2023 of 37.75
US cents per ordinary share will be paid on 21 July 2023, to shareholders on
the register at the close of business on 23 June 2023. Unless shareholders
elect by 23 June 2023 to receive US dollars, their dividends will be paid in
pounds sterling at a rate per share calculated on the basis of the exchange
rate from US dollars to pounds sterling on 30 June 2023.
This dividend is not included as a liability in these financial statements.
This second interim dividend and the first interim dividend paid in February
2023 comprise the full-year dividend for the financial year of 54.75 US cents
per ordinary share. Dividend amounts are quoted gross.
In the year ended 31 March 2023, the employee trusts waived their entitlements
to dividends of US$4m (2022: US$4m). There is no entitlement to dividends in
respect of own shares held as treasury shares.
(b) Income Access Share (IAS) arrangements
As its ordinary shares are listed on the London Stock Exchange, the Company
has a large number of UK resident shareholders. In order that shareholders may
receive Experian dividends from a UK source, should they wish, the IAS
arrangements have been put in place. The purpose of the IAS arrangements is to
preserve the tax treatment of dividends paid to Experian shareholders in the
UK, in respect of dividends paid by the Company. Shareholders who elect, or
are deemed to elect, to receive their dividends via the IAS arrangements will
receive their dividends from a UK source (rather than directly from the
Company) for UK tax purposes.
Shareholders who hold 50,000 or fewer Experian plc shares on the first
dividend record date after they become shareholders, unless they elect
otherwise, will be deemed to have elected to receive their dividends under the
IAS arrangements.
Shareholders who hold more than 50,000 shares and who wish to receive their
dividends from a UK source must make an election to receive dividends via the
IAS arrangements. All elections remain in force indefinitely unless revoked.
Unless shareholders have made an election to receive dividends via the IAS
arrangements, or are deemed to have made such an election, dividends will be
received from an Irish source and will be taxed accordingly. The final date
for submission of elections to receive UK sourced dividends via the IAS
arrangements is 23 June 2023. The Company offers a Dividend Reinvestment Plan
(DRIP) to shareholders who receive their dividends under the IAS arrangements,
and the final date for submission of DRIP elections is also 23 June 2023.
Shareholders should contact the registrars for further details.
Notes to the financial statements (continued)
for the year ended 31 March 2023
14. Goodwill
(a) Movements in goodwill
2023 2022
US$m US$m
Cost
At 1 April 5,790 5,314
Differences on exchange (149) 40
Additions through business combinations (note 22) 180 469
Disposal of business (note 23) - (33)
At 31 March 5,821 5,790
Accumulated impairment
At 1 April 53 53
Differences on exchange 14 -
Impairment charge 179 -
At 31 March 246 53
Net book amount at 1 April 5,737 5,261
Net book amount at 31 March 5,575 5,737
(b) Goodwill by cash-generating unit (CGU)
2023 2022
US$m US$m
North America 3,662 3,546
Latin America 724 760
UK and Ireland 700 694
EMEA 409 649
Asia Pacific 80 88
At 31 March 5,575 5,737
(c) Key assumptions for value-in-use calculations by CGU
2023 2022
Discount rate Long-term growth rate Discount rate Long-term growth rate
% p.a. % p.a. % p.a. % p.a.
North America 11.2 2.3 9.3 2.3
Latin America 15.8 4.7 13.5 4.7
UK and Ireland 10.9 2.3 9.1 2.3
EMEA 12.6 3.9 10.6 3.9
Asia Pacific 11.2 5.3 8.6 5.3
As indicated in note 5(a) of the Group's statutory financial statements for
the year ended 31 March 2022, value-in-use calculations are underpinned by
financial forecasts looking forward up to five years, which continue to
reflect our current assessment of the impact of climate change and associated
commitments the Group has made. Management's key assumptions in setting the
financial budgets for the initial five-year period were as follows:
· forecast revenue growth rates were based on past experience,
adjusted for the strategic opportunities within each CGU; the forecasts used
average nominal growth rates of up to 14%, with high-single-digit average
nominal growth rates in EMEA and Asia Pacific;
· Benchmark EBIT was forecast based on historical margins.
These were expected to improve modestly throughout the period in the mature
CGUs and improve annually by a mid-single-digit amount in EMEA and Asia
Pacific; and
· forecast Benchmark operating cash flow conversion rates were
based on historical experience and performance expectations with rates of up
to 93% unless a Benchmark EBIT loss was forecast. In these circumstances, cash
outflows were forecast to exceed the Benchmark EBIT loss.
Further details of the principles used in determining the basis of allocation
by CGU and annual impairment testing are given in note 5(a) of the Group's
statutory financial statements for the year ended 31 March 2022.
Notes to the financial statements (continued)
for the year ended 31 March 2023
14. Goodwill (continued)
(d) Results of annual impairment review as at 31 March 2023
As a result of increased discount rate assumptions used in the value-in-use
calculation, driven by increases in underlying risk-free interest rates,
combined with ongoing challenging market conditions, the carrying value of the
EMEA CGU has been reduced to its recoverable amount through recognition of an
impairment charge of US$179m. This charge is recognised within total operating
expenses in the Group income statement. Any additional adverse movement in the
key assumptions at the balance sheet date would lead to a further impairment
of goodwill. The sensitivities can be summarised as follows:
· an absolute increase of 1.0 percentage points in the discount
rate would lead to a further impairment of US$80m; or
· an absolute reduction in the long-term growth rate of 1.0
percentage points would lead to a further impairment of US$60m; or
· an absolute reduction of 2.0 or 4.0 percentage points in the
forecast FY28 profit margin of 22.2% would lead to an additional impairment of
US$53m or US$106m respectively; or
· a 10% or 20% reduction in the forecast FY28 profit would lead
to an additional impairment of US$58m or US$117m respectively.
The review for the Asia Pacific CGU indicated that the recoverable amount
exceeded the carrying value by US$120m and that any decline in the estimated
value-in-use in excess of that amount would result in the recognition of an
impairment charge. The sensitivities, which result in the recoverable amount
being equal to the carrying value, can be summarised as follows:
· an absolute increase of 3.9 percentage points in the discount
rate, from 11.2% to 15.1%; or
· an absolute reduction of 5.4 percentage points in the
long-term growth rate, from growth of 5.3% to a decline of 0.1%; or
· a reduction of 5.4 percentage points in the forecast FY28
profit margin, from 14.4% to 9.0%. A reduction in the annual margin
improvement of approximately 1.1 percentage points per year over the five-year
forecast period would also reduce the recoverable amount to the carrying
value; or
· an absolute reduction of 38% in the forecast FY28 profit.
The recoverable amount of all other CGUs exceeded their carrying value, on the
basis of the assumptions set out in note 14(c) and any reasonably possible
changes thereof.
The impairment review considered the potential impact of climate change by
considering the results of the scenario analysis performed consistent with the
recommendations of the TCFD. There was no impact on the reported amounts of
goodwill as a result of this review.
15. Capital expenditure, disposals and capital commitments
(a) Additions
2023 2022
US$m US$m
Capital expenditure 627 508
Right-of-use-assets 39 39
666 547
b) Disposal of other intangible assets and property, plant and equipment
The book value of other intangible fixed assets and property, plant and
equipment disposed of in the year was US$17m (2022: US$24m), of which US$9m
(2022: US$5m) related to the disposal of right-of-use assets. A loss of US$7m
(2022: US$nil) on the disposal of internally generated software is reported
within non-benchmark items in the Group income statement, as it relates to
assets developed for markets in which we no longer operate as a result of
restructuring activity (note 8(d)). There was no material sublease income in
the current or prior year.
Notes to the financial statements (continued)
for the year ended 31 March 2023
15. Capital expenditure, disposals and capital commitments (continued)
(c) Capital commitments
2023 2022
US$m US$m
Capital expenditure for which contracts have been placed:
Other intangible assets 56 64
Property, plant and equipment 12 17
68 81
Capital commitments at 31 March 2023 included US$3m (2022: US$2m) in respect
of right-of-use assets. Capital commitments at 31 March 2023 included
commitments of US$46m not expected to be incurred before 31 March 2024.
Capital commitments at 31 March 2022 included commitments of US$56m not then
expected to be incurred before 31 March 2023.
16. Post-employment benefits - IAS 19 information
(a) Balance sheet assets/(obligations)
2023 2022
US$m US$m
Retirement benefit assets/(obligations) - funded defined benefit plans:
Fair value of funded plans' assets 866 1,214
Present value of funded plans' obligations (692) (998)
Assets in the Group balance sheet for funded defined benefit pensions 174 216
Obligations for unfunded post-employment benefits:
Present value of defined benefit pensions - unfunded plans (36) (48)
Present value of post-employment medical benefits (3) (4)
Liabilities in the Group balance sheet (39) (52)
Net post-employment benefit assets 135 164
Pension assets are deemed to be recoverable and there are no adjustments in
respect of minimum funding requirements as, under the rules of the UK Experian
Pension Scheme, future economic benefits are available to the Group in the
form of reductions in future contributions or refunds of surplus.
The latest full actuarial valuation of the Experian Pension Scheme was carried
out as at 31 March 2022. The valuation has been agreed, and there was a
moderate funding surplus. The next full valuation will be carried out as at 31
March 2025.
(b) Movements in net post-employment benefit assets recognised in the Group
balance sheet
2023 2022
US$m US$m
At 1 April 164 47
Differences on exchange (10) (7)
Credit/(charge) to the Group income statement 2 (7)
Remeasurement (losses)/gains recognised within OCI (23) 121
Contributions paid by the Group and employees 2 10
At 31 March 135 164
Contributions paid in the year ended 31 March 2023 relate to unfunded
post-employment benefits. Contributions paid in the year ended 31 March 2022
included a final additional contribution of US$4m to the Experian Pension
Scheme to correct a previous funding deficit.
The funded defined benefit pension plans hold a range of assets including
equities, index-linked gilts, global corporate bonds, secured credit, and a
Liability Driven Investment strategy which is used to hedge against interest
fluctuations and inflation. The primary drivers of the reductions in the fair
value of the plans' funded assets and obligations are an increase in pound
sterling interest rates and the retranslation of assets and obligations into
US dollars.
The Experian Pension Scheme was closed to the future accrual of new benefits
from 1 April 2022 and consequently no further assumption is required for
future pensionable salary growth. Active member benefits were crystallised as
deferred pensions from that date. No material impact on the Group's net
post-employment benefit assets resulted from this change.
Notes to the financial statements (continued)
for the year ended 31 March 2023
16. Post-employment benefits - IAS 19 information (continued)
(c) Income statement charge
2023 2022
US$m US$m
By nature of expense:
Current service cost - 5
Administration expenses 2 3
Charge within labour costs and operating profit 2 8
Interest income (4) (1)
Total net (credit)/charge to the Group income statement (2) 7
The income statement charge relates to defined benefit pension plans. There is
no current service cost in the year ended 31 March 2023, due to the closure of
the Experian Pension Scheme to future accrual from 1 April 2022. Of the
remeasurement recognised in the Statement of comprehensive income, a gain of
US$1m (2022: US$nil) is in respect of post-employment medical benefits, with
the balance relating to defined benefit pension plans.
(d) Financial actuarial assumptions
2023 2022
% p.a. % p.a.
Discount rate 4.9 2.8
Inflation rate - based on the UK Retail Prices Index (the RPI) 3.3 3.8
Inflation rate - based on the UK Consumer Prices Index (the CPI) 2.9 3.3
Increase for pensions in payment - element based on the RPI (where cap is 5%) 3.1 3.4
Increase for pensions in payment - element based on the CPI (where cap is 1.9 2.0
2.5%)
Increase for pensions in payment - element based on the CPI (where cap is 3%) 2.1 2.3
Increase for pensions in deferment 2.9 3.3
Inflation in medical costs 6.3 6.8
The assumed margin between RPI and CPI has been reduced to 45 basis points (50
basis points in the year ended 31 March 2022), consistent with a 100 basis
point margin assumed to 2030, with a ten basis point margin assumed
thereafter. The single equivalent differential is expected to reduce over time
towards 2030. This results in an increase in retirement benefit obligations at
31 March 2023 of approximately US$2m or 0.25%.
The principal financial assumption is the real discount rate, which is the
excess of the discount rate over the rate of inflation. The discount rate is
based on the market yields on high-quality corporate bonds of a currency and
term appropriate to the defined benefit obligations. The criteria used to set
the discount rate are unchanged from the year ended 31 March 2022. The
increase in the discount rate at the balance sheet date reflects the
significant increase in UK bond yields during the year. The Experian Pension
Scheme obligations are in pounds sterling and have a maturity on average of 13
years.
If the real discount rate increased/decreased by 0.25%, the defined benefit
obligations at 31 March 2023 would decrease/increase by approximately US$22m
and the fair value of plan assets would decrease/increase by approximately
US$27m. The discount rate sensitivity has been updated to 0.25% from 0.1% to
reflect an increase in both the range of reasonably possible rates and the
estimation uncertainty for discount rates, given the increase in UK discount
rates and their volatility observed during the year.
The rates of increase for pensions in payment reflect the separate
arrangements applying to different groups of Experian's pensioners. If the
inflation rate underlying the pension increases (both in payment and in
deferment) increased/decreased by 0.1%, the defined benefit obligations at 31
March 2023 would increase/decrease by approximately US$5m.
The mortality and early retirement assumptions have been updated to reflect
the latest analysis undertaken as part of the full actuarial funding valuation
at 31 March 2022. The accounting valuation assumes that mortality will be in
line with standard tables adjusted to reflect the expected experience of the
Experian Pension Scheme membership, based on analysis carried out for the 2022
actuarial valuation. A specific allowance for anticipated future improvements
in life expectancy is also incorporated. The perpetuation of excess deaths
during 2022 is expected to be reflected in the standard UK model for projected
improvements in life expectancy, due to be published later this calendar year.
The Group has therefore applied a 4% scaling factor to its mortality
assumptions to allow for this impact on member mortality. This reduced
retirement benefit obligations at 31 March 2023 by approximately US$8m.
The Group has also considered the potential impact of climate change and, at
the present time, we do not believe that there is sufficient evidence to
require a change in the long-term mortality assumptions. We will continue to
monitor any potential future impact on the mortality assumptions used.
The other methods and assumptions used are consistent with those used in the
prior year.
Notes to the financial statements (continued)
for the year ended 31 March 2023
17. Notes to the Group cash flow statement
(a) Cash generated from operations
2023 2022
US$m US$m
Profit before tax 1,174 1,447
Share of post-tax loss of associates 17 28
Net finance expense/(income) 74 (59)
Operating profit 1,265 1,416
Profit on disposal of property, plant and equipment - (4)
Net loss on disposal of operations 1 43
Net profit on disposal of associates (1) (90)
Impairment of goodwill 179 -
Impairment of other intangible assets(1) 1 -
Amortisation and depreciation(2) 674 658
Charge in respect of share incentive plans 129 149
Decrease in working capital (note 17(b)) 30 58
Acquisition expenses - difference between income statement charge and amount 8 7
paid
Adjustment to the fair value of contingent consideration 45 26
Movement in Exceptional and other non-benchmark items included in working 15 7
capital
Movement in Exceptional items included in other intangible assets 12 -
Cash generated from operations 2,358 2,270
1. US$8m of the charge for impairment of internally generated software
assets is recorded as exceptional as it relates to restructuring activity.
2. Amortisation and depreciation includes amortisation of acquisition
intangibles of US$192m (2022: US$174m) which is excluded from Benchmark PBT.
(b) Decrease in working capital
2023 2022
US$m US$m
Trade and other receivables (171) (143)
Trade and other payables 201 201
Decrease in working capital 30 58
(c) Purchase of other intangible assets
2023 2022
US$m US$m
Databases 190 180
Internally generated software 335 236
Internal use software 38 29
Purchase of other intangible assets 563 445
(d) Cash flows on acquisitions (non-GAAP measure)
2023 2022
US$m US$m
Purchase of subsidiaries (note 22(a)) 268 706
Less: net cash acquired with subsidiaries (note 22(a)) (5) (17)
Settlement of deferred and contingent consideration 46 47
As reported in the Group cash flow statement 309 736
Acquisition expenses paid 38 40
Settlement of put options held over shares in subsidiaries 133 4
Transactions in respect of non-controlling interests - 1
Cash outflow for acquisitions (non-GAAP measure) 480 781
Notes to the financial statements (continued)
for the year ended 31 March 2023
17. Notes to the Group cash flow statement (continued)
(e) Cash outflow in respect of net share purchases (non-GAAP measure)
2023 2022
US$m US$m
Issue of ordinary shares (19) (24)
Purchase of shares by employee trusts 45 61
Purchase of shares held as treasury shares 149 109
Purchase of shares for Co-investment Plan delivery - 3
Cash outflow in respect of net share purchases (non-GAAP measure) 175 149
As reported in the Group cash flow statement:
Cash inflow in respect of shares issued (19) (24)
Cash outflow in respect of share purchases 194 173
Cash outflow in respect of net share purchases (non-GAAP measure) 175 149
(f) Analysis of cash and cash equivalents
2023 2022
US$m US$m
Cash and cash equivalents in the Group balance sheet 202 179
Bank overdrafts (4) (3)
Cash and cash equivalents in the Group cash flow statement 198 176
(g) Reconciliation of Cash generated from operations to Benchmark operating
cash flow (non-GAAP measure)
2023 2022
US$m US$m
Cash generated from operations (note 17(a)) 2,358 2,270
Purchase of other intangible assets (note 17(c)) (563) (445)
Purchase of property, plant and equipment (64) (63)
Sale of property, plant and equipment - 23
Principal lease payments (57) (57)
Acquisition expenses paid 38 40
Dividends received from associates 2 13
Cash flows in respect of Exceptional and other non-benchmark items 39 19
Benchmark operating cash flow (non-GAAP measure) 1,753 1,800
Cash flow conversion for the year ended 31 March 2023 was 98% (2022: 109%).
Benchmark free cash flow for the year ended 31 March 2023 was US$1,109m (2022:
US$1,311m).
Notes to the financial statements (continued)
for the year ended 31 March 2023
18. Net debt (non-GAAP measure)
(a) Analysis by nature
2023 2022
US$m US$m
Cash and cash equivalents (net of overdrafts) 198 176
Debt due within one year - commercial paper (109) -
Debt due within one year - lease obligations (42) (53)
Debt due after more than one year - bonds and notes (3,733) (3,903)
Debt due after more than one year - bank loans (85) (2)
Debt due after more than one year - lease obligations (105) (126)
Derivatives hedging loans and borrowings (154) (42)
(4,030) (3,950)
(b) Analysis by balance sheet caption
2023 2022
US$m US$m
Cash and cash equivalents 202 179
Current borrowings (156) (57)
Non-current borrowings (3,943) (4,039)
Borrowings (4,099) (4,096)
Total of Group balance sheet line items (3,897) (3,917)
Accrued interest reported within borrowings excluded from Net debt 21 9
Derivatives reported within Other financial assets 4 20
Derivatives reported within Other financial liabilities (158) (62)
(4,030) (3,950)
At 31 March 2023, the fair value of borrowings was US$3,826m (2022: US$4,089m)
and includes lease obligations of US$148m (2022: US$180m) recognised in
respect of right-of-use assets.
(c) Analysis of movements in Net debt
1 April Movements in the year ended 31 March 2023 31 March
2022 Net Non-cash lease obligation Principal lease payments Net share purchases Fair Exchange 2023
cash movements(1) value and other movements
flow gains/
(losses)
US$m US$m US$m US$m US$m US$m US$m US$m
Derivatives hedging loans (42) 61 - - - (76) (97) (154)
and borrowings
Borrowings (4,096) (147) (29) - - 29 144 (4,099)
Liabilities from financing activities (4,138) (86) (29) - - (47) 47 (4,253)
Accrued interest 9 12 - - - - - 21
Cash and cash equivalents 179 170 - 57 (175) - (29) 202
Net debt (3,950) 96 (29) 57 (175) (47) 18 (4,030)
1. Non-cash lease obligation movements include additions of US$39m and
disposals of US$10m.
Notes to the financial statements (continued)
for the year ended 31 March 2023
19. Undrawn committed bank borrowing facilities
2023 2022
US$m US$m
Facilities expiring in:
One to two years 365 400
Two to three years 2,050 250
Three to four years - 1,950
2,415 2,600
These facilities are at variable interest rates and are in place for general
corporate purposes, including the financing of acquisitions and the
refinancing of other borrowings.
20. Called-up share capital and share premium account
Number of shares Called-up share Share
capital premium
account
million US$m US$m
At 1 April 2021 969.6 96 1,756
Shares issued under employee share incentive plans 1.0 - 24
At 31 March 2022 970.6 96 1,780
Shares issued under employee share incentive plans 0.8 - 19
At 31 March 2023 971.4 96 1,799
21. Own shares held
Number of shares Cost
of shares
million US$m
At 1 April 2021 56.0 1,006
Purchase of shares held as treasury shares 2.7 111
Purchase of shares by employee trusts 1.7 61
Other vesting of awards and exercises of share options (3.7) (49)
At 31 March 2022 56.7 1,129
Purchase of shares held as treasury shares 4.8 149
Purchase of shares by employee trusts 1.5 45
Other vesting of awards and exercises of share options (4.0) (50)
At 31 March 2023 59.0 1,273
Own shares held at 31 March 2023 included 52.3 million shares (2022: 48.5
million) held as treasury shares and 6.7 million (2022: 8.2 million) shares
held by employee trusts.
During the year ended 31 March 2022, 6.0 million shares held as treasury
shares were transferred to an employee trust.
The total cost of own shares held at 31 March 2023 of US$1,273m (2022:
US$1,129m) is deducted from Other reserves in the Group balance sheet.
Notes to the financial statements (continued)
for the year ended 31 March 2023
22. Acquisitions
(a) Acquisitions in the year
The Group made six acquisitions during the year ended 31 March 2023, including
the acquisition on 4 April 2022 of the entire share capital of CIC Plus, LLC
and its affiliate Tayvah, LLC (together CIC Plus), a leading provider of
employer compliance management solutions, for a cash consideration of US$188m.
Goodwill of US$108m was recognised based on the fair value of the net assets
acquired of US$80m. This investment supplements our employer services offering
in the USA.
We also purchased the remaining 40% interest in the Arvato Financial Solutions
Risk Management Division, acquired in FY21, for US$133m (note 17(d)).
Net assets acquired, goodwill and acquisition consideration are analysed
below.
CIC Plus Other Total
US$m US$m US$m
Intangible assets:
Customer and other relationships 51 19 70
Software development 20 35 55
Marketing-related acquisition intangibles 1 - 1
Other non-acquisition intangibles 4 - 4
Intangible assets 76 54 130
Property, plant and equipment - 1 1
Trade and other receivables 9 4 13
Cash and cash equivalents (note 17(d)) 3 2 5
Trade and other payables (8) (3) (11)
Deferred tax liabilities - (4) (4)
Total identifiable net assets 80 54 134
Goodwill 108 72 180
Total 188 126 314
Satisfied by:
Cash and cash equivalents (note 17(d)) 188 80 268
Put options - 11 11
Contingent consideration - 35 35
Total 188 126 314
These fair values are determined by using established estimation techniques
including discounted cash flow and option valuation models, such as the
multi-period excess earnings method for customer and other relationships and
the relief-from-royalty method for software development. The most significant
assumption is related to the proportion of earnings attributable to customer
and other relationships and software development. For significant
acquisitions, we engage with third-party valuation experts to assist with this
process.
Fair values on the acquisition of CIC Plus have been finalised, other amounts
are provisional and will be finalised no later than one year after the date of
acquisition. Provisional amounts; predominantly for intangible assets, have
been included at 31 March 2023, as a consequence of the timing and complexity
of the acquisitions.
Goodwill represents the synergies, assembled workforces and future growth
potential of the acquired businesses. The goodwill in relation to CIC Plus and
one other acquisition is currently deductible for tax purposes, and
consequently no deferred tax liability has been recognised for these
acquisitions.
There have been no other material gains, losses, corrections or other
adjustments recognised in the year ended 31 March 2023 that relate to
acquisitions in the current or earlier years.
Notes to the financial statements (continued)
for the year ended 31 March 2023
22. Acquisitions (continued)
(b) Additional information
(i) Current year acquisitions
CIC Plus Other Total
US$m US$m US$m
Increase/(decrease) in book value of net assets from provisional fair value adjustments:
Intangible assets 76 54 130
Trade and other payables (3) (1) (4)
Deferred tax liabilities - (4) (4)
Increase in book value of net assets from provisional fair value adjustments 73 49 122
Gross contractual amounts receivable in respect of trade and other receivables 9 4 13
Pro-forma revenue from 1 April 2022 to date of acquisition - 6 6
Revenue from date of acquisition to 31 March 2023 32 5 37
Profit before tax from date of acquisition to 31 March 2023 2 1 3
At the dates of acquisition, the gross contractual amounts receivable in
respect of trade and other receivables of US$13m were expected to be collected
in full.
If the transactions had occurred on the first day of the financial year, the
estimated additional contribution to profit before tax would have been US$1m.
(ii) Prior years' acquisitions
US$39m of contingent consideration was settled in the year in respect of
acquisitions made in FY22. These cash flows principally relate to the
acquisitions of Tax Credit Co, LLC (TCC) and Gabi Personal Insurance Agency,
Inc. (Gabi). In addition, deferred consideration of US$4m was settled in the
year in respect of the FY22 acquisition of Employment Tax Servicing, LLC. In
the year ended 31 March 2022, US$43m was settled in respect of acquisitions
made in earlier years, principally in relation to the FY21 and FY20
acquisitions of Axesor businesses and Look Who's Charging Pty Ltd.
The Group made six acquisitions in the year ended 31 March 2022, which
included Gabi and TCC, both in the USA. A cash outflow of US$689m was reported
in the Group cash flow statement for that year, after deduction of US$17m in
respect of net cash acquired.
(iii) Post balance sheet acquisitions
On 20 April 2023, we agreed to acquire Flexpag Tecnologia e Instituição de
Pagamento S.A. (Flexpag) for R$250m (c.US$49m), and contingent consideration
based on Flexpag's profits in calendar year 2025, the fair value of which is
yet to be determined. Completion is expected in the year ending 31 March 2024.
Flexpag is a Brazilian FinTech specialising in digital payment solutions,
connecting payment systems to utilities to offer consumers a broad range of
payment methods.
The fair values of goodwill, software development, customer relationships and
other assets and liabilities in respect of these acquisitions will be reported
in the 2024 Experian Annual Report & Accounts, following completion of the
initial accounting.
Notes to the financial statements (continued)
for the year ended 31 March 2023
23. Disposal
During the year we disposed of interests in two small subsidiary undertakings
in EMEA/Asia Pacific, realising a gain on disposal of US$2m. In addition,
further costs of US$3m were incurred following the cessation of our operations
in Russia in the year ended 31 March 2022.
24. Assets and liabilities classified as held-for-sale
During the year we classified two small subsidiaries in the EMEA region, and
one subsidiary in the Asia Pacific region as held-for-sale. In the year ended
31 March 2022 the Group recorded a UK associate as held-for-sale. It is not
now anticipated that the UK transaction will complete within 12 months and
accordingly the investment has been reclassified as an associate at 31 March
2023.
The Group continues to market part of its UK property portfolio and it is
anticipated that this transaction will be completed in the year ending 31
March 2024. Any gain or loss on disposal will be recognised in that year.
2023 2022
US$m US$m
Assets classified as held-for-sale:
Investment in associate - 29
Property, plant and equipment 12 12
Trade and other receivables 4 -
Assets classified as held-for-sale 16 41
Liabilities classified as held-for-sale:
Trade and other payables (3) -
Liabilities classified as held-for-sale (3) -
25. Financial risk management
(a) Financial risk factors
The Group's activities expose it to a variety of financial risks. These are
market risk, including foreign exchange risk and interest rate risk, credit
risk and liquidity risk. The nature of these risks and the policies adopted by
way of mitigation are unchanged from those reported in the Annual Report and
Group financial statements for the year ended 31 March 2022. Full information
and disclosures were contained in that document.
(b) Analysis by valuation method for put options and items measured at fair
value
(i) At 31 March 2023
Level 1 Level 2 Level 3 Total
US$m US$m US$m US$m
Financial assets:
Non-hedging derivatives - 139 - 139
Other financial assets at fair value through profit or loss (FVPL) - - 16 16
Financial assets at fair value through profit or loss - 139 16 155
Listed and trade investments(1) 61 - 252 313
61 139 268 468
Financial liabilities:
Derivatives used for hedging - fair value hedges(2) - (124) - (124)
Non-hedging derivatives - (20) - (20)
Other liabilities at fair value through profit or loss - - (139) (139)
Financial liabilities at fair value through profit or loss - (144) (139) (283)
Derivatives used for hedging - cash flow hedge(1,2) - (24) - (24)
Options in respect of non-controlling interests - - (33) (33)
- (168) (172) (340)
Net financial assets/(liabilities) 61 (29) 96 128
1. Listed and trade investments, and derivatives designated as a cash flow
hedge, which are in a documented hedge accounting relationship, are revalued
through OCI.
2. Derivatives used for hedging are in documented hedge accounting
relationships.
Notes to the financial statements (continued)
for the year ended 31 March 2023
25. Financial risk management (continued)
(b) Analysis by valuation method for put options and items measured at fair
value (continued)
(ii) At 31 March 2022
Level 1 Level 2 Level 3 Total
US$m US$m US$m US$m
Financial assets:
Non-hedging derivatives - 69 - 69
Other financial assets at fair value through profit or loss - - 18 18
Financial assets at fair value through profit or loss - 69 18 87
Derivatives used for hedging - cash flow hedge(1) - 13 - 13
Listed and trade investments 67 - 295 362
Financial assets revalued through OCI 67 13 295 375
67 82 313 462
Financial liabilities:
Derivatives used for hedging - fair value hedges(1) - (34) - (34)
Non-hedging derivatives - (24) - (24)
Other liabilities at fair value through profit or loss - - (107) (107)
Financial liabilities at fair value through profit or loss - (58) (107) (165)
Options in respect of non-controlling interests - - (190) (190)
- (58) (297) (355)
Net financial assets 67 24 16 107
1. Derivatives used for hedging are in documented hedge accounting
relationships.
Financial assets at fair value through profit or loss are reported within
Other financial assets in the Group balance sheet. Other financial assets
include financial assets held at amortised cost of US$nil (2022: US$1m).
Contingent consideration is reported within trade and other payables in the
Group balance sheet. Put options and other financial liabilities at fair value
through profit or loss are reported within Other financial liabilities in the
Group balance sheet.
The fair values of derivative financial instruments and other financial assets
and liabilities are determined by using market data and established estimation
techniques such as discounted cash flow and option valuation models. 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 at the year end.
There have been no changes in valuation techniques during the year under
review.
The levels used in the above tables are defined in IFRS 13 'Fair Value
Measurement' and are summarised here for completeness:
· assets and liabilities whose valuations are based on unadjusted
quoted prices in active markets for identical assets and liabilities are
classified as Level 1;
· assets and liabilities which are not traded in an active market, and
whose valuations are derived from available market data that is observable for
the asset or liability, are classified as Level 2; and
· assets and liabilities whose valuations are derived from inputs not
based on observable market data are classified as Level 3.
Level 3 items principally comprise minority shareholdings in unlisted
businesses, trade investments, contingent consideration and put options
associated with corporate transactions.
Unlisted equity investments, initially measured at cost, are revalued where
sufficient indicators are identified that a change in the fair value has
occurred. The inputs to any subsequent valuations are based on a combination
of observable evidence from external transactions in the investee's equity and
estimated discounted cash flows that will arise from the investment.
Valuations of material contingent consideration, and put options associated
with corporate transactions, are based on Monte Carlo simulations using the
most recent management expectations of relevant business performance,
reflecting the different contractual arrangements in place.
There would be no material effect on the amounts stated from any reasonably
possible change in such inputs at 31 March 2023. There were no transfers
between levels during the year. In the year ended 31 March 2022 a Level 3
investment was reclassified to Level 1. Further details are provided in note
25(c).
Notes to the financial statements (continued)
for the year ended 31 March 2023
25. Financial risk management (continued)
(c) Analysis of movements in Level 3 net financial assets/(liabilities)
(i) Year ended 31 March 2023
Financial assets revalued through OCI Other financial assets at FVPL Contingent consideration Put options Total
US$m US$m US$m US$m US$m
At 1 April 2022 295 18 (107) (190) 16
Additions(1,2) 14 1 (35) (11) (31)
Disposals(4) (6) - - - (6)
Settlement of contingent consideration - - 40 - 40
Cash payment on exercise of put options(5) - - - 133 133
Adjustment to the fair value of contingent consideration(2) - - (45) - (45)
Valuation gains/(losses) recognised in the - (2) - 26 24
Group income statement(6)
Valuation losses recognised in OCI (52) - - - (52)
Currency translation gains recognised directly in OCI - - 4 9 13
Other 1 (1) 4 - 4
At 31 March 2023 252 16 (139) (33) 96
(ii) Year ended 31 March 2022
Financial assets revalued through OCI Other financial assets at FVPL Contingent consideration Put Total
options
US$m US$m US$m US$m US$m
At 1 April 2021 164 12 (66) (220) (110)
Additions(1,2) 24 8 (46) (11) (25)
Reclassification of associate to trade investment 138 - - - 138
Reclassification of Level 3 investment to Level 1(3) (30) - - - (30)
Disposals (12) - - - (12)
Settlement of contingent consideration - - 36 - 36
Cash payment on exercise of put options - - - 4 4
Adjustment to the fair value of contingent consideration(2) - - (26) - (26)
Valuation gains recognised in the - - - 29 29
Group income statement(6)
Valuation gains recognised in OCI 10 - - - 10
Currency translation gains/(losses) recognised directly in OCI (2) - (6) 8 -
Other 3 (2) 1 - 2
At 31 March 2022 295 18 (107) (190) 16
1. Additions to put options in the year ended 31 March 2023 comprised
US$11m in respect of the acquisition of APC Buró, and in the year ended 31
March 2022 included US$13m in respect of the acquisition of Servicios de
Información Avanzada Comercial Y Financiera S.A. (Sinacofi Buró).
2. Additions to contingent consideration comprised US$35m (2022: US$46m)
in respect of acquisitions. Contingent consideration in relation to the
acquisition of TCC in FY22 increased by US$49m following fair value
adjustments recognised in the year, which are determined by revenue and profit
performance up to and including FY25. This was offset by a reduction in the
fair value of contingent consideration on other acquisitions of US$4m. There
are limits in place for contingent consideration payments, including up to
US$80m in respect of TCC. Contingent liabilities are revalued at each
reporting date based on current projections of their associated targets, with
any fair value remeasurements recognised as a non-benchmark item in the Group
income statement (note 8(a)).
3. Our investment in Grab Holdings Limited was reclassified as a Level 1
investment following Nasdaq listing in the year ended 31 March 2022.
4. During the year ended 31 March 2023, we disposed of a trade investment
valued at US$6m, US$3m of the consideration is deferred.
5. The cash payment on exercise of put options in the year ended 31 March
2023, relates to the purchase of the remaining 40% stake in the Arvato
Financial Solutions Risk Management Division.
6. Movements in the present value of expected future payments for put
options are unrealised and are recognised in financing fair value
remeasurements in the Group income statement.
Notes to the financial statements (continued)
for the year ended 31 March 2023
25. Financial risk management (continued)
(d) Fair value methodology
Information in respect of the carrying amounts and the fair value of
borrowings is included in note 18(b). There are no material differences
between the carrying value of the Group's other financial assets and
liabilities not measured at fair value and their estimated fair values. The
following assumptions and methods are used to estimate the fair values:
· the fair values of receivables, payables and cash and cash
equivalents are considered to approximate to the carrying amounts;
· the fair values of short-term borrowings, other than bonds, are
considered to approximate to the carrying amounts due to the short maturity
terms of such instruments;
· the fair value of that portion of bonds carried at amortised cost is
based on quoted market prices, employing a valuation methodology falling
within Level 1 of the IFRS 13 fair value hierarchy;
· the fair value of listed investments is based on quoted market
prices, employing a valuation methodology falling within Level 1 of the IFRS
13 fair value hierarchy;
· the fair values of long-term variable rate bank loans and lease
obligations are considered to approximate to the carrying amount; and
· the fair values of other financial assets and liabilities are
calculated based on a discounted cash flow analysis, using a valuation
methodology falling within Level 2 of the IFRS 13 fair value hierarchy, apart
from the fair value of trade investments and contingent consideration which
use a valuation methodology falling within Level 3 of the IFRS 13 fair value
hierarchy.
The Group considers the impact of climate-related matters, including
legislation, on the fair value measurement of assets and liabilities. At
present, the impact of climate-related matters is not material to the
financial statements.
(e) Carrying value of financial assets and liabilities
There have been no unusual changes in business circumstances that have
affected the carrying value of the Group's financial assets and liabilities at
31 March 2023. Changes in global interest rates in the year have significantly
impacted the fair values of derivatives and borrowings and a credit of US$51m
is included in the Group income statement in respect of financing fair value
remeasurements (note 9(c)). The fair values of investments revalued through
OCI and net post-employment benefit assets have also been impacted by
macro-economic factors, and losses of US$58m and US$23m respectively are
recognised in the Group statement of comprehensive income.
26. Related party transactions
The Group's related parties were disclosed in the Group's statutory financial
statements for the year ended 31 March 2022 and there have been no material
changes during the year ended 31 March 2023.
Following the divestment of CCM in the year ended 31 March 2018, the Group
owns 23.0% of the issued share capital of Vector CM Holdings (Cayman), L.P.
(Vector). Vector completed a merger with the CM Group involving its Cheetah
Digital business on 4 February 2022. The Group no longer has significant
influence over Vector and accordingly our interest in this company was
recognised as a trade investment from that date. In the year ended 31 March
2022, a promissory note and associated interest due to Experian of US$110m
were repaid in full as a result of the merger. Interest income of US$8m was
recognised on the promissory note in that year.
Transactions with associates are made on normal market terms and in the year
ended 31 March 2023 comprised the provision and receipt of services to other
associates of US$nil (2022: US$10m) and US$7m (2022: US$7m) respectively. At
31 March 2023 and 31 March 2022, no amounts were owed from or to
associates.
The Group transacts with a number of related undertakings in connection with
the operation of its share incentive plans, pension arrangements in the UK,
the USA, Brazil, South Africa, Germany and Ireland, and the provision of
medical cover in the UK.
The assets, liabilities and expenses of the Experian UK Approved All-Employee
Share Plan and The Experian plc Employee Share Trust are included in these
financial statements.
During the year ended 31 March 2023, US$33m (2022: US$56m) was paid by the
Group to related undertakings, in connection with the provision of
post-employment pensions benefits. US$3m (2022: US$3m) was paid to Experian
Medical Plan Limited, in connection with the provision of healthcare benefits.
There were no other material transactions or balances with these related
undertakings during the current or prior year.
Notes to the financial statements (continued)
for the year ended 31 March 2023
27. Contingencies
(a) Latin America tax
As previously indicated, Serasa S.A. has been advised that the Brazilian tax
authorities are challenging the deduction for tax purposes of goodwill
amortisation arising from its acquisition by Experian in 2007. The Brazilian
courts have ultimately upheld Experian's position in respect of the tax years
from 2007 to 2012 with no further right of appeal. The Brazilian tax
authorities have raised similar assessments in respect of the 2013 to 2018 tax
years, in which approximately US$198m was claimed by Experian, and may raise
similar claims in respect of other years. The possibility of this resulting in
a liability to the Group is considered to be remote, based on the advice of
external legal counsel, success in cases to date and other factors in respect
of the claim.
A similar challenge has been raised in Colombia in respect of the 2014 and
2016 tax years, in which approximately US$4m was claimed, and similar claims
in respect of other years may be raised. We are contesting these on the basis
of external legal advice.
(b) UK marketing services regulation
We successfully appealed to the First Tier Tribunal a final enforcement notice
from the UK Information Commissioner's Office (ICO) with respect to a 2018
audit of several companies on the use of data for marketing purposes under the
EU General Data Protection Regulation (GDPR), which relates to our marketing
services activities in the UK. The ICO has subsequently applied for permission
to appeal to the Upper Tier Tribunal, during which time all requirements will
be stayed. At this stage we do not know what the final outcome will be, but if
the First Tier Tribunal judgment is overturned, it may require significant
changes to business processes in our UK marketing services business. This
business represents approximately 1% of our global revenues and we do not
expect this to result in a materially adverse financial outcome for the Group.
(c) Other litigation and claims
There continue to be an increasing number of pending and threatened claims and
regulatory actions involving the Group across all its major geographies which
are in various stages of investigation or enforcement, and which are being
vigorously defended, including from the Consumer Financial Protection Bureau
and Federal Trade Commission in the USA. The directors do not believe that the
outcome of any individual enforcement notice will have a materially adverse
effect on the Group's financial position. However, as is inherent in legal,
regulatory and administrative proceedings, there is a risk of outcomes that
may be unfavourable to the Group. In the case of unfavourable outcomes, the
Group may benefit from applicable insurance recoveries.
28. Events occurring after the end of the reporting period
Details of the second interim dividend announced since the end of the
reporting period are given in note 13(a).
On 20 April 2023, we agreed to acquire Flexpag. Further details are provided
in note 22(b)(iii).
29. Company website
A full range of investor information is available at www.experianplc.com.
Details of the 2023 Annual General Meeting (AGM), to be held in Dublin,
Ireland on Wednesday, 19 July 2023, will be given on the website and in the
notice of meeting. Information on the Company's share price is available on
the website.
30. Risks and uncertainties
Identifying and managing risk is key to our purpose and the delivery of our
strategy and objectives. All colleagues play a crucial role in managing risks,
and doing so helps us create long-term shareholder value and protect our
business, people, assets, capital and reputation.
The Board is responsible for maintaining and reviewing the effectiveness of
our risk management activities from a strategic, financial, regulatory and
operational perspective. These activities are designed to identify and manage,
rather than eliminate, the risk of failing to achieve business objectives or
strategy. The risk management process is designed to identify, assess, respond
to, report on and monitor the risks that threaten our ability to do this,
within our risk appetite.
Our risk landscape continues to change as both business and regulatory
environments evolve. In addition to known principal risks, which are
summarised below, we continue to identify and analyse emerging ones, and
discuss as appropriate in different forums.
Notes to the financial statements (continued)
for the year ended 31 March 2023
30. Risks and uncertainties (continued)
(a) Risk area - Data Loss/Misuse
Description
We hold and manage sensitive business, customer and consumer information that
increases our exposure and susceptibility to cyber attacks or other
unauthorised access to data, either directly through our online systems or
indirectly through our partners or third-party suppliers.
Potential impact
Loss or unauthorised access to sensitive business, customer or consumer data
could cause problems for consumers, result in material loss of business,
substantial legal liability, regulatory enforcement or significant harm to our
reputation. The impact of this risk, if it materialised, would typically be
felt in the short term.
Examples of control mitigation
• We deploy physical and technological security measures, combined
with monitoring and alerting for suspicious activities.
• We maintain an information security programme with strong
governance for identifying, protecting against, detecting and responding to
cyber security risks and recovering from cyber security incidents.
• We impose contractual security requirements on our partners and
other third parties that use our data, complemented by periodic reviews of
third-party controls.
• We maintain insurance coverage, where feasible and appropriate.
(b) Risk area - Macroeconomic
Description
We operate globally and our results could be affected by global, regional or
national changes in fiscal or monetary policies.
A substantial change in credit markets in the USA, Brazil or the UK could harm
our financial performance and growth potential in those countries.
A substantial or sustained rise in US, EU or UK interest rates could impact
lending and consumer spending. It could also increase our future cost of
borrowings.
We present our Group financial statements in US dollars. However, we transact
business in a number of currencies. Changes in other currencies relative to
the US dollar affect our financial results.
Potential impact
The US, Brazil and UK markets are significant contributors to our revenue. A
reduction in one or more of these markets for consumer and business credit
services could reduce our revenue and profit.
We benefit from the strengthening of currencies relative to the US dollar and
are adversely affected by currencies weakening relative to it.
We have outstanding debt denominated principally in euros, pounds sterling and
US dollars. As this debt matures, we may need to replace it with borrowings at
higher interest rates.
The impact of this risk, if it materialised, would typically be felt in the
short to long term.
Examples of control mitigation
• We have a diverse portfolio by region, product, sector and client.
We provide cyclical and counter-cyclical products and services.
• We convert cash balances in foreign currencies into US dollars.
• We fix the interest rates on a proportion of our borrowings.
• We review contingency plans in our key markets for specific
potential responses to evolving financial conditions.
Notes to the financial statements (continued)
for the year ended 31 March 2023
30. Risks and uncertainties (continued)
(c) Risk area - Legislative/regulatory change and compliance
Description
We hold and manage sensitive consumer information and we must comply with many
complex privacy and consumer protection laws, regulations and contractual
obligations.
New laws, new or novel interpretations of existing laws, changes to existing
regulations and heightened regulatory scrutiny, will also affect how we
operate. For example, regulatory interpretation of complex, principles-based
privacy regulations could affect how we collect and process information for
marketing, risk management and fraud detection.
Potential impact
Non-compliance may result in material litigation, including class actions, as
well as regulatory actions. These could result in civil or criminal liability
or penalties, damage to our reputation or significant changes to parts of our
business. We may also suffer increased costs or reduced revenue resulting from
modified business practices, adopting new procedures, self-regulation or
litigation or regulatory actions resulting in liability, fines or changes in
our business practices. The impact of this risk, if it materialised, would
typically be felt in the short to long term.
Examples of control mitigation
• We maintain a compliance management framework that includes
defined policies, procedures and controls for Experian employees, business
processes, and third parties such as our data resellers.
• Our global Compliance team has region-specific regulatory
expertise and works with our businesses to identify and adopt balanced
compliance strategies.
• We assess the appropriateness of using data in new and changing
products and services.
• We operate a horizon scanning process to identify potential
changes in laws and regulation and assess their impact.
• Our Government Affairs strategic plan and policy-influencing
activity seeks to respond to legislative proposals and influence their outcome
to mitigate impacts on Experian strategy.
• We vigorously defend all pending and threatened claims, employing
internal and external counsel to manage and conclude such proceedings
effectively.
(d) Risk area - Resiliency
Description
Delivery of our products and services depends on a number of key IT systems
and processes that expose our clients, consumers and businesses to serious
disruption in the event of systems or operational failures.
Potential impact
Failure to manage service availability and enterprise resiliency and its
impact on clients and / or consumers within established risk tolerance levels
could have a materially adverse effect on our business, financial performance,
financial condition and reputation. The impact of this risk, if it
materialised, would typically be felt in the short term.
Examples of control mitigation
• Our operations are designed to avoid material and sustained
disruption to our businesses, clients and consumers.
• We design applications to be resilient and with a balance between
longevity, sustainability and speed.
• We maintain a global integrated business continuity framework that
includes industry-appropriate policies, procedures and controls for all our
systems and related processes, as well as ongoing review, monitoring and
escalation activities.
• We maintain back-up data centres.
(e) Risk area - Business conduct
Description
At Experian, we place the utmost importance on operating with honesty,
integrity and high ethical standards. And we are committed to maintaining the
highest level of professionalism in the conduct of our business.
Potential impact
Failure to conduct our business operations in an appropriate manner could
adversely affect our clients, consumers or counterparties. The impact of this
risk, if it materialised, would typically be felt in the short term.
Notes to the financial statements (continued)
for the year ended 31 March 2023
30. Risks and uncertainties (continued)
(e) Risk area - Business conduct (continued)
Examples of control mitigation
• We enforce our Global Code of Conduct, Anti-Corruption Policy, and
Gifts and Hospitality Policy. If we believe employees or suppliers are not
following our conduct standards, we will investigate thoroughly and take
disciplinary action where appropriate.
• Experian operates a Confidential Helpline for anyone who needs to
raise a concern about our conduct. The hotline is managed by Global Internal
Audit.
(f) Risk area - Talent acquisition and retention
Description
Our success depends on our ability to attract, motivate and retain key talent
while also building future leadership.
Potential impact
Not having the right people could materially affect our ability to innovate
our products, service our clients and grow our business. The impact of this
risk, if it materialised, would typically be felt in the medium term.
Examples of control mitigation
• In every region, we have ongoing programmes for recruitment,
personal and career development, and talent identification and development.
• As part of our strategy, we conduct periodic employee surveys. We
track progress on our action plans.
• We offer competitive compensation and benefits, and review them
regularly.
• We monitor attrition rates, with a focus on individuals designated
as high talent or in strategically important roles.
(g) Risk area - Competition
Description
We operate in dynamic markets such as business and consumer credit
information, decisioning software, fraud, marketing, and consumer services.
Our competitive landscape is still evolving, with traditional players
reinventing themselves, emerging players investing heavily and new entrants
making commitments in new technologies or approaches to our markets. There is
a risk that we will not respond adequately to such disruptions, or that our
products and services will fail to meet changing client and consumer
preferences.
Potential impact
Price reductions may reduce our margins and financial results. Increased
competition may reduce our market share, harm our ability to obtain new
clients or retain existing ones, affect our ability to recruit talent, and
influence our investment decisions. We might also be unable to support changes
in the way our businesses and clients use and purchase information, affecting
our operating results. The impact of this risk, if it materialised, would
typically be felt in the long term.
Examples of control mitigation
• We continue to research and invest in new data sources, analytics,
technology, capabilities and talent to pursue our strategic plan.
• We continue to develop innovative products that use our scale and
expertise and allow us to deploy capabilities in new and existing markets and
geographies.
• We use rigorous processes to identify and select our development
investments, so we can efficiently and effectively introduce new products and
solutions to the market.
• Where appropriate, and available, we make acquisitions, minority
investments and enter into strategic alliances to acquire new capabilities and
enter into new markets.
Notes to the financial statements (continued)
for the year ended 31 March 2023
30. Risks and uncertainties (continued)
(h) Risk area - Investment outcomes
Description
We critically evaluate, and may invest in, equity investments and other growth
opportunities, including internal performance improvement programmes. To the
extent invested, any of these may not produce the desired financial or
operating results.
Potential impact
Failure to successfully implement our key business strategies could have a
materially adverse effect on our ability to achieve our growth targets.
Poorly executed business acquisitions or partnerships could result in material
loss of business, increased costs, reduced revenue, substantial legal
liability, regulatory enforcement actions and significant harm to our
reputation.
The impact of this risk, if it materialised, would typically be felt in the
long term.
Examples of control mitigation
• We carry out comprehensive business reviews.
• We perform comprehensive due diligence and post-investment reviews
on acquisitions and investments.
• We prioritise our activities within integration plans to ensure we
target first the most significant gaps to Experian policy.
• We employ a robust capital allocation framework.
• We design our incentive programmes to optimise shareholder value
through delivery of balanced, sustainable returns and a sound risk profile
over the long term.
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, the financial
statements are prepared in accordance with the applicable set of accounting
standards, give a true and fair view of the assets, liabilities, financial
position and profit of the Company and the Group taken as a whole; and the
Strategic report contains 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, which is included in note 30.
The names and functions of the directors of Experian plc in office as at 17
May 2022 were listed in the Experian Annual Report 2022. On 21 July 2022,
Kerry Williams, George Rose and Deirdre Mahlan retired as directors of
Experian plc, in accordance with the previously announced intention. Craig
Boundy was appointed as a director of Experian plc on that date. Dr Ruba Borno
stepped down as a director of Experian plc on 31 January 2023.
Kathleen DeRose, Louise Pentland and Esther Lee were appointed as new
independent non-executive directors of Experian plc on 1 November 2022, 1
November 2022 and 31 March 2023 respectively.
A list of current directors is maintained on the Company website at
www.experianplc.com (http://www.experianplc.com) .
By order of the Board
Charles Brown
Company Secretary
16 May 2023
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