REG - Experian plc - Half-year Report
16/11/2022 07:00
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RNS Number : 5255G Experian plc 16 November 2022
news
release
Strong delivery in H1 driven by new products, new business wins and consumer
expansion
7am, 16 November 2022 ─ Experian plc, the global information services
company, today issues its financial report for the six months ended 30
September 2022.
Brian Cassin, Chief Executive Officer, commented:
"We delivered another strong performance in H1 driven by new products, new
business wins and consumer expansion. Total revenue growth from ongoing
activities was 7% at actual exchange rates and 9% at constant exchange rates.
Organic revenue growth was 8%. While we expect economic conditions to be
tougher over the balance of the year, and face some stronger comparables in
Q3, our full year expectations are unchanged. We expect organic revenue growth
of between 7-9%, total revenue growth of between 8-10% and modest margin
accretion, all at constant exchange rates and on an ongoing basis.
"With many households and businesses facing a difficult period of rising costs
in the coming months, we will also continue to push ahead with our mission to
help millions of people improve their financial health and save money."
Benchmark and Statutory financial highlights
2022 2021 Actual rates growth % Constant rates growth % Organic growth %(2)
US$m
US$m
Benchmark¹
Revenue - ongoing activities(3) 3,233 3,026 7 9 8
Benchmark EBIT - ongoing activities(3,4) 881 813 8 8 n/a
Total Benchmark EBIT 873 806 8 8 n/a
Benchmark EPS USc 65.4 USc 61.7 6 6 n/a
Statutory
Revenue 3,247 3,061 6 n/a n/a
Operating profit 513 702 (27) n/a n/a
Profit before tax 517 654 (21) n/a n/a
Basic EPS USc 33.5 USc 56.5 (41) n/a n/a
First interim dividend USc 17.0 USc 16.0 6 n/a n/a
1. See Appendix 1 (page 15) and note 5 to the condensed interim financial
statements for definitions of non-GAAP measures.
2. Organic revenue growth is at constant currency.
3. Revenue and Benchmark EBIT for the six months ended 30 September 2021
have been re-presented for the reclassification to exited business activities
of certain Business-to-Business (B2B) and Consumer Services businesses, detail
is provided on page 12 and in notes 6(a) and 7 to the condensed interim
financial statements.
4. See page 16 for reconciliation of Benchmark EBIT from ongoing
activities to Profit before tax.
Highlights
· A good half of strategic and financial progress. Q2 organic
revenue growth was 8%, to give 8% for the half, with selective acquisition
in-fills taking total revenue growth from ongoing activities to 9% at constant
exchange rates.
· Consumer Services organic revenue up 12%, as we address new value
pools with broader propositions, serving 145 million free members, up 11
million over the past six months.
· B2B organic revenue growth of 7% supported by expanded data
assets, enhanced analytics, wider adoption of our new platforms, and
addressing new client segments.
· Significant expansion in Latin America, and good performances
across North America and the UK and Ireland (UK&I).
· Plan to deliver enhanced focus and improved operating performance
in key EMEA/Asia Pacific markets is well under way. Started phased exit from
identified markets. Group revenue and Benchmark EBIT are re-presented as a
result of these planned market exits.
· Benchmark EBIT rose 8% to US$873m. Ongoing Benchmark EBIT margin
of 27.3%, compared to H1 FY22 reported margin of 26.3% and re-presented
prior-year comparative margin of 26.9%.
· Statutory profit before tax of US$517m down from US$654m,
predominantly due to a non-cash charge for the impairment of goodwill of
US$152m in EMEA, and an increase to the fair value of contingent
consideration. Basic EPS down from USc 56.5 to USc 33.5 reflecting the lower
profit before tax and an increased tax charge.
· First interim dividend up 6% to 17.0 US cents per ordinary share.
Experian
Nadia Ridout-Jamieson Investor queries +44 (0)20 3042 4200
Gerry Tschopp Media queries
Tulchan
Graeme Wilson, Louise Male and Guy Bates +44 (0)20 7353 4200
There will be a presentation today at 9.30am (UK time) to analysts and
investors via conference call. 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 third quarter trading for FY23 on 17 January 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 the risk section on page 14 and note 26 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 21,700 people operating across 30 countries and every day we're
investing in new technologies, talented people, and innovation to help all our
clients maximise every opportunity. 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.
Part 1 - Chief Executive Officer's review
Experian has started the year well and we are making good progress, both
strategically and financially. In the first half of the year, we delivered
revenue growth from ongoing activities of 9% at constant currency, while
organically we grew 8%. This is sustained by our investment in people, data,
new products and in our technology platforms. Our performance is a great
credit to our 21,700 people around the world.
All regions delivered revenue growth in H1. Growth in Latin America has been
outstanding, and we are making progress with the repositioning of EMEA/Asia
Pacific. Turning to our business activities, we now reach 145 million free
consumer members across our three largest markets, up 19% year-on-year, and we
continue to drive towards our ambition of creating the world's most inclusive
financial platform. Consumer Services is delivering strong growth as we
address this opportunity. Our B2B activities have been strong, reflecting good
demand for our data, analytical insights and value-added products as companies
invest in digitising their businesses.
Like all businesses, our financial performance depends to a certain extent on
macroeconomic factors, and we are monitoring the headwinds in the global
economy and the growing pressures on consumers and businesses as they deal
with higher inflation and rising costs. We have a key role to play in helping
our communities deal with these pressures by providing guidance and tools
which help consumers and businesses manage their finances and save money. As a
business, we also have a long track record of resilience which will help us to
weather short-term uncertainties. We are very confident that the investments
we are making will sustain our growth outlook over the medium term and will
help us to unlock the tremendous opportunities that lie ahead of us.
First-half financial highlights
· Total revenue growth from ongoing activities was 7% at actual
exchange rates and 9% at constant currency. Organic revenue growth was 8%.
Organic revenue growth is determined on a constant currency basis and for
ongoing activities.
· By quarter, organic revenue growth was 8% in Q1 and 8% in Q2.
· We delivered good organic revenue growth across our three largest
regions, up 8% in North America, 18% in Latin America and 5% in UK and Ireland
(UK&I).
· We have made good progress towards repositioning EMEA/Asia
Pacific, where organic revenue growth was 4%. We are focusing on key
geographies and implementing a programme to reduce regional overheads and exit
sub-scale activities. We expect to close or dispose operations in a number of
countries, accounting for revenue of US$67m and Benchmark EBIT of US$(7)m in
the full year ended 31 March 2022. Following a number of closures, revenue and
Benchmark EBIT for the first half of FY23 for exited activities was US$14m and
US$(8)m respectively. We have re-presented a number of comparative values in
our condensed interim financial statements for ongoing activities, with a
reconciliation included on page 12.
· B2B organic revenue growth was 7%, reflecting strength in data,
strong demand for analytics and platforms and successful expansion into new
market segments.
· Consumer Services delivered organic revenue up 12%. This reflects
growth in our membership base, ever-more valuable relationships with our
members and the expansion of our ecosystem of consumer offers.
· Benchmark EBIT was up 8% at both constant and actual exchange
rates.
· Our Benchmark EBIT margin for ongoing activities was 27.3%. This
compared to the FY22 reported margin of 26.3% and a re-presented prior-year
comparative margin of 26.9%. The currency exchange benefit was 70 basis
points.
· We delivered growth in Benchmark earnings per share of 6% at both
constant and actual exchange rates. Basic EPS was USc 33.5 (2021: USc 56.5),
predominantly due to a goodwill impairment in EMEA of US$152m due to higher
interest rates and macroeconomic weakness in our European markets, and an
increase to the fair value of contingent consideration.
· Cash flow conversion of Benchmark EBIT into Benchmark operating
cash flow was 88%, in our seasonally weaker half of the year for cash flow
generation. Benchmark operating cash flow was US$0.8bn, up 7% at actual
exchange rates.
· We ended the period with Net debt to Benchmark EBITDA of 1.9x,
compared to our target range of 2.0-2.5x. Our financial position is strong,
with no debt refinancing due until September 2024 and over 90% of our current
debt at fixed interest rates for the next two years.
B2B organic revenue growth was 7%:
· We delivered organic growth in Data of 6%. North America
delivered a strong performance, with growth in core bureau (excluding
mortgage), verification services, automotive and targeting. We also benefitted
from the uptake of positive data attributes and scores in Brazil. Ascend
implementations continue to grow.
· In Decisioning, where organic revenue rose 8%, we secured new
wins for our cloud-enabled decisioning platforms, as well as for fraud and
identity management and for analytics. Health performed well.
Consumer Services organic revenue growth was 12%:
· We now have 145 million free consumer memberships across our
three largest markets, up by 23 million year-on-year.
· We delivered double-digit revenue growth in North America and
Brazil, while UK&I was flat.
Other financial developments
Central Activities decreased from US$82m to US$56m in the six months ended 30
September 2022. This reflected one-off costs recorded in the prior year
related to a catch up in our incentive programme and a favourable foreign
exchange movement.
Benchmark PBT was US$811m, up 8% at actual exchange rates, after a higher net
interest expense of US$62m (2021: US$55m). Benchmark net finance expense
increased by US$7m, reflecting increasing interest rates on short term debt.
For FY23, we continue to expect net interest expense to be around US$120-125m.
The Benchmark tax rate was 26.0% (2021: 24.8%). For FY23, we continue to
expect a rate of around 26% (FY22: 25.7%), taking into account expected profit
mix for the year.
Our Benchmark EPS was USc 65.4, an increase of 6% at both constant and actual
exchange rates. The weighted average number of ordinary shares (WANOS) remains
at 914m. For FY23, we expect WANOS of circa 914m.
Non-benchmark items:
· Statutory PBT was US$517m, down US$137m, as a result of increased
non-benchmark costs.
· Macroeconomic conditions have contributed to a non-cash
impairment of goodwill of US$152m partially offset by a gain on financing fair
value remeasurements of US$59m.
· We have incurred a charge of US$66m 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, we have incurred costs of
US$28m in the half, including US$20m of restructuring and US$8m of onerous
global support costs for exited businesses.
Reconciliation of statutory to Benchmark measures for the six months ended 30
September 2022
Statutory Non-benchmark and other items Benchmark
Investment- Goodwill impairment Amortisation of acquisition intangibles Non-cash financing items Exceptional items(2)
related items(1)
US$m US$m US$m US$m US$m US$m US$m
3,233 - - - - - 3,233 Ongoing
14 - - - - - 14 Exited
Revenue 3,247 - - - - - 3,247 Revenue
521 90 152 93 - 25 881 Ongoing
(8) - - - - - (8) Exited
Operating profit 513 90 152 93 - 25 873 Benchmark EBIT
Profit before tax 517 89 152 93 (65) 25 811 Benchmark PBT
Basic EPS USc 33.5 9.6 16.6 7.5 (5.7) 3.9 65.4 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 condensed interim
financial statements.
Foreign exchange translation was neutral to Benchmark EPS. For FY23, we now
expect a foreign exchange translation effect of circa -3% impact on revenue,
flat on Benchmark EBIT and circa +60 basis points on Benchmark EBIT margin,
assuming recent foreign exchange rates prevail.
Capital allocation and liquidity
· Cash generation was good with 88% conversion of Benchmark EBIT
into Benchmark operating cashflow (2021: 89%). Benchmark operating cash flow
was US$0.8bn, up 7% at actual exchange rates. The increase is due to the mix
of growth, strong control of working capital and some phasing.
· 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 FY23 we
continue to expect capital expenditure to represent circa 9% of total revenue.
· We invested US$287m through acquisitions and US$7m of 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 first interim dividend of 17.0 US cents per
share, up 6%. This will be paid on 3 February 2023 to shareholders on the
register at the close of business on 6 January 2023.
· We have executed a net US$113m of our FY23 share repurchase
programme, which mainly offsets deliveries under employee share plans.
· Our bonds, including derivatives, totalled US$3.8bn as at 30
September 2022 and had an average remaining tenor of six years. Undrawn
committed bank borrowing facilities were US$2.4bn as at 30 September 2022
(2021: US$2.4bn).
· At 30 September 2022, Net debt to Benchmark EBITDA was 1.9x,
compared to our target leverage range of 2.0-2.5x. We have no refinancing
commitments until September 2024. Over 90% of our current debt is at fixed
interest rates for the next two years and 60% fixed for at least six years.
Environmental, Social and Governance (ESG)
· More than 11 million US consumers have now connected to Experian
Boost, helping over eight million to improve their credit score. The most
recent enhancement allows consumers to add rental payments to their credit
file helping more people improve their credit score. We were pleased that
Experian Boost was recognised in Fast Company's 2022 World Changing Ideas
Awards.
· Since the launch of Experian Go in January, over 90,000 'credit
invisible' consumers in the US have connected to the platform and created new
credit profiles.
· Experian was certified as a Great Place to Work in 22 countries,
with over 90% of participating employees agreeing that people are treated
fairly regardless of their sexual orientation, race, age and gender, 89%
agreeing that Experian makes the workplace accessible for them, and 85%
agreeing that Experian is a great place to work.
· We launched a multi-year Diversity, Equity and Inclusion (DEI)
learning plan which includes customised learning this year for our Group
Operating Committee, their leadership teams, and 4,000 people leaders
globally. This will be rolled out globally to all employees next year.
· Following two recent appointments, our Board is now comprised of
45% women and 73% independent members (including the Chair). Our Board meets
the recommendations of both the FTSE Women Leaders Review on gender diversity
and the Parker Review on ethnic diversity.
· Experian is committed to helping tackle climate change and
reducing our impact on the environment. We continue to make progress and since
the FY22 year-end have increased our use of renewable electricity from 32% to
60%.
Part 2 - Regional highlights for the six months ended 30 September 2022
Year-on-year % change in organic¹ revenue - for the six months ended 30 Benchmark
September 2022
EBIT
margin²
% of Group revenue³ Data Decisioning B2B Consumer Services Total Total
North America 68 5 7 5 12 8 33.8%
Latin America 14 15 21 16 29 18 27.2%
UK and Ireland 12 9 4 7 0 5 19.6%
EMEA/Asia Pacific 6 2 7 4 n/a 4 (2.0)%
Total Global 100 6 8 7 12 8 27.3%
1. At constant exchange rates.
2. At actual exchange rates.
3. Percentage of Group revenue from ongoing activities calculated
based on FY23 H1 revenue at actual exchange rates.
North America
We delivered strong growth in North America. Revenue was US$2,204m, with total
and organic revenue growth of 8%. Acquisitions included CIC Plus, in
employment services, and Gabi, in Consumer Services.
In B2B, organic revenue growth was 5%. Data and Decisioning revenues have
performed strongly, excluding mortgage, reflecting new business progress and
new product contributions. While some clients have tightened criteria for
lending into certain customer segments, bureau volume activity has remained
relatively strong reflecting ongoing acquisition and prospecting activity by
Tier One clients and the addition of new client mandates to our mix. Our
clients also remain focused on accelerating their shift to digital platforms
to remove cost and manage higher inflation. We are catering to this by
expanding our data assets, providing new ways to analyse trends through
scores, attributes and models, and with value-added platforms that assist
automation. This has resulted in further growth from Experian Ascend, growing
success of our Experian PowerCurve platform in the mid-market and continued
growth across fraud, identity management and analytics. We also continue to
make excellent progress in income and employment verification services, where
we are adding new clients and where our record count has grown to 43 million.
Our Automotive, Targeting and Health verticals also performed well. Automotive
performance was solid, reflecting some market recovery and good performance by
key propositions such as our Experian Marketing Engine. Targeting also
performed strongly, with growth across digital activation and identity
management. In Health, we saw strong demand for solutions that drive digital
patient interactions and payment certainty, offsetting reduced demand for
COVID-19 linked products.
Consumer Services delivered organic revenue growth of 12%. We introduced
several new consumer offers in the half, helping us to expand our audience,
further engage our membership base and diversify our sources of revenue.
Memberships have grown to 57 million, up by 10 million year-on-year. Exciting
new features include further ways to add data for rental payments via Experian
Boost, which could help millions of renters in the USA to access credit at
more affordable rates. We also introduced new ways to help our members save
money through a bill negotiation feature that enables consumers to determine
if they are overpaying on eligible bills. We have brought to market a new way
for consumers to take the hassle out of shopping for car insurance in our bid
to re-invent the insurance comparison experience in the USA. Taken together,
these add to our revenue potential while also diversifying our business model.
While lenders have become more selective in their acquisition strategy, our
credit marketplace has grown strongly and we are adding new sources of revenue
via our digital insurance agency. As expected, premium revenue increased
modestly as we lap strong prior-year comparables, and more recently, we have
seen early signs of improved premium membership enrolments.
Benchmark EBIT was up 1% to US$745m, suppressed by the ongoing mortgage drag,
growth investments in verification services and our insurance marketplace, as
well as the changing business mix due to the higher growth of Consumer
Services compared to our B2B activities. Benchmark EBIT margin was 33.8%, down
240 basis points, due to the aforementioned factors.
Latin America
Latin America has performed strongly, delivering revenue of US$449m, with
organic revenue growth of 18% and total revenue growth at constant currency of
22%. Acquisitions contributing to our performance included Sinacofi, our new
bureau in Chile, and PagueVeloz, which adds to our Consumer Services
activities in Brazil.
B2B organic revenue growth was 16%.
Credit markets in Brazil are undergoing significant change brought about by
regulatory reforms. These are expanding access to affordable credit for
consumers and small and medium enterprises (SMEs). We are at the centre of
this change as demand grows for alternative ways to analyse and manage credit
risk, and we are investing to create completely new markets. Since positive
data use was enacted, we have launched over 190 positive data products and
features, which include enhanced scores and data attributes, and are
successfully introducing Experian Ascend and Experian One, our credit risk
platforms. We have also developed new products specifically tailored to
address high growth segments of the economy, including FinTechs and
agricultural lending. We are expanding our fraud prevention capabilities to
position ourselves as a one-stop shop to help clients deal with the growing
frequency and complexity of online fraud, and we are developing new
propositions which will help us address the opportunities emerging from the
Central Bank-sponsored Open Receivables initiative, which will help SMEs to
use trade receivables as collateral for credit.
Spanish Latin America also performed strongly. Our global platforms have
become a critical growth enabler for our Spanish Latin America business. As
our bureau presence grows, we are combining the power of our data assets and
our advanced analytics and platforms such as Experian Ascend, to grow our
position with clients and expand into new areas.
Consumer Services delivered organic revenue growth of 29%. Our ambition in
Brazil is to provide credit access to all and we continue to make good
progress towards this goal. We added 11 million consumer memberships
year-on-year to take our total free membership base to 76 million. Our debt
resolution service, Limpa Nome, has performed well as new partners joined the
platform, increasing the number of lenders consumers can renegotiate their
debts with. Our premium proposition performed well, with a good response to
our new 'lock/unlock' feature, which helps consumers manage their identity
online, and we are at the early stages of developing an e-wallet payment
service.
Benchmark EBIT in Latin America was US$122m, up 38% at constant exchange
rates. The Benchmark EBIT margin from ongoing activities at actual exchange
rates was 27.2%, up by 320 basis points. Progress reflected revenue
acceleration and improving margin in Consumer Services as the business scales,
even as we invested in developing new market opportunities.
UK and Ireland
Against a weakening macroeconomic backdrop, the UK and Ireland delivered a
good performance overall. Revenue was US$378m. Total revenue growth was 6% and
organic revenue growth was 5%, both at constant exchange rates.
B2B was resilient in H1, delivering organic revenue growth of 7%, with
particular strength in our core bureau activities, analytics and identity
management. More recently, volatility in UK economic policy has led to some
changes in client behaviour, with lenders generally becoming more focused on
risk-based analysis and adjusting their criteria for new customer acquisition.
In financial services, we have seen increased demand for capabilities such as
economic-change analytics, affordability analysis and detailed customer
segmentation analysis. Amongst our utility and energy clients, we see greater
demand for analytics which reveal the impact of energy price increases on
households. In telecommunications, focus has shifted to our debt management
capabilities. As we support our clients in these countercyclical activities,
we expect to sustain solid growth in UK&I B2B revenue over the balance of
the year, assisted also by the recent strength of our new business
performance. We also continue to invest in our strategic initiatives. We have
invested in, built and launched new income verification capabilities,
beginning with data partnerships with large UK payroll providers. We have made
a rapid start, securing access to 20m UK Pay As You Earn (PAYE) records
representing 70% of the UK PAYE workforce. We have also commenced the UK&I
implementation of our Group-wide technology migration initiative.
Organic revenue in Consumer Services was flat, with strong growth in
transaction volumes across our credit matching marketplace, offset by
moderation in our premium subscription services as we lapped a strong prior
year comparable. Free memberships were 12m.
Benchmark EBIT from ongoing activities was US$74m, down 3% at constant
exchange rates. The Benchmark EBIT margin from ongoing activities was 19.6%
(2021: 21.1%). The reductions reflect start-up investment to support our
income and employment verification initiative, the commencement of the
implementation of our technology migration plan for the UK&I and more
subdued profitability in Consumer Services.
EMEA/Asia Pacific
In EMEA/Asia Pacific, revenue from ongoing activities was US$202m, with both
total and organic revenue growth at constant exchange rates of 4%.
We are benefitting from higher bureau volumes in Italy, new business deals in
Australia and New Zealand, and Turkey, and strong growth across the board in
India.
We are executing on a plan to focus our EMEA/Asia Pacific operations to take
advantage of scale and drive more profitable growth. As part of this plan, we
will focus on markets where we can drive scale. We have made good progress in
the first phase of implementation, having merged the two operating regions
under a single leadership team, streamlined functional areas and identified
non-core activities to exit. We expect to close or dispose operations in a
number of countries and have commenced this process. In the full year ended 31
March 2022, the non-core markets accounted for revenue of US$67m and Benchmark
EBIT of US$(7)m. In the period ended 30 September 2022, the non-core markets
accounted for revenue of US$14m and Benchmark EBIT of US$(8)m. Due to higher
interest rates and macroeconomic weakness in our European markets we have
impaired goodwill in EMEA by US$152m.
In the next phase of this process, we will focus on realising the full
potential of the region by leveraging core Experian capabilities, including
Ascend, Experian One, Open Banking, value-added services and fraud and
identity management. We expect this to lead to growth and margin accretion
over the medium term.
Our actions have led to an improved Benchmark EBIT trajectory, which for
ongoing activities was US$(4)m, up from US$(15)m in the previous period. The
Benchmark EBIT margin for ongoing activities also improved to (2.0)% from
(6.8)%.
FY23 modelling considerations
Organic revenue growth 7-9%
Acquisitions¹ 1% contribution to growth
Benchmark EBIT margin¹ Modest margin improvement at constant exchange rates for ongoing activities;
+40 basis points for divestment and closures
Foreign exchange c.-3% on revenue
Flat on Benchmark EBIT
c.+60 basis points on Benchmark EBIT margin
Net interest c.US$120-125m
Benchmark tax rate c.26%
WANOS² 914m
Capital expenditure c.9% of revenue
OCF³ conversion >90%
Share repurchases US$175m
1. Constant exchange rates.
2. Weighted average number of shares.
3. Benchmark operating cash flow.
Group financial results
Business mix including % change in organic revenue year-on-year for the six
months ended 30 September 2022
Segment Business unit % of Group revenue¹ Organic revenue growth %²
Q1 Q2 H1
North America 68% 7% 8% 8%
Data CI / BI bureaux 25% 3% 2% 3%
- CI / BI bureaux, excluding mortgage 22% 11% 10% 11%
- Mortgage 3% (31)% (38)% (35)%
Automotive 5% 4% 11% 8%
Targeting 3% 11% 16% 13%
Decisioning Health 8% 5% 8% 7%
DA / Other 4% 7% 9% 8%
Consumer Consumer Services 23% 13% 11% 12%
Latin America 14% 18% 18% 18%
Data CI / BI bureaux 9% 14% 15% 15%
Other 0% 5% 42% 24%
Decisioning DA / Other 3% 20% 22% 21%
Consumer Consumer Services 2% 42% 18% 29%
UK and Ireland 12% 5% 6% 5%
Data CI / BI bureaux 5% 9% 10% 10%
Targeting / Auto 1% 3% 3% 3%
Decisioning DA / Other 3% 2% 6% 4%
Consumer Consumer Services 3% 0% 0% 0%
EMEA/Asia Pacific(3) 6% 3% 4% 4%
Total global 100% 8% 8% 8%
1. Percentage of Group revenue from ongoing activities calculated based on
FY23 H1 revenue at actual exchange rates.
2. Ongoing activities, at constant exchange rates.
3. Organic growth rates for EMEA/Asia Pacific have been re-presented for
the reclassification to exited business activities of certain B2B businesses.
CI = Consumer Information, BI = Business Information, DA = Decision Analytics.
Revenue by region
Six months ended 30 September 2022 2021¹ Growth %
US$m US$m
Total at actual exchange rates Total at constant exchange rates Organic at constant exchange rates
North America
Data 1,071 1,016 5 5
Decisioning 403 376 7 7
Business-to-Business 1,474 1,392 6 5
Consumer Services 730 645 13 12
Total ongoing activities 2,204 2,037 8 8 8
Exited business activities - -
Total North America 2,204 2,037
Latin America
Data 296 249 17 15
Decisioning 83 67 22 21
Business-to-Business 379 316 18 16
Consumer Services 70 46 50 29
Total ongoing activities 449 362 24 22 18
Exited business activities - -
Total Latin America 449 362
UK and Ireland
Data 186 194 10 9
Decisioning 105 115 4 4
Business-to-Business 291 309 8 7
Consumer Services 87 99 0 0
Total ongoing activities 378 408 (7) 6 5
Exited business activities - -
Total UK and Ireland 378 408
EMEA/Asia Pacific
Data 149 163 2 2
Decisioning 53 56 7 7
Total ongoing activities 202 219 (8) 4 4
Exited business activities 14 35
Total EMEA/Asia Pacific 216 254
Total revenue - ongoing activities 3,233 3,026 7 9 8
Total revenue - exited business activities 14 35
Revenue 3,247 3,061 6 8 7
1. The results for the six months ended 30 September 2021 have been
re-presented for the reclassification to exited business activities of certain
B2B businesses, detail is provided on page 12 and in notes 6(a) and 7 to the
condensed interim financial statements.
See Appendix 1 (page 15) and note 5 to the condensed interim financial
statements for definitions of non-GAAP measures.
See Appendix 3 (page 16) for analyses of revenue, Benchmark EBIT and Benchmark
EBIT margin from ongoing activities by business segment.
Income statement, earnings and Benchmark EBIT margin analysis
Six months ended 30 September 2022 2021¹ Growth %
US$m US$m
Total at actual exchange rates Total at constant exchange rates
Benchmark EBIT by geography
North America 745 737 1
Latin America 122 87 38
UK and Ireland 74 86 (3)
EMEA/Asia Pacific (4) (15) 71
Benchmark EBIT before Central Activities 937 895 5 6
Central Activities - central corporate costs (56) (82)
Benchmark EBIT from ongoing activities 881 813 8 8
Exited business activities (8) (7)
Benchmark EBIT 873 806 8 8
Net interest (62) (55)
Benchmark PBT 811 751 8 7
Exceptional items (27) 5
Impairment of goodwill (152) -
Amortisation of acquisition intangibles (93) (89)
Acquisition and disposal expenses (21) (18)
Adjustment to the fair value of contingent consideration (66) (1)
Non-benchmark share of post-tax loss of associates - (3)
Interest on uncertain tax provisions 6 (12)
Financing fair value remeasurements 59 21
Profit before tax 517 654 (21)
Tax charge (210) (156)
Profit after tax 307 498 (38)
Benchmark earnings
Benchmark PBT 811 751 8 7
Benchmark tax charge (211) (186)
Total Benchmark earnings 600 565
Owners of Experian plc 598 564 6 6
Non-controlling interests 2 1
Benchmark EPS USc 65.4 USc 61.7 6 6
Basic EPS USc 33.5 USc 56.5 (41)
Weighted average number of ordinary shares 914m 914m
Benchmark EBIT margin - ongoing activities
North America 33.8% 36.2%
Latin America 27.2% 24.0%
UK and Ireland 19.6% 21.1%
EMEA/Asia Pacific (2.0)% (6.8)%
Benchmark EBIT margin 27.3% 26.9%
1. Benchmark results for the six months ended 30 September 2021 have been
re-presented for the reclassification to exited business activities of certain
B2B and Consumer Services businesses, detail is provided on page 12 and in
notes 6(a) and 7 to the condensed interim financial statements.
See Appendix 1 (page 15) and note 5 to the condensed interim financial
statements for definitions of non-GAAP measures.
See Appendix 3 (page 16) for analyses of revenue, Benchmark EBIT and Benchmark
EBIT margin from ongoing activities by business segment.
Re-presentation of exited businesses
US$m Six months ended 30 September 2021 Twelve months ended 31 March 2022 Six months ended 30 September 2022
Reported Change Re-presented Reported Change Re-presented Reported
UK and Ireland
Ongoing activities
- Benchmark EBIT 85 1 86 188 - 188 74
- Benchmark EBIT margin 20.8% 0.3% 21.1% 22.2% - 22.2% 19.6%
Exited business activities
- Benchmark EBIT (1) (1) (2) (4) - (4) -
Total continuing operations
- Benchmark EBIT 84 - 84 184 - 184 74
EMEA/Asia Pacific
Data 175 (12) 163 343 (10) 333 149
Decisioning 78 (22) 56 164 (36) 128 53
Ongoing activities
- Revenue 253 (34) 219 507 (46) 461 202
- Benchmark EBIT (21) 6 (15) - 16 16 (4)
- Benchmark EBIT margin (8.3)% 1.5% (6.8)% 0.0% 3.5% 3.5% (2.0)%
Exited business activities
- Revenue 1 34 35 21 46 67 14
- Benchmark EBIT 1 (6) (5) 9 (16) (7) (8)
Total continuing operations
- Revenue 254 - 254 528 - 528 216
- Benchmark EBIT (20) - (20) 9 - 9 (12)
Global
Data 1,634 (12) 1,622 3,313 (10) 3,303 1,702
Decisioning 636 (22) 614 1,341 (36) 1,305 644
B2B 2,270 (34) 2,236 4,654 (46) 4,608 2,346
Consumer 790 - 790 1,613 - 1,613 887
Ongoing activities
- Revenue 3,060 (34) 3,026 6,267 (46) 6,221 3,233
- Benchmark EBIT 806 7 813 1,640 16 1,656 881
- Benchmark EBIT margin 26.3% 0.6% 26.9% 26.2% 0.4% 26.6% 27.3%
Exited business activities
- Revenue 1 34 35 21 46 67 14
- Benchmark EBIT - (7) (7) 5 (16) (11) (8)
Total continuing operations
- Revenue 3,061 - 3,061 6,288 - 6,288 3,247
- Benchmark EBIT 806 - 806 1,645 - 1,645 873
Benchmark results for the six months ended 30 September 2021 have been
re-presented for the reclassification to exited business activities of certain
B2B and Consumer Services businesses, detail is provided in notes 6(a) and 7
to the condensed interim financial statements.
Group financial review
Key statutory measures
Statutory revenue
We delivered a robust performance in the period. Revenue increased by 6% to
US$3,247m (2021: US$3,061m) through a combination of our portfolio diversity
and innovation-led growth initiatives.
Statutory operating profit and profit before tax
Operating profit for the six months ended 30 September 2022 reduced to US$513m
(2021: US$702m). The decrease is predominantly from a non-cash charge of
US$152m for goodwill impairment, driven by increased discount rates and
macro-economic weakness in our European markets. We also incurred a charge of
US$66m for increased contingent consideration due to over-performance on prior
acquisitions. The movements in Benchmark EBIT at constant currency are
discussed in the Chief Executive Officer's review and Regional highlights on
pages three to eight. Net finance expense decreased by US$49m, largely from
financing fair value remeasurements, which helped offset the goodwill
impairment charge, however profit before tax declined to US$517m (2021:
US$654m).
Statutory Basic EPS
Basic EPS decreased to 33.5 US cents (2021: 56.5 US cents). The reduction
reflects a lower profit before tax, no repeat of the prior period profit from
discontinued operations, and an increased effective tax rate.
Statutory cash flow
Cash generated from operations increased to US$1,024m (2021: US$927m)
reflecting strong control of working capital and some phasing. Net borrowing
inflows were US$361m (2021: US$309m). Cash outflows in respect of net share
purchases were broadly unchanged at US$113m (2021: US$115m). Undrawn committed
bank borrowing facilities at 30 September 2022 totalled US$2.4bn (2021:
US$2.4bn).
Tax
The effective rate of tax based on profit before tax was 40.6%, an increase of
16.7 percentage points from the comparative period, largely attributable to
the non-deductible goodwill impairment and an adjustment to the fair value of
contingent consideration in the period.
Net assets
Net assets at 30 September 2022 were US$3,605m (2021: US$3,322m). Capital
employed, as defined in note 5(p) to the condensed interim financial
statements, was US$7,932m (2021: US$7,824m).
Equity
There was a decrease in equity of US$402m 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 half include:
· Profit for the period of US$307m.
· Remeasurement losses of US$35m in respect of defined benefit
pension plans.
· A reduction in the fair value of investments revalued through
Other comprehensive income (OCI) of US$42m.
· Currency translation losses of US$260m.
· Employee share awards and options cost of US$63m.
· Ordinary dividends of US$327m and a movement of US$107m in
connection with net share purchases.
Seasonality
In recent years, our Benchmark EBIT performance has been evenly spread across
the two halves of the year due to impacts from the COVID-19 pandemic. We now
expect profits to be more second-half weighted which is in line with
historical performance.
Risks
The principal risks and uncertainties we face in the remaining six months of
the year remain consistent with those explained in detail on pages 85 to 92 of
our Annual Report for the year ended 31 March 2022:
• Loss or inappropriate use of data and systems;
• Adverse and unpredictable financial markets or fiscal
developments;
• New legislation or changes in regulatory enforcement;
• Failure to comply with laws and regulations;
• Non-resilient IT/business environment;
• Business conduct risk;
• Dependence on highly skilled personnel;
• Increasing competition; and
• Undesirable investment outcomes.
In the first half of the financial year, we note that risks associated with
new laws, new interpretations of existing laws, changes to existing
regulations and regulatory scrutiny continue to increase. The global focus
remains on privacy and a general trend towards more consumer access and
control over data, as well as heightened regulations related to our credit
reference and consumer services businesses in our larger markets. Recent
examples include: increased scrutiny by the US Consumer Financial Protection
Bureau; privacy laws being enacted in several US States; the ongoing
interpretation of data protection laws in several jurisdictions in which we
operate; and the UK Financial Conduct Authority's published rules on Consumer
Duty which require firms to deliver good outcomes for consumers.
We continue to see increasing consumer litigation, particularly in the USA and
Brazil, which is being vigorously defended.
As inflation remains high across much of the globe, Central banks across the
world have responded by materially raising interest rates with a knock on
reduction in expected growth in GDP in our key markets of the UK and North
America. In addition, the increase in rates will increase the Group's future
borrowing costs and therefore its Weighted Average Cost of Capital. We
continue to monitor trends in geopolitical risks including market volatility,
regulatory and tax policy uncertainty. There is continued uncertainty in the
development of tax legislation globally including tax reform proposals that
could increase the tax burden on our businesses.
Further information on financial risk management is given in note 23 to the
condensed interim financial statements.
The Chief Executive Officer's, Business and Group financial reviews on pages 3
to 13 include consideration of key uncertainties affecting us for the
remainder of the current financial year. There may however be additional risks
unknown to us and other risks, currently believed to be immaterial, which
could turn out to be material. These risks, whether they materialise
individually or simultaneously, could significantly affect our business and
financial results.
Going concern
The principal risks and uncertainties we face and our assessment of viability,
remain largely unchanged from those explained in detail on pages 85 to 94 of
our Annual Report for the year ended 31 March 2022.
The Group has a robust balance sheet with access to considerable funding and
continues to adopt the going concern basis in preparing these condensed
interim financial statements. Cash flow in the period was strong with cash
flow conversion of 88% (2021: 89%). Our undrawn committed bank borrowing
facilities at 30 September 2022 were US$2.4bn (2021: US$2.4bn) and have an
average remaining tenor of three years (2021: four years). Outstanding
commercial paper at 30 September was US$0.2bn (2021: US$0.7bn).
The directors believe that the Group is well placed to manage its financing
and other business risks satisfactorily, and have a reasonable expectation
that the Group will have adequate resources to continue in operational
existence for at least 12 months from the date of signing these condensed
interim financial statements.
See note 2 to the condensed interim financial statements for further detail.
Appendices
1. Non-GAAP financial information
We have identified and defined certain measures that we believe assist
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 have included them as
these are considered 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
condensed interim financial statements, to include onerous global support
costs associated with the closure of significant operations, to improve
assessment of underlying operating performance.
The table below summarises our non-GAAP measures and there is a fuller
explanation in note 5 to the condensed interim 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 which 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, 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/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. The reconciliation of revenue from ongoing activities is set out
in note 6(c) on page 30, Benchmark EBIT and Benchmark PBT to profit before tax
in Appendix 3 and Benchmark EPS in note 12 on pages 35 and 36.
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.
Period ended Period ended Year ended
30 September 2022 30 September 2021 31 March 2022
US dollar : Brazilian real 5.08 5.26 5.34
Pound sterling : US dollar 1.21 1.39 1.37
Euro : US dollar 1.04 1.19 1.16
US dollar : Colombian peso 4,151 3,769 3,834
US dollar : South African rand 16.31 14.37 14.85
The impact of currency movements on revenue from ongoing activities is set out
in note 6(c) to the condensed interim 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 period end dates are shown in the table below.
30 September 2022 30 September 2021 31 March 2022
US dollar : Brazilian real 5.41 5.41 4.78
Pound sterling : US dollar 1.11 1.35 1.31
Euro : US dollar 0.98 1.16 1.11
US dollar : Colombian peso 4,574 3,833 3,757
US dollar : South African rand 17.99 15.15 14.56
3. Revenue, Benchmark EBIT and Benchmark EBIT margin by business segment
Six months ended 30 September Growth %
Total at constant exchange Organic at constant exchange
2022 2021(1)
US$m US$m rates rates
Revenue
Data 1,702 1,622 7 6
Decisioning 644 614 8 8
Business-to-Business 2,346 2,236 8 7
Consumer Services 887 790 14 12
Ongoing activities 3,233 3,026 9 8
Exited business activities 14 35 n/a
Total 3,247 3,061 8
Benchmark EBIT
Business-to-Business 740 707 5
Consumer Services 197 188 6
Business segments 937 895 6
Central Activities - central corporate costs (56) (82) n/a
Ongoing activities 881 813 8
Exited business activities (8) (7) n/a
Total Benchmark EBIT 873 806 8
Net interest expense (62) (55) n/a
Benchmark PBT 811 751 7
Exceptional items(2) (27) 5
Other adjustments made to derive Benchmark PBT(2) (267) (102)
Profit before tax 517 654
Benchmark EBIT margin - ongoing activities
Business-to-Business 31.5% 31.6%
Consumer Services 22.2% 23.8%
Benchmark EBIT margin(3) 27.3% 26.9%
1. Revenue and Benchmark EBIT for the six months ended 30 September
2021 have been re-presented for the reclassification to exited business
activities of certain B2B and Consumer Services businesses. See notes 6(a) and
7 to the condensed interim financial statements.
2. See note 8 to the condensed interim financial statements.
3. Benchmark EBIT margin for ongoing activities is calculated by
dividing Benchmark EBIT for ongoing activities by revenue from ongoing
activities.
Appendices (continued)
4. Cash flow and Net debt summary
Six months ended 30 September 2022 2021
US$m US$m
Benchmark EBIT 873 806
Amortisation and depreciation charged to Benchmark EBIT 240 237
Benchmark EBITDA 1,113 1,043
Impairment of non-current assets charged to Benchmark EBIT - 1
Net capital expenditure (280) (211)
Increase in working capital (97) (157)
Principal lease payments (30) (30)
Charge for share incentive plans 63 74
Benchmark operating cash flow 769 720
Net interest paid (68) (87)
Tax paid (227) (158)
Dividends paid to non-controlling interests - (2)
Benchmark free cash flow 474 473
Acquisitions(1) (287) (369)
Disposal of operations (3) -
Purchase of investments (7) (10)
Disposal of investments 1 19
Movement in Exceptional and other non-benchmark items (34) (12)
Ordinary dividends paid (327) (297)
Net cash outflow - continuing operations (183) (196)
Net cash inflow - discontinued operations - 1
Net debt at 1 April (3,950) (4,026)
Net share purchases (113) (115)
Non-cash lease obligation additions and disposals (11) (14)
Principal lease payments 30 30
Foreign exchange and other movements 79 9
Net debt at 30 September (4,148) (4,311)
1. See note 17(d) to the condensed interim financial statements.
5. Reconciliation of net investment
Six months ended 30 September 2022 2021
US$m US$m
Capital expenditure as reported in the Group cash flow statement 281 229
Disposal of property, plant and equipment (1) (21)
Profit on disposal of property, plant and equipment - 3
Net capital expenditure 280 211
Acquisitions 287 369
Purchase of investments 7 10
Disposal of operations and investments 2 (19)
Net investment 576 571
Condensed interim financial statements
Group income statement
for the six months ended 30 September 2022
Six months ended 30 September 2022 Six months ended 30 September 2021
Benchmark(1) Non-benchmark(2) Total Benchmark(1) Non-benchmark(2) Total
US$m US$m US$m US$m US$m US$m
Revenue (note 6(a)) 3,247 - 3,247 3,061 - 3,061
Total operating expenses (note 8(a)) (2,375) (359) (2,734) (2,256) (103) (2,359)
Operating profit/(loss) 872 (359) 513 805 (103) 702
Finance income 5 - 5 7 - 7
Finance expense (67) 65 (2) (62) 9 (53)
Net finance income/(expense) (note 9(a)) (62) 65 3 (55) 9 (46)
Share of post-tax profit/(loss) of associates 1 - 1 1 (3) (2)
Profit/(loss) before tax (note 6(a)) 811 (294) 517 751 (97) 654
Tax (charge)/credit (note 10(a)) (211) 1 (210) (186) 30 (156)
Profit/(loss) for the period from continuing operations 600 (293) 307 565 (67) 498
Profit for the period from discontinued operations (note 11) - - - - 19 19
Profit/(loss) for the period 600 (293) 307 565 (48) 517
Attributable to:
Owners of Experian plc 598 (292) 306 564 (48) 516
Non-controlling interests 2 (1) 1 1 - 1
Profit/(loss) for the period 600 (293) 307 565 (48) 517
Total Benchmark EBIT(1) (note 6(a)) 873 806
US cents US cents US cents US cents US cents US cents
Earnings/(loss) per share (note 12(a))
Basic 65.4 (31.9) 33.5 61.7 (5.2) 56.5
Diluted 65.1 (31.8) 33.3 61.3 (5.2) 56.1
Earnings/(loss) per share from
continuing operations
Basic 65.4 (31.9) 33.5 61.7 (7.3) 54.4
Diluted 65.1 (31.8) 33.3 61.3 (7.3) 54.0
1. Total Benchmark EBIT and other Benchmark items are non-GAAP
measures, defined in note 5 to the condensed interim financial statements.
2. The loss before tax for non-benchmark items of US$294m (2021:
US$97m) is analysed in note 8(a) to the condensed interim financial
statements.
Condensed interim financial statements
Group statement of comprehensive income
for the six months ended 30 September 2022
Six months ended 30 September
2022 2021
US$m US$m
Profit for the period 307 517
Other comprehensive income
Items that will not be reclassified to profit or loss:
Remeasurement of post-employment benefit assets and obligations (note 16(b)) (35) 25
Changes in the fair value of investments revalued through OCI (42) 6
Deferred tax credit 8 -
Items that will not be reclassified to profit or loss (69) 31
Items that are or may be reclassified subsequently to profit or loss:
Currency translation losses (260) (9)
Fair value loss on cash flow hedge (93) (19)
Hedging loss reclassified to profit or loss (note 9(c)) 81 12
Items that are or may be reclassified subsequently to profit or loss (272) (16)
Other comprehensive (expense)/income for the period(1) (341) 15
Total comprehensive (expense)/income for the period (34) 532
Attributable to:
Owners of Experian plc (28) 532
Non-controlling interests (6) -
Total comprehensive (expense)/income for the period (34) 532
1. Amounts reported within OCI are in respect of continuing operations
and, except as reported for post-employment benefit assets and obligations,
there is no associated tax. Currency translation items, not reclassified to
profit or loss, are recognised in the hedging or translation reserve within
other reserves and in non-controlling interests. Other items within Other
comprehensive income are recognised in retained earnings.
Condensed interim financial statements
Group balance sheet
at 30 September 2022
30 September 31 March
2022 2021 2022
Notes US$m US$m US$m
Non-current assets
Goodwill 14 5,448 5,491 5,737
Other intangible assets 2,195 2,060 2,214
Property, plant and equipment 370 424 415
Investments in associates 4 126 4
Deferred tax assets 26 88 46
Post-employment benefit assets 16(a) 144 127 216
Trade and other receivables 125 156 133
Financial assets revalued through OCI 326 241 375
Other financial assets 181 192 81
8,819 8,905 9,221
Current assets
Trade and other receivables 1,373 1,244 1,409
Current tax assets 41 44 37
Other financial assets 7 21 7
Cash and cash equivalents - excluding bank overdrafts 18(b) 146 176 179
1,567 1,485 1,632
Assets classified as held-for-sale 24 35 - 41
1,602 1,485 1,673
Current liabilities
Trade and other payables (1,626) (1,459) (1,744)
Borrowings 18(b) (237) (863) (57)
Current tax liabilities (135) (158) (109)
Provisions (55) (35) (33)
Other financial liabilities (20) (13) (22)
(2,073) (2,528) (1,965)
Liabilities classified as held-for-sale 24 (1) - -
(2,074) (2,528) (1,965)
Net current liabilities (472) (1,043) (292)
Total assets less current liabilities 8,347 7,862 8,929
Non-current liabilities
Trade and other payables (216) (178) (248)
Borrowings 18(b) (3,731) (3,681) (4,039)
Deferred tax liabilities (273) (360) (353)
Post-employment benefit obligations 16(a) (37) (54) (52)
Provisions (4) - (4)
Financial liabilities revalued through OCI (78) - -
Other financial liabilities (403) (267) (226)
(4,742) (4,540) (4,922)
Net assets 3,605 3,322 4,007
Equity
Called-up share capital 20 96 96 96
Share premium account 20 1,796 1,777 1,780
Retained earnings 20,087 19,495 20,157
Other reserves (18,406) (18,082) (18,064)
Attributable to owners of Experian plc 3,573 3,286 3,969
Non-controlling interests 32 36 38
Total equity 3,605 3,322 4,007
Condensed interim financial statements
Group statement of changes in equity
for the six months ended 30 September 2022
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$m
At 1 April 2022 96 1,780 20,157 (18,064) 3,969 38 4,007
Comprehensive income:
Profit for the period - - 306 - 306 1 307
Other comprehensive expense - - (69) (265) (334) (7) (341)
Total comprehensive income/(expense) - - 237 (265) (28) (6) (34)
Transactions with owners:
Employee share incentive plans:
- value of employee services - - 63 - 63 - 63
- shares issued on vesting - 16 - - 16 - 16
- purchase of shares by employee trusts - - - (45) (45) - (45)
- other vesting of awards and exercises of share options - - (32) 46 14 - 14
- related tax charge - - (6) - (6) - (6)
- other payments - - (5) - (5) - (5)
Purchase of shares held as treasury shares - - - (78) (78) - (78)
Dividends paid - - (327) - (327) - (327)
Transactions with owners - 16 (307) (77) (368) - (368)
At 30 September 2022 96 1,796 20,087 (18,406) 3,573 32 3,605
Group statement of changes in equity
for the six months ended 30 September 2021
Called-up share capital Share premium account Retained earnings Other reserves Attributable to owners of Experian plc Non-controlling interests Total equity
(Note 20) (Note 20)
US$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 period - - 516 - 516 1 517
Other comprehensive income/(expense) - - 31 (15) 16 (1) 15
Total comprehensive income/(expense) - - 547 (15) 532 - 532
Transactions with owners:
Employee share incentive plans:
- value of employee services - - 74 - 74 - 74
- shares issued on vesting - 21 - - 21 - 21
- purchase of shares by employee trusts - - - (61) (61) - (61)
- other vesting of awards and exercises of share options - - (35) 47 12 - 12
- related tax credit - - 3 - 3 - 3
- other payments - - (4) - (4) - (4)
Purchase of shares held as treasury shares - - - (75) (75) - (75)
Dividends paid - - (297) - (297) (2) (299)
Transactions with owners - 21 (259) (89) (327) (2) (329)
At 30 September 2021 96 1,777 19,495 (18,082) 3,286 36 3,322
Condensed interim financial statements
Group cash flow statement
for the six months ended 30 September 2022
Six months ended 30 September
2022 2021
Notes US$m US$m
Cash flows from operating activities
Cash generated from operations 17(a) 1,024 927
Interest paid (71) (89)
Interest received 3 2
Dividends received from associates 1 1
Tax paid (227) (158)
Net cash inflow from operating activities - continuing operations 730 683
Net cash inflow from operating activities - discontinued operations 11 - 1
Net cash inflow from operating activities 730 684
Cash flows from investing activities
Purchase of other intangible assets 17(c) (251) (208)
Purchase of property, plant and equipment (30) (21)
Sale of property, plant and equipment 1 21
Purchase of other financial assets (7) (10)
Sale of other financial assets - 8
Acquisition of subsidiaries, net of cash acquired 17(d) (267) (346)
Disposal of operations 8(b) (3) -
Disposal of investment in associate 8(c) 1 11
Net cash flows used in investing activities (556) (545)
Cash flows from financing activities
Cash inflow in respect of shares issued 17(e) 16 21
Cash outflow in respect of share purchases 17(e) (129) (136)
Other payments on vesting of share awards (5) (4)
Settlement of put options held over shares in subsidiaries 17(d) - (4)
Transactions in respect of non-controlling interests 17(d) - (1)
New borrowings 362 866
Repayment of borrowings (1) (557)
Principal lease payments (30) (30)
Net payments for cross-currency swaps and foreign exchange contracts (65) -
Net receipts from equity swaps - 2
Dividends paid (327) (299)
Net cash flows used in financing activities (179) (142)
Net decrease in cash and cash equivalents (5) (3)
Cash and cash equivalents at 1 April 176 170
Exchange movements on cash and cash equivalents (25) 7
Cash and cash equivalents at 30 September 17(f) 146 174
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
1. Corporate information
Experian plc (the Company) is the ultimate parent company of the Experian
group of companies (Experian or the Group). Experian is a 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.
There has been no change in this information since the Annual Report for the
year ended 31 March 2022.
2. Basis of preparation
The condensed consolidated interim financial statements (the condensed interim
financial statements) are prepared on the going concern basis and in
accordance with International Accounting Standard (IAS) 34 'Interim Financial
Reporting' (IAS 34) as issued by the International Accounting Standards Board
(IASB) and as adopted for use in the UK and the European Union (EU).
The condensed interim financial statements:
· comprise the consolidated results of the Group for the six months
ended 30 September 2022 and 30 September 2021;
· were approved for issue on 15 November 2022;
· have not been audited but have been reviewed by the Company's
auditor with their report set out on pages 52 and 53; and
· do not constitute the Group's statutory financial statements but
should be read in conjunction with the Group's statutory financial statements
for the year ended 31 March 2022.
The Group's statutory financial statements comprise the Annual Report and
audited financial statements which are prepared in accordance with both
UK-adopted International Accounting Standards (UK-IFRS) and International
Financial Reporting Standards (IFRS or IFRSs) as adopted for use in the EU and
IFRS Interpretations Committee interpretations (together EU-IFRS). The
financial statements also comply with IFRS as issued by the 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.
The most recent such statutory financial statements, for the year ended 31
March 2022, were approved by the directors on 17 May 2022 and subsequently
delivered to the Jersey Registrar of Companies. The auditor's report was
unqualified and did not contain a statement under Article 113B(3) or Article
113B(6) of the Companies (Jersey) Law 1991. Copies of these financial
statements are available on the Company's website, at www.experianplc.com, and
from the Company Secretary at 2 Cumberland Place, Fenian Street, Dublin 2, D02
HY05, Ireland.
The financial information for the year ended 31 March 2022 included in the
condensed interim financial statements is not the Company's statutory accounts
for that financial year, but has been extracted from the Group's statutory
financial statements.
As required by the UK Financial Conduct Authority Disclosure Guidance and
Transparency Rules Sourcebook, these condensed interim financial statements
have been prepared applying the accounting policies and presentation that were
applied in the preparation of the Group's statutory financial statements for
the year ended 31 March 2022.
No significant events impacting the Group, other than those disclosed in this
document, have occurred between 1 October and 15 November 2022.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
2. Basis of preparation (continued)
Going concern
In adopting the going concern basis for preparing these condensed interim
financial statements, the directors have considered the business activities,
the principal risks and uncertainties and the other matters discussed in
connection with the Viability statement included in our Annual Report for the
year ended 31 March 2022.
At 30 September 2022, the Group had undrawn committed bank borrowing
facilities of US$2.4bn (2021: US$2.4bn) which have an average remaining tenor
of three years (2021: four years). Outstanding commercial paper at 30
September was US$0.2bn (2021: US$0.7bn).
The directors believe that the Group is well placed to manage its financing
and other business risks satisfactorily, and have a reasonable expectation
that the Group will have adequate resources to continue in operational
existence for at least 12 months from the date of signing these condensed
interim financial statements. The directors therefore consider it appropriate
to adopt the going concern basis of accounting in preparing the condensed
interim financial statements.
In reaching this conclusion, the directors noted the Group's strong cash
performance in the period and the substantial committed bank borrowing
facilities which extend to December 2025.
3. Accounting and other developments
Additional charges were incurred in the period stemming from macro-economic
factors and market weakness. The rise in global interest and discount rates,
and resulting impacts on the expected growth in GDP, have contributed to a
non-cash impairment of goodwill of US$152m (note 14) and a reduction in the
fair value of net post-employment benefit assets (note 16(b)). The latter
being impacted by remeasurement and exchange losses of US$35m and US$24m
respectively. Additional costs were mitigated by a gain on financing fair
value remeasurements of US$59m (note 9(c)).
There have been no accounting standards, amendments or interpretations
effective for the first time in these condensed interim financial statements
which have had a material impact on the financial statements.
There are no new standards, amendments to existing standards or
interpretations that are not yet effective that are expected to have a
material impact on the Group's financial results. Accounting developments are
routinely reviewed by the Group and its financial reporting systems are
adapted as appropriate.
4. Accounting policies, estimates and judgments
(a) Introduction
The preparation of the condensed interim financial statements requires
management to make estimates and assumptions that affect the reported amount
of revenues, expenses, assets, liabilities and the disclosure of contingent
liabilities. If in the future such estimates and assumptions, which are based
on management's best judgment at the date of these condensed interim financial
statements, deviate from actual circumstances, the original estimates and
assumptions will be modified as appropriate in the period in which the
circumstances change. There have been no significant changes in the bases upon
which estimates have been determined, compared to those applied at 31 March
2022. Changes to estimated amounts used in assessing the carrying value of
goodwill and contingent consideration have had a material impact in the
period. Further detail is provided in notes 14 and 23(c) respectively
The accounting policies applied in these condensed interim financial
statements are the same as those applied in the Annual Report and Group
financial statements for the year ended 31 March 2022.
(b) Goodwill (note 14)
Goodwill held in the Group's balance sheet is tested annually for impairment,
or more frequently if there is an indication that it may be impaired and
details of the methodology used are set out in the Group's statutory financial
statements for the year ended 31 March 2022.
During the six months ended 30 September 2022 the annual tests were performed
resulting in an impairment charge of US$152m. Further detail is provided in
note 14 to the condensed interim financial statements.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
4. Accounting policies, estimates and judgments (continued)
(c) Post-employment benefits (note 16)
We have updated the accounting valuation of our principal defined benefit
pension plan in light of changes in the key actuarial assumptions, and this is
recognised in the condensed interim financial statements. The actuarial
assumption with the most significant impact at 30 September 2022 is the
discount rate of 5.3% (2021: 2.0%). The discount rate used in the year ended
31 March 2022 was 2.8%.
(d) Revenue recognition (note 6)
Revenue is stated net of any sales taxes, rebates and discounts and reflects
the amount of consideration we expect to receive in exchange for the transfer
of promised goods and services.
Total consideration from contracts with customers is allocated to the
performance obligations identified based on their standalone selling price,
and is recognised when those performance obligations are satisfied and the
control of goods or services is transferred to the customer, either over time
or at a point in time.
· The provision and processing of transactional data is
distinguished between contracts that:
- provide a service on a per unit basis; where the transfer to the
customer of each completed unit is considered satisfaction of a single
performance obligation. Revenue is recognised on the transfer of each unit;
- provide a service to the customer over the contractual term,
normally between one and five years, where revenue is recognised on the
transfer of this service to customers. For the majority of contracts this
means revenue is spread evenly over the contract term, as customers
simultaneously receive and consume the benefits of the service;
- require an enhanced service at the start, where revenue is
recognised to reflect the upfront benefit the customer receives and consumes.
Revenue for such contracts is recognised proportionally in line with the costs
of providing the service.
· Revenue from referral fees for credit products and white-label
partnerships is recognised as transactional revenue.
· Revenue from transactional batch data arrangements that include
an ongoing update service is apportioned across each delivery to the customer
and is recognised when the delivery is complete, and control of the batch data
passes to the customer. Performance obligations are determined based on the
frequency of data refresh: one-off, quarterly, monthly, or real-time.
· Subscription and membership fees for continuous access to a
service are recognised over the period to which they relate, usually 1, 12 or
24 months. Customers simultaneously receive and consume the benefits of the
service; therefore, revenue is recognised evenly over the subscription or
membership term.
· Revenue for one-off credit reports is recognised when the report
is delivered to the consumer.
· Software licence and implementation services are primarily
accounted for as a single performance obligation, with revenue recognised when
the combined offering is delivered to the customer. Contract terms normally
vary between one and five years. These services are distinguished between:
- Experian-hosted solutions, where the customer has the right to
access a software solution over a specified time period. Customers
simultaneously receive and consume the benefits of the service and revenue is
spread evenly over the period that the service is available; and
- On-premise software licence arrangements, where the software
solution is installed in an environment controlled by the customer. The
arrangement represents a right to use licence and so the performance
obligation is considered to be fulfilled on delivery completion, when control
of the configured solution is passed to the customer. Revenue is recognised at
that point in time.
· The delivery of support and maintenance agreements is generally
considered to be a separate performance obligation to provide a technical
support service including minor updates. Contract terms are often aligned with
licence terms. Customers simultaneously receive and consume the benefits of
the service, therefore revenue is spread evenly over the term of the
maintenance period.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
4. Accounting policies, estimates and judgments (continued)
(d) Revenue recognition (note 6) (continued)
· The provision of distinct standalone consultancy and professional
services is distinguished between:
- Professional consultancy services where the performance
obligation is the provision of personnel. Customers simultaneously receive and
consume the benefits of the service, and revenue is recognised over time, in
line with hours provided; and
- The provision of analytical models and analyses, where the
performance obligation is a deliverable, or a series of deliverables, and
revenue is recognised on delivery when control is passed to the customer.
Sales are typically invoiced in the geographic area in which the customer is
located. As a result, the geographic location of the invoicing undertaking is
used to attribute revenue to individual countries.
Accrued income balances, which represent the right to consideration in
exchange for goods or services that we have transferred to a customer, are
assessed as to whether they meet the definition of a contract asset:
· When the right to consideration is conditional on something other
than the passage of time, a balance is classified as a contract asset. This
arises where there are further performance obligations to be satisfied as part
of the contract with the customer and typically includes balances relating to
software licensing contracts.
· When the right to consideration is conditional only on the
passage of time, the balance does not meet the definition of a contract asset
and is classified as an unbilled receivable. This typically arises where the
timing of the related billing cycle occurs in a period after the performance
obligation is satisfied.
Costs incurred prior to the satisfaction or partial satisfaction of a
performance obligation are first assessed to see if they are within the scope
of other standards. Where they are not, certain costs are recognised as an
asset providing they relate directly to a contract (or an anticipated
contract), generate or enhance resources that will be used in satisfying (or
to continue to satisfy) performance obligations in the future and are expected
to be recovered from the customer. Costs which meet this criteria are deferred
as contract costs and these are amortised on a systematic basis consistent
with the pattern of transfer of the related goods or services.
· Costs to obtain a contract predominantly comprise sales
commissions costs.
· Costs to fulfil a contract predominantly comprise labour costs
directly relating to the implementation services provided.
Contract liabilities arise when we have an obligation to transfer future goods
or services to a customer for which we have received consideration, or the
amount is due, from the customer, and include both deferred income balances
and specific reserves.
(e) Tax (note 10)
The tax charge recognised in the period is derived from the estimated tax rate
for the full year, taking account of one-off tax charges and credits arising
in the period and expected to arise in the full year and the tax effect of
Exceptional items and other adjustments made to derive Benchmark PBT.
5. Use of non-GAAP measures in the condensed interim 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 has included
them as they consider 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.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
5. Use of non-GAAP measures in the condensed interim financial statements
(continued)
(a) Benchmark profit before tax (Benchmark PBT) (note 6(a) and note 7)
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 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.
(b) Benchmark earnings before interest and tax (Benchmark EBIT) and margin
(Benchmark EBIT margin) (note 6(a) and note 7)
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 30 September 2022, which 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(c))
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(c))
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.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
5. Use of non-GAAP measures in the condensed interim financial statements
(continued)
(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 condensed interim 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) 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.
(n) Cash flow conversion
Cash flow conversion is Benchmark operating cash flow expressed as a
percentage of Benchmark EBIT.
(o) 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.
(p) 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 condensed interim financial statements
for the six months ended 30 September 2022
6. Segment information
(a) Income statement
North Latin UK and Ireland EMEA/ Total operating segments Central Total
America America Asia Pacific(1) Activities continuing operations
Six months ended 30 September 2022 US$m US$m US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 2,204 449 378 202 3,233 - 3,233
Exited business activities - - - 14 14 - 14
Total 2,204 449 378 216 3,247 - 3,247
Reconciliation from Benchmark EBIT to
profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 761 121 68 (12) 938 (57) 881
Transfer pricing and other adjustments (16) 1 6 8 (1) 1 -
Ongoing activities 745 122 74 (4) 937 (56) 881
Exited business activities - - - (8) (8) - (8)
Total 745 122 74 (12) 929 (56) 873
Net interest income/(expense) included in Benchmark PBT (2) (1) 1 (1) (3) (59) (62)
(note 9(b))
Benchmark PBT 743 121 75 (13) 926 (115) 811
Exceptional items (note 8(a)) 4 - - (31) (27) - (27)
Impairment of goodwill (note14) - - - (152) (152) - (152)
Amortisation of acquisition intangibles (62) (12) (4) (15) (93) - (93)
Acquisition and disposal expenses (10) (3) (3) (5) (21) - (21)
Adjustment to the fair value of contingent consideration (56) (10) - - (66) - (66)
Interest on uncertain tax provisions (note 9(a)) - - - - - 6 6
Financing fair value remeasurements (note 9(c)) - - - - - 59 59
Profit/(loss) before tax 619 96 68 (216) 567 (50) 517
North Latin UK and Ireland EMEA/ Total operating segments Central Total
America America Asia Pacific(1) Activities continuing operations
Six months ended 30 September 2021(2) US$m US$m US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 2,037 362 408 219 3,026 - 3,026
Exited business activities - - - 35 35 - 35
Total 2,037 362 408 254 3,061 - 3,061
Reconciliation from Benchmark EBIT to
profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 756 85 79 (24) 896 (83) 813
Transfer pricing and other adjustments (19) 2 7 9 (1) 1 -
Ongoing activities 737 87 86 (15) 895 (82) 813
Exited business activities - - (2) (5) (7) - (7)
Total 737 87 84 (20) 888 (82) 806
Net interest expense included in Benchmark PBT (2) (1) - (1) (4) (51) (55)
(note 9(b))
Benchmark PBT 735 86 84 (21) 884 (133) 751
Exceptional items (note 8(a)) 5 - - - 5 - 5
Amortisation of acquisition intangibles (58) (10) (4) (17) (89) - (89)
Acquisition and disposal expenses (10) (3) (1) (4) (18) - (18)
Adjustment to the fair value of contingent consideration - - 3 (4) (1) - (1)
Non-benchmark share of post-tax loss of associates - - - - - (3) (3)
Interest on uncertain tax provisions (note 9(a)) - - - - - (12) (12)
Financing fair value remeasurements (note 9(c)) - - - - - 21 21
Profit/(loss) before tax 672 73 82 (46) 781 (127) 654
1. EMEA/Asia Pacific represents all other operating segments.
2. Revenue of US$34m and Benchmark EBIT of US$(7m) for the six months
ended 30 September 2021 have been re-presented for the reclassification to
exited business activities of certain B2B and Consumer Services 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 condensed interim financial statements
for the six months ended 30 September 2022
6. Segment information (continued)
(b) 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.
(c) 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$m
Revenue for the six months ended 30 September 2021(1) 2,037 362 408 219 3,026
Adjustment to constant exchange rates - (6) (5) (5) (16)
Revenue at constant rates for the six months ended 30 September 2021 2,037 356 403 214 3,010
Organic revenue growth 153 64 21 8 246
Revenue from acquisitions 14 14 2 - 30
Revenue at constant rates for the six months ended 30 September 2022 2,204 434 426 222 3,286
Adjustment to actual exchange rates - 15 (48) (20) (53)
Revenue for the six months ended 30 September 2022 2,204 449 378 202 3,233
Organic revenue growth at constant exchange rates 8% 18% 5% 4% 8%
Revenue growth at constant exchange rates 8% 22% 6% 4% 9%
1. Revenue for the six months ended 30 September 2021 has been
re-presented for the reclassification to exited business activities of certain
B2B businesses.
The table above demonstrates the application of the methodology set out in
note 5 in determining organic and total revenue growth at constant exchange
rates.
(d) Disaggregation of revenue from contracts with customers
North Latin UK and Ireland EMEA/ Total operating segments
America America Asia Pacific
Six months ended 30 September 2022 US$m US$m US$m US$m US$m
Revenue from external customers
Data 1,071 296 186 149 1,702
Decisioning 403 83 105 53 644
Business-to-Business 1,474 379 291 202 2,346
Consumer Services 730 70 87 - 887
Total ongoing activities 2,204 449 378 202 3,233
North Latin UK and Ireland EMEA/ Total operating segments
America America Asia Pacific
Six months ended 30 September 2021(1) US$m US$m US$m US$m US$m
Revenue from external customers
Data 1,016 249 194 163 1,622
Decisioning 376 67 115 56 614
Business-to-Business 1,392 316 309 219 2,236
Consumer Services 645 46 99 - 790
Total ongoing activities 2,037 362 408 219 3,026
1. Revenue for the six months ended 30 September 2021 has been
re-presented for the reclassification to exited business activities of certain
B2B businesses, and includes EMEA/Asia Pacific Data and Decisioning revenue of
US$12m and US$22m respectively.
Data revenue is predominantly transactional with a portion from licence fees.
Decisioning revenue is derived from:
• software and system sales, and includes recurring licence fees,
consultancy and implementation fees, and transactional charges;
• credit score fees which are primarily transactional; and
• analytics income comprising a mix of consultancy and professional
fees as well as transactional revenue.
Consumer Services revenue primarily comprises monthly subscription and one-off
fees, and referral fees for credit products and white-label partnerships.
The timing of revenue recognition in relation to these revenue streams is
discussed in note 4(d).
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
6. Segment information (continued)
(e) Balance sheet
(i) Net assets/(liabilities) North Latin UK and Ireland EMEA/ Total operating segments Central Total
America America Asia Pacific Activities and other Group
At 30 September 2022 US$m US$m US$m US$m US$m US$m US$m
Goodwill 3,660 667 638 483 5,448 - 5,448
Investments in associates 4 - - - 4 - 4
Right-of-use assets 74 14 16 21 125 5 130
Assets classified as held-for-sale - - 24 1 25 10 35
Other assets 2,332 592 422 480 3,826 978 4,804
Total assets 6,070 1,273 1,100 985 9,428 993 10,421
Lease obligations (93) (16) (16) (23) (148) (3) (151)
Liabilities classified as held-for-sale - - - (1) (1) - (1)
Other liabilities (1,193) (292) (235) (281) (2,001) (4,663) (6,664)
Total liabilities (1,286) (308) (251) (305) (2,150) (4,666) (6,816)
Net assets/(liabilities) 4,784 965 849 680 7,278 (3,673) 3,605
North Latin UK and Ireland EMEA/ Total operating segments Central Total
America America Asia Pacific Activities and other Group
At 30 September 2021 US$m US$m US$m US$m US$m US$m US$m
Goodwill 3,348 660 704 779 5,491 - 5,491
Investments in associates 5 - 58 11 74 52 126
Right-of-use assets 83 13 27 31 154 5 159
Other assets 2,014 517 455 644 3,630 984 4,614
Total assets 5,450 1,190 1,244 1,465 9,349 1,041 10,390
Lease obligations (103) (16) (27) (34) (180) (4) (184)
Other liabilities (886) (220) (266) (420) (1,792) (5,092) (6,884)
Total liabilities (989) (236) (293) (454) (1,972) (5,096) (7,068)
Net assets/(liabilities) 4,461 954 951 1,011 7,377 (4,055) 3,322
(ii) Central Activities and other comprises:
30 September
2022 2021
Assets Liabilities Net assets/ Assets Liabilities Net assets/
(liabilities) (liabilities)
US$m US$m US$m US$m US$m US$m
Central Activities 776 (108) 668 612 (202) 410
Investments in associates - - - 52 - 52
Net debt(1) 150 (4,150) (4,000) 245 (4,376) (4,131)
Tax (current and deferred) 67 (408) (341) 132 (518) (386)
993 (4,666) (3,673) 1,041 (5,096) (4,055)
1. Total Net debt comprises Net debt included within Central Activities
plus lease obligations included in operating segments of US$148m (2021:
US$180m).
(iii) Capital employed 30 September
2022 2021
US$m US$m
North America 4,784 4,461
Latin America 965 954
UK and Ireland 849 951
EMEA/Asia Pacific 680 1,011
Total operating segments 7,278 7,377
Central Activities 668 462
Add: Lease obligations in operating segments 148 180
Less: Right-of-use assets (130) (159)
Less: Non-controlling interests (32) (36)
Capital employed attributable to owners 7,932 7,824
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
7. Information on business segments (including non-GAAP disclosures)
Business-to- Consumer Services Total business segments Central Total
Business Activities continuing operations
Six months ended 30 September 2022 US$m US$m US$m US$m US$m
( )
Revenue from external customers
Ongoing activities 2,346 887 3,233 - 3,233
Exited business activities 14 - 14 - 14
Total 2,360 887 3,247 - 3,247
Reconciliation from Benchmark EBIT to
profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 736 202 938 (57) 881
Transfer pricing and other adjustments 4 (5) (1) 1 -
Ongoing activities 740 197 937 (56) 881
Exited business activities (8) - (8) - (8)
Total 732 197 929 (56) 873
Net interest expense included in Benchmark PBT (note 9(b)) (2) (1) (3) (59) (62)
Benchmark PBT 730 196 926 (115) 811
Exceptional items (note 8(a)) (27) - (27) - (27)
Impairment of goodwill (note 14) (152) - (152) - (152)
Amortisation of acquisition intangibles (78) (15) (93) - (93)
Acquisition and disposal expenses (10) (11) (21) - (21)
Adjustment to the fair value of contingent consideration (66) - (66) - (66)
Interest on uncertain tax provisions (note 9(a)) - - - 6 6
Financing fair value remeasurements (note 9(c)) - - - 59 59
Profit/(loss) before tax 397 170 567 (50) 517
Business-to- Consumer Services Total business segments Central Total
Business Activities continuing operations
Six months ended 30 September 2021(1) US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 2,236 790 3,026 - 3,026
Exited business activities 35 - 35 - 35
Total 2,271 790 3,061 - 3,061
Reconciliation from Benchmark EBIT to
profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 704 192 896 (83) 813
Transfer pricing and other adjustments 3 (4) (1) 1 -
Ongoing activities 707 188 895 (82) 813
Exited business activities (6) (1) (7) - (7)
Total 701 187 888 (82) 806
Net interest expense included in Benchmark PBT (note 9(b)) (3) (1) (4) (51) (55)
Benchmark PBT 698 186 884 (133) 751
Exceptional items (note 8(a)) 5 - 5 - 5
Amortisation of acquisition intangibles (80) (9) (89) - (89)
Acquisition and disposal expenses (18) - (18) - (18)
Adjustment to the fair value of contingent consideration (1) - (1) - (1)
Non-benchmark share of post-tax loss of associates - - - (3) (3)
Interest on uncertain tax provisions (note 9(a)) - - - (12) (12)
Financing fair value remeasurements (note 9(c)) - - - 21 21
Profit/(loss) before tax 604 177 781 (127) 654
1. Revenue of US$34m and Benchmark EBIT of US$(7m) for the six months
ended 30 September 2021 have been re-presented for the reclassification to
exited business activities of certain B2B and Consumer Services businesses.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
8. Exceptional items and other adjustments made to derive Benchmark PBT
(a) Net charge for Exceptional items and other adjustments made to derive
Benchmark PBT
Six months ended 30 September
2022 2021
US$m US$m
Exceptional items:
Loss on disposal of operations (note 8(b)) 3 -
Profit on disposal of associate (note 8(c)) (1) (11)
Restructuring costs (note 8(d)) 20 -
Onerous global support costs (note 8(e)) 8 -
Legal provisions movements (note 8(f)) (3) 6
Net charge/(credit) for Exceptional items 27 (5)
Other adjustments made to derive Benchmark PBT:
Amortisation of acquisition intangibles 93 89
Impairment of goodwill (note 14) 152 -
Acquisition and disposal expenses 21 18
Adjustment to the fair value of contingent consideration (note 23(c)) 66 1
Non-benchmark share of post-tax loss of associates - 3
Interest on uncertain tax provisions (note 9(a)) (6) 12
Financing fair value remeasurements (note 9(c)) (59) (21)
Net charge for other adjustments made to derive Benchmark PBT 267 102
Net charge for Exceptional items and other adjustments made to derive 294 97
Benchmark PBT
By income statement caption:
Within total operating expenses 359 103
Within operating profit 359 103
Within share of post-tax loss of associates - 3
Within finance expense (65) (9)
Net charge for Exceptional items and other adjustments made to derive 294 97
Benchmark PBT
(b) Loss on disposal of operations
The loss on disposal of operations in the period ended 30 September 2022 of
US$3m comprises costs incurred following the cessation of our activities in
Russia in the year ended 31 March 2022.
(c) Profit on disposal of associate
On 18 November 2020, the Group disposed of its 18.6% interest in Finicity
Corporation. During the period, further consideration of US$1m (2021: US$11m)
was received in respect of earnout arrangements, the payout of which was not
anticipated at 31 March 2021.
(d) Restructuring costs
Costs of US$20m were recognised in the period associated with a strategic
review and restructuring, primarily in the EMEA and Asia Pacific regions. 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 of US$7m on the disposal of internally generated software
assets, and US$11m is labour related. The associated cash outflow was US$9m.
(e) Onerous global support costs
The charge in the current period 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
period ended 30 September 2022 reflects legal costs incurred in North America
of US$25m, offset by insurance recoveries of US$28m.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
9. Net finance (income)/expense
(a) Net finance (income)/expense included in profit before tax
Six months ended 30 September
2022 2021
US$m US$m
Interest income:
Bank deposits, short-term investments and loan notes (3) (7)
Interest on pension plan assets (note 16(b)) (2) -
Interest income (5) (7)
Finance expense:
Interest on borrowings and derivatives 63 58
Interest on leases 4 4
Credit in respect of financing fair value remeasurements (note 9(c)) (59) (21)
Interest on uncertain tax provisions (6) 12
Finance expense 2 53
Net finance (income)/expense included in profit before tax (3) 46
(b) Net interest expense included in Benchmark PBT
Six months ended 30 September
2022 2021
US$m US$m
Interest income (5) (7)
Interest expense 67 62
Net interest expense included in Benchmark PBT 62 55
(c) Analysis of credit in respect of financing fair value remeasurements
Six months ended 30 September
2022 2021
US$m US$m
Foreign exchange losses/(gains) on Brazilian real intra-Group funding(1) 30 (13)
Foreign currency loss on cross currency-swaps designated as a 81 12
cashflow hedge - transfer from OCI
Other financing fair value gains(2) (170) (20)
Credit in respect of financing fair value remeasurements (59) (21)
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$81m (2021: US$12m) of fair value gains on borrowings which are in a
cashflow hedge relationship.
10. Tax - continuing operations
(a) Tax charge and effective rate of tax
Six months ended 30 September
2022 2021
US$m US$m
Tax charge(1) 210 156
Profit before tax 517 654
Effective rate of tax based on profit before tax 40.6% 23.9%
1. The tax charge comprises a current tax charge of US$253m (2021:
US$150m) and a deferred tax credit of US$43m (2021: charge of US$6m).
Tax charged within the interim reporting period ended 30 September 2022 has
been calculated by applying the effective rate of tax which is expected to
apply to the Group for the year ending 31 March 2023 using rates substantively
enacted by 30 September 2022 as required by IAS 34 'Interim Financial
Reporting'.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
10. Tax - continuing operations (continued)
(a) Tax charge and effective rate of tax (continued)
The increase in the effective rate of tax from the comparative period is
largely attributable to the goodwill impairment arising in the period and the
significant increase in the adjustment to the fair value of contingent
consideration, both of which are treated as non-deductible for tax purposes.
In addition, there has been a small adjustment to tax balances relating to
earlier periods.
The Group's tax charge will continue to be influenced by the profile of
profits earned in different countries in which the Group's subsidiaries
operate, in particular, our material markets being North America, Brazil and
the UK. Tax reform continues in 2023 and future years driven by the
Organisation for Economic Co-operation and Development's (OECD) project to
address the tax challenges arising from the digitalisation of the economy
including the proposed global minimum tax legislation. Experian continues to
analyse the implications for the Group from these model rules and will
determine the outcome once the final relevant legislation is available.
(b) Reconciliation of the tax charge to the Benchmark tax charge
Six months ended 30 September
2022 2021
US$m US$m
Tax charge 210 156
Tax relief on Exceptional items and other adjustments made to derive Benchmark 1 30
PBT
Benchmark tax charge 211 186
Benchmark PBT 811 751
Benchmark tax rate 26.0% 24.8%
11. Discontinued operations
There have been no material divestments during the six months ended 30
September 2022. The profit from discontinued operations in the period ended 30
September 2021 of US$19m comprised the release of historical tax provisions
relating to the disposal of the Group's comparison shopping and lead
generation businesses in FY13, and the email/cross channel marketing business
(CCM) disposed of in FY18.
The cash inflow from operating activities of US$nil (2021: US$1m) related to
the disposal of CCM.
12. Earnings per share disclosures
(a) Earnings per share (EPS)
Six months ended 30 September
Basic Diluted
2022 2021 2022 2021
US cents US cents US cents US cents
Continuing and discontinued operations 33.5 56.5 33.3 56.1
Less: profit from discontinued operations - (2.1) - (2.1)
Continuing operations 33.5 54.4 33.3 54.0
Add: Exceptional items and other adjustments made to derive Benchmark PBT, net 31.9 7.3 31.8 7.3
of related tax
Benchmark EPS (non-GAAP measure) 65.4 61.7 65.1 61.3
(b) Analysis of earnings Six months ended
30 September
2022 2021
US$m US$m
Total profit for the period attributable to owners of Experian plc 306 516
Less: profit from discontinued operations - (19)
Continuing operations 306 497
Add: Exceptional items and other adjustments made to derive Benchmark PBT, net 292
of related tax, attributable to owners of Experian plc
67
Benchmark earnings attributable to owners of Experian plc (non-GAAP measure) 598 564
Benchmark earnings attributable to non-controlling interests (non-GAAP 2 1
measure)
Total Benchmark earnings (non-GAAP measure) 600 565
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
12. Earnings per share disclosures (continued)
(c) Reconciliation of Total Benchmark earnings to profit for the period Six months ended
30 September
2022 2021
US$m US$m
Total Benchmark earnings (non-GAAP measure) 600 565
Profit from discontinued operations - 19
Exceptional items and other adjustments made to derive Benchmark PBT, net of
related tax:
- attributable to owners of Experian plc (292) (67)
- attributable to non-controlling interests (1) -
Profit for the period 307 517
(d) Weighted average number of ordinary shares Six months ended
30 September
2022 2021
million million
Weighted average number of ordinary shares 914 914
Add: dilutive effect of share incentive awards, options and share purchases 5 6
Diluted weighted average number of ordinary shares 919 920
13. Dividends on ordinary shares
Six months ended 30 September
2022 2021
US cents US cents
per share US$m per share US$m
Amounts recognised and paid:
Second interim - paid in July 2022 (2021: July) 35.75 327 32.50 297
First interim - announced(1) 17.00 155 16.00 146
1. The cost of the first interim dividend for the year ended 31 March 2022
paid in February 2022, was US$1m higher than the announced amount due to
foreign exchange rate movements.
A first interim dividend of 17.0 US cents per ordinary share will be paid on 3
February 2023 to shareholders on the register at the close of business on 6
January 2023 and is not included as a liability in these condensed interim
financial statements. The first interim dividend for the six months ended 30
September 2021 was 16.0 US cents per ordinary share and the total dividend per
ordinary share for the year ended 31 March 2022 was 51.75 US cents, with a
total full year cost of US$474m. Further administrative information on
dividends is given in the Shareholder information section on pages 54 and 55.
Dividend amounts are quoted gross.
14. Goodwill
(a) Movements in goodwill Six months ended 30 September
2022 2021
US$m US$m
Cost
At 1 April 5,790 5,314
Differences on exchange (298) (9)
Additions through business combinations (note 22(a)) 157 239
At 30 September 5,649 5,544
Accumulated impairment
At 1 April 53 53
Differences on exchange (4) -
Impairment charge 152 -
At 30 September 201 53
Net book amount at 1 April 5,737 5,261
Net book amount at 30 September 5,448 5,491
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
14. Goodwill (continued)
(b) Goodwill by cash-generating unit (CGU)
30 September
2022 2021
US$m US$m
North America 3,660 3,348
Latin America 667 660
UK and Ireland 638 704
EMEA 405 693
Asia Pacific 78 86
5,448 5,491
(c) Key assumptions for value-in-use calculations by CGU
Six months ended Year ended
30 September 2022 31 March 2022(1)
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 12.8 3.9 10.6 3.9
Asia Pacific 11.2 5.3 8.6 5.3
1. The comparatives presented are for the most recent value-in-use
calculation performed for each CGU in the year ended 31 March 2022.
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 budgets, looking forward up to five years. 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
typically used nominal growth rates of up to 14%;
· Benchmark EBIT was forecast based on historical margins. These
were expected to improve modestly throughout the period in the mature CGUs,
improve annually by a low-single-digit amount in EMEA and a mid-single-digit
amount in 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.
(d) Results of annual impairment review as at 30 September 2022
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 on-going 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$152m. 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.
· an absolute increase of 1.0 percentage points in the discount
rate would lead to a further impairment of US$74m; or
· an absolute reduction in the long-term growth rate of 1.0
percentage points would lead to a further impairment of US$55m; or
· an absolute reduction of 2.0 or 4.0 percentage points in the
forecast FY28 profit margin would lead to an additional impairment of US$58m
or US$116m respectively; or
· a 10% or 20% reduction in the forecast FY28 profit would lead to
an additional impairment of US$57m or US$116m respectively.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
14. Goodwill (continued)
(d) Results of annual impairment review as at 30 September 2022 (continued)
The review for the Asia Pacific CGU indicated that the recoverable amount
exceeded the carrying value by US$120m and that any decline in estimated
value-in-use in excess of that amount would result in the recognition of an
impairment charge. The sensitivities, which result in the recoverable amount
being equal to the carrying value, can be summarised as follows:
· an absolute increase of 3.9 percentage points in the discount
rate, from 11.2% to 15.1%; or
· an absolute reduction of 5.4 percentage points in the long-term
growth rate, from growth of 5.3% to a decline of 0.1%; or
· a reduction of 5.4 percentage points in the forecast FY28 profit
margin, from 14.4% to 9.0%. A reduction in the annual margin improvement of
approximately 1.1 percentage points per year over the five-year forecast
period would also reduce the recoverable amount to the carrying value.
The recoverable amount of all other CGUs exceeded their carrying value, on the
basis of the assumptions set out in the table in note 14(c) and any reasonably
possible changes thereof.
15. Capital expenditure, disposals and capital commitments
(a) Additions
Six months ended 30 September
2022 2021
US$m US$m
Capital expenditure 281 229
Right-of-use-assets 13 16
294 245
(b) Disposal of other intangible assets and property, plant and equipment
The book value of other intangible assets and property, plant and equipment
disposed of in the six months ended 30 September 2022 was US$10m (2021:
US$20m), of which US$2m (2021: US$2m) related to the disposal of right-of-use
assets. The loss on disposal in the period ended 30 September 2022 of US$7m is
reported within non-benchmark items in the Group income statement, as it
relates to software assets developed for markets in which we no longer operate
as a result of restructuring activity (note 8(d)). The gain on disposal in the
period ended 30 September 2021 was US$3m. There was no material sublease
income in the current or prior period.
(c) Capital commitments
30 September
2022 2021
US$m US$m
Capital expenditure for which contracts have been placed:
Other intangible assets 55 61
Property, plant and equipment 10 12
65 73
Capital commitments at 30 September 2022 included commitments of US$46m not
expected to be incurred before 30 September 2023. Capital commitments at 30
September 2021 included commitments of US$53m not then expected to be incurred
before 30 September 2022. There were no material leases, in the current or
prior period, committed to which had not yet started at 30 September 2022 or
30 September 2021 respectively.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
16. Post-employment benefit assets and obligations - defined benefit plans
(a) Amounts recognised in the Group balance sheet
30 September
2022 2021
US$m US$m
Retirement benefit assets/(obligations) - funded defined benefit plans:
Fair value of funded plans' assets 753 1,292
Present value of funded plans' obligations (609) (1,165)
Assets in the Group balance sheet for funded defined benefit pensions 144 127
Obligations for unfunded post-employment benefits:
Present value of defined benefit pensions - unfunded plans (34) (50)
Present value of post-employment medical benefits (3) (4)
Liabilities in the Group balance sheet (37) (54)
Net post-employment benefit assets 107 73
The net post-employment benefit assets of US$164m at 1 April 2022 (1 April
2021: US$47m) comprised assets of US$216m (1 April 2021: US$102m) in respect
of funded plans and obligations of US$52m (1 April 2021: US$55m) in respect of
unfunded plans. The post-employment benefit assets and obligations are
denominated primarily in pounds sterling.
The funded defined benefit pension plans hold a range of assets including
equities, index-linked gilts, global corporate bonds, secured credit, and a
Liability Driven Investment strategy which is used to hedge against interest
fluctuations and inflation. The primary drivers of the reductions in the fair
value of the plans' funded assets and obligations are an increase in pound
sterling interest rates and the retranslation of assets and obligations into
US dollars.
(b) Movements in net post-employment benefit assets recognised in the Group
balance sheet
Six months ended 30 September
2022 2021
US$m US$m
At 1 April 164 47
Charge to the Group income statement within total operating expenses (1) (4)
Credit to the Group income statement within interest income 2 -
Remeasurements recognised within Other comprehensive income (35) 25
Differences on exchange (24) (2)
Contributions paid by the Group and employees 1 7
At 30 September 107 73
Contributions paid in the six months ended 30 September 2021 included a final
additional contribution of US$4m to the Experian Pension Scheme to correct a
previous funding deficit. Contributions paid in the six months ended 30
September 2022 relate to unfunded post-employment benefits.
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.
(c) Actuarial assumptions 30 September
2022 2021
% p.a. % p.a.
Discount rate 5.3 2.0
Inflation rate - based on the UK Retail Prices Index (RPI) 3.7 3.5
Inflation rate - based on the UK Consumer Prices Index (CPI) 3.2 3.0
Increase for pensions in payment - element based on the RPI (where cap is 5%) 3.4 3.3
Increase for pensions in payment - element based on the CPI (where cap is 2.0 2.0
2.5%)
Increase for pensions in payment - element based on the CPI (where cap is 3%) 2.3 2.3
Increase for pensions in deferment 3.2 3.0
Inflation in medical costs 6.8 6.3
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
16. Post-employment benefit assets and obligations - defined benefit plans
(continued)
(c) Actuarial assumptions (continued)
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, and has increased by 2.5
percentage points in the six month period from 31 March 2022.
The mortality and early retirement assumptions have been updated to reflect
the latest analysis that has been undertaken as part of the full actuarial
funding valuation at 31 March 2022, which is near completion. It is
anticipated that the funding position at 31 March 2022 will show an
improvement over the 31 March 2019 position, primarily due to a higher than
assumed return on assets. The updated mortality and early retirement
assumptions have reduced retirement benefit obligations at 30 September 2022
by approximately US$5m.
The other demographic assumptions at 30 September 2022 remain unchanged from
those used at 31 March 2022 and disclosed in the Group's statutory financial
statements for the year then ended. While COVID-19 continues to have an impact
on mortality, the impact on future trends is unknown and consequently no
adjustment has been made to mortality assumptions in this regard.
17. Notes to the Group cash flow statement
(a) Cash generated from operations
Six months ended 30 September
2022 2021
US$m US$m
Profit before tax 517 654
Share of post-tax (profit)/loss of associates (1) 2
Net finance (income)/costs (3) 46
Operating profit 513 702
Profit on disposal of property, plant and equipment - (3)
Loss on disposal of operations (note 8(b)) 3 -
Profit on disposal of associate (note 8(c)) (1) (11)
Impairment of goodwill (note 14) 152 -
Impairment of other intangible assets - 1
Amortisation and depreciation(1) 333 326
Charge in respect of share incentive plans 63 74
Increase in working capital (note 17(b)) (97) (157)
Acquisition expenses - difference between income statement charge and amount 1
paid
-
Adjustment to the fair value of contingent consideration 66 1
Movement in Exceptional and other non-benchmark items included in working (9)
capital
(6)
Cash generated from operations 1,024 927
1. Amortisation and depreciation includes amortisation of acquisition
intangibles of US$93m (2021: US$89m) which is excluded from Benchmark PBT.
Depreciation of right-of-use assets totalled US$26m (2021: US$27m).
(b) Increase in working capital
Six months ended 30 September
2022 2021
US$m US$m
Trade and other receivables (16) (47)
Trade and other payables (81) (110)
Increase in working capital(1) (97) (157)
1. There was no material change to contract assets, contract costs or loss
allowance in the period ended 30 September 2022. Contract liabilities reduced
by US$80m in the current period predominantly due to the cyclical nature of
invoicing and exchange gains.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
17. Notes to the Group cash flow statement (continued)
(c) Purchase of other intangible assets
Six months ended 30 September
2022 2021
US$m US$m
Databases 96 83
Internally generated software 147 108
Internal use software 8 17
Purchase of other intangible assets 251 208
(d) Cash flows on acquisitions (non-GAAP measure)
Six months ended 30 September
2022 2021
US$m US$m
Purchase of subsidiaries (note 22(a)) 237 347
Less: net cash acquired with subsidiaries (note 22(a)) (4) (9)
Settlement of deferred and contingent consideration 34 8
As reported in the Group cash flow statement 267 346
Acquisition expenses paid 20 18
Settlement of put options held over shares in subsidiaries - 4
Transactions in respect of non-controlling interests - 1
Cash outflow for acquisitions (non-GAAP measure) (Appendix 5) 287 369
(e) Cash outflow in respect of net share purchases (non-GAAP measure)
Six months ended 30 September
2022 2021
Notes US$m US$m
Issue of ordinary shares 20 (16) (21)
Purchase of shares by employee trusts 21 45 61
Purchase of shares held as treasury shares 21 78 75
Purchase of shares for Co-investment plan delivery 6 -
Cash outflow in respect of net share purchases (non-GAAP measure) 113 115
As reported in the Group cash flow statement:
Cash inflow in respect of shares issued (16) (21)
Cash outflow in respect of share purchases 129 136
Cash outflow in respect of net share purchases (non-GAAP measure) 113 115
(f) Analysis of cash and cash equivalents
30 September
2022 2021
US$m US$m
Cash and cash equivalents in the Group balance sheet 146 176
Bank overdrafts - (2)
Cash and cash equivalents in the Group cash flow statement 146 174
Cash and cash equivalents at 31 March 2022 of US$176m in the Group cash flow
statement were reported net of bank overdrafts of US$3m.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
17. Notes to the Group cash flow statement (continued)
(g) Reconciliation of Cash generated from operations to Benchmark operating
cash flow
(non-GAAP measure)
Six months ended 30 September
2022 2021
Notes US$m US$m
Cash generated from operations 17(a) 1,024 927
Purchase of other intangible assets 17(c) (251) (208)
Purchase of property, plant and equipment (30) (21)
Sale of property, plant and equipment 1 21
Principal lease payments (30) (30)
Acquisition expenses paid 17(d) 20 18
Dividends received from associates 1 1
Cash flows in respect of Exceptional and other non-benchmark items 34 12
Benchmark operating cash flow (non-GAAP measure) 769 720
Cash flow conversion for the six months ended 30 September 2022 was 88% (2021:
89%). Benchmark free cash flow for the six months ended 30 September 2022 was
US$474m (2021: US$473m).
18. Net debt (non-GAAP measure)
(a) Analysis by nature
30 September
2022 2021
US$m US$m
Cash and cash equivalents (net of overdrafts) 146 174
Debt due within one year - commercial paper (187) (662)
Debt due within one year - bank loans - (150)
Debt due within one year - lease obligations (49) (49)
Debt due after more than one year - bonds and notes (3,455) (3,474)
Debt due after more than one year - bank loans (176) (77)
Debt due after more than one year - lease obligations (103) (135)
Derivatives hedging loans and borrowings (324) 62
(4,148) (4,311)
(b) Analysis by balance sheet caption
30 September
2022 2021
US$m US$m
Cash and cash equivalents 146 176
Current borrowings (237) (863)
Non-current borrowings (3,731) (3,681)
Borrowings (3,968) (4,544)
Total of Group balance sheet line items (3,822) (4,368)
Accrued interest reported within borrowings excluded from Net debt (2) (5)
Derivatives reported within Other financial assets 4 69
Derivatives reported within Other financial liabilities (328) (7)
(4,148) (4,311)
At 30 September 2022, the fair value of borrowings was US$3,563m (2021:
US$4,698m).
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
18. Net debt (non-GAAP measure) (continued)
(c) Analysis of movements in Net debt
1 April Movements in the six months ended 30 September 2022 30 September
2022 Net Non-cash lease obligation Principal lease payments Net share purchases Fair Exchange 2022
cash movements(1) value and other movements
flow losses
US$m US$m US$m US$m US$m US$m US$m US$m
Derivatives hedging (42) 65 - - - (60) (287) (324)
loans and borrowings
Borrowings (4,096) (320) (11) - - (6) 465 (3,968)
Liabilities from financing activities (4,138) (255) (11) - - (66) 178 (4,292)
Accrued interest 9 (11) - - - - - (2)
Cash and cash equivalents 179 83 - 30 (113) - (33) 146
Net debt (3,950) (183) (11) 30 (113) (66) 145 (4,148)
1. Non-cash lease obligation movements include additions of US$13m and
disposals of US$2m (note 15).
19. Undrawn committed bank borrowing facilities
30 September
2022 2021
US$m US$m
Facilities expiring in:
Less than one year 250 -
One to two years 150 325
Two to three years 75 150
Three to four years 1,950 -
Four to five years - 1,950
2,425 2,425
At 31 March 2022, there were undrawn committed bank borrowing facilities of
US$2,600m.
There is one financial covenant in connection with the borrowing facilities.
Benchmark EBIT must exceed three times net interest expense before financing
fair value remeasurements. The calculation of the financial covenant excludes
the effects of IFRS 16 'Leases'. The Group monitors this, and the Net debt to
EBITDA leverage ratio, and has complied with this covenant throughout the
current and prior period.
20. Called-up share capital and share premium account
Number of Called-up share Share premium account
shares capital
million US$m US$m
At 1 April 2021 969.6 96 1,756
Shares issued under employee share incentive plans 0.9 - 21
At 30 September 2021 970.5 96 1,777
Shares issued under employee share incentive plans 0.1 - 3
At 31 March 2022 970.6 96 1,780
Shares issued under employee share incentive plans 0.6 - 16
At 30 September 2022 971.2 96 1,796
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
21. Own shares held
Number of Cost of shares
shares
million US$m
At 1 April 2021 56.0 1,006
Purchase of shares held as treasury shares 1.9 75
Purchase of shares by employee trusts 1.6 61
Other vesting of awards and exercises of share options (3.5) (47)
At 30 September 2021 56.0 1,095
Purchase of shares held as treasury shares 0.8 36
Purchase of shares by employee trusts 0.1 -
Other vesting of awards and exercises of share options (0.2) (2)
At 31 March 2022 56.7 1,129
Purchase of shares held as treasury shares 2.6 78
Purchase of shares by employee trusts 1.5 45
Other vesting of awards and exercises of share options (3.8) (46)
At 30 September 2022 57.0 1,206
Own shares held at 30 September 2022 included 50.0 million (2021: 47.7
million) shares held as treasury shares and 7.0 million (2021: 8.3 million)
shares held in employee trusts. Own shares held at 31 March 2022 included 48.5
million shares held as treasury shares (1 April 2021: 52.3 million shares) and
8.2 million shares
(1 April 2021: 3.7 million shares) held in employee trusts.
During the period ended 30 September 2021, 6.0 million shares held as treasury
shares were transferred to an employee trust.
The total cost of own shares held at each balance sheet date is deducted from
other reserves in the Group balance sheet.
22. Acquisitions
(a) Acquisitions in the period
The Group made five acquisitions in the period to 30 September 2022, including
the acquisition on 4 April 2022 of the entire share capital of CIC Plus, Inc.
and its affiliate Tayvah, LLC (CIC Plus), a leading provider of employer
compliance management solutions, for a cash consideration of US$188m. This
investment supplements our employer services offering in the USA.
CIC Plus Other Total
US$m US$m US$m
Intangible assets:
Customer and other relationships 51 1 52
Software development 20 34 54
Marketing-related acquisition intangibles 1 - 1
Other non-acquisition intangibles 4 - 4
Intangible assets 76 35 111
Trade and other receivables 9 3 12
Cash and cash equivalents (note 17(d)) 3 1 4
Trade and other payables (7) (1) (8)
Deferred tax liabilities - (4) (4)
Total identifiable net assets 81 34 115
Goodwill 107 50 157
Total 188 84 272
Satisfied by:
Cash (note 17(d)) 188 49 237
Contingent consideration - 35 35
Total 188 84 272
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
22. Acquisitions (continued)
(a) Acquisitions in the period (continued)
These provisional fair values are determined by using established estimation
techniques such as discounted cash flow and option valuation models; the most
significant assumption being related to the proportion of earnings
attributable to customer relationships and software. Provisional fair values
contain amounts which will be finalised no later than one year after the date
of acquisition. Provisional amounts, predominantly for intangible assets and
associated tax balances, have been included at 30 September 2022, 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.
(b) Additional information in respect of acquisitions in the period
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 35 111
Trade and other payables (2) (1) (3)
Deferred tax liabilities - (4) (4)
Increase in book value of net assets from provisional fair value adjustments 74 30 104
Gross contractual amounts receivable in respect of trade and other receivables 9 3 12
Pro forma revenue from 1 April 2022 to date of acquisition - - -
Revenue from date of acquisition to 30 September 2022 8 1 9
Loss before tax from date of acquisition to 30 September 2022 (4) - (4)
At the dates of acquisition, the gross contractual amounts receivable in
respect of trade and other receivables of US$12m were expected to be collected
in full.
If the transactions had occurred on the first day of the financial year, no
additional contribution to profit before tax would have been recorded.
(c) Prior year acquisitions
US$30m of contingent consideration was settled in the period in respect of Tax
Credit Co., LLC and a further US$4m was settled in respect of the acquisition
of Servicios de Información Avanzada Comercial y Financiera S.A. (Sinacofi
Buró). Both acquisitions completed in the year ended 31 March 2022. Further
detail on contingent consideration fair value adjustments recognised in the
period is provided in note 23(c).
23. Financial risk management
(a) Financial risk factors
The Group's activities expose it to a variety of financial risks. These are
market risk, including foreign exchange risk and interest rate risk, credit
risk and liquidity risk. The nature of these risks and the policies adopted by
way of mitigation are unchanged from those reported in the Annual Report and
Group financial statements for the year ended 31 March 2022. Full information
and disclosures were contained in that document.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
23. Financial risk management (continued)
(b) Analysis by valuation method for put options and items measured at fair
value
(i) At 30 September 2022
Level 1 Level 2 Level 3 Total
US$m US$m US$m US$m
Financial assets:
Non-hedging derivatives - 170 - 170
Other financial assets at fair value through profit or loss - - 18 18
Financial assets at fair value through profit or loss - 170 18 188
Listed and trade investments(1) 51 - 275 326
51 170 293 514
Financial liabilities:
Derivatives used for hedging - fair value hedges(2) - (234) - (234)
Non-hedging derivatives - (38) - (38)
Other liabilities at fair value through profit or loss - - (166) (166)
Financial liabilities at fair value through profit or loss - (272) (166) (438)
Derivatives used for hedging - cash flow hedge(1, 2) - (78) - (78)
Put options - - (151) (151)
- (350) (317) (667)
Net financial assets/(liabilities) 51 (180) (24) (153)
(ii) At 30 September 2021 Level 1 Level 2 Level 3 Total
US$m US$m US$m US$m
Financial assets:
Derivatives used for hedging - fair value hedges(2) - 49 - 49
Non-hedging derivatives - 48 - 48
Other financial assets at fair value through profit or loss - - 8 8
Financial assets at fair value through profit or loss - 97 8 105
Derivatives used for hedging - cash flow hedge(1,2) - 21 - 21
Listed and trade investments(1) 45 - 175 220
Financial assets revalued through OCI 45 21 175 241
45 118 183 346
Financial liabilities:
Non-hedging derivatives - (61) - (61)
Other liabilities at fair value through profit or loss - - (110) (110)
Financial liabilities at fair value through profit or loss - (61) (110) (171)
Put options - - (219) (219)
- (61) (329) (390)
Net financial assets/(liabilities) 45 57 (146) (44)
1. Listed and trade investments, and derivatives designated as a cash flow
hedge are revalued through OCI.
2. Derivatives used for hedging are in documented hedge accounting
relationships.
Financial assets at fair value through profit or loss (FVPL) are reported
within Other financial assets in the Group balance sheet. Other financial
assets include financial assets held at amortised cost of US$nil (2021:
US$108m).
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 period 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 period
end. There have been no changes in valuation techniques during the period
under review.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
23. Financial risk management (continued)
(b) Analysis by valuation method for put options and items measured at fair
value (continued)
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 30 September 2022. There have been no
transfers between levels during the current or prior period.
(c) Analysis of movements in Level 3 net financial assets/(liabilities)
(i) Six months ended 30 September 2022
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) 6 1 (35) - (28)
Settlement of contingent consideration - - 34 - 34
Adjustment to the fair value of contingent consideration(2) - - (66) - (66)
Valuation gains recognised in the - - - 16 16
Group income statement(3)
Valuation losses recognised in OCI (26) - - - (26)
Currency translation gains/(losses) recognised - (1) 8 23 30
directly in OCI
At 30 September 2022 275 18 (166) (151) (24)
1. Additions to contingent consideration comprised US$35m in respect of
acquisitions (note 22(a)).
2. Contingent consideration in relation to Tax Credit Co., LLC increased
by US$56m following fair value adjustments recognised in the period, alongside
an increase of US$10m for other previous acquisitions. Contingent
consideration liabilities are revalued at each reporting date based on current
projections of their associated targets, with any fair value remeasurements
recognised as a non-benchmark item in the Group income statement (note 8(a)).
3. Movements in the present value of expected future payments for put
options are unrealised and are recognised in financing fair value
remeasurements in the Group income statement.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
23. Financial risk management (continued)
(c) Analysis of movements in Level 3 net financial assets/(liabilities)
(continued)
(ii) Six months ended 30 September 2021
Financial assets revalued through OCI Other financial assets at FVPL Contingent consideration Put options Total
US$m US$m US$m US$m US$m
At 1 April 2021 164 12 (66) (220) (110)
Additions(1,2) 10 - (44) (7) (41)
Disposals (8) - - - (8)
Cash payment on exercise of put option - - - 4 4
Adjustment to the fair value of contingent consideration - - (1) - (1)
Conversion of convertible debt to equity investment 4 (4) - - -
Valuation gains recognised in the - - - 2 2
Group income statement(3)
Valuation gains recognised in OCI 5 - - - 5
Currency translation gains recognised directly in OCI - - 1 2 3
At 30 September 2021 175 8 (110) (219) (146)
1. Additions to contingent consideration comprised US$44m in respect of
acquisitions.
2. The addition to put options was in respect of the acquisition of
Sinacofi Buró.
3. 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.
(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 values of trade investments and contingent consideration which
are determined using a valuation methodology falling within Level 3 of the
IFRS 13 fair value hierarchy.
(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
30 September 2022. Changes in global interest rates have significantly
impacted the fair values of derivatives and borrowings and a credit of US$59m
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$42m and US$35m respectively, are
recognised in the Group statement of comprehensive income.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
24. Assets and liabilities classified as held-for-sale
The Group has classified a UK associate and two small subsidiaries in the EMEA
region as held-for-sale, and is planning to sell part of its existing UK
property portfolio. It is anticipated that these transactions will be
completed within 12 months and accordingly the assets and liabilities relating
to these transactions have been classified as held-for-sale at 30 September
2022.
Total
US$m
Assets classified as held-for-sale:
Investment in associate 24
Property, plant and equipment 10
Trade and other receivables 1
Assets classified as held-for-sale 35
Liabilities classified as held-for-sale:
Trade and other payables (1)
Liabilities classified as held-for-sale (1)
25. 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 six months ended 30 September 2022.
Following the divestment of CCM in the year ended 31 March 2018 the Group owns
23.1% 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. At the date of merger, a promissory note
and associated interest due to Experian totalled US$110m (30 September 2021:
US$106m). This was repaid in full as a result of the merger. The Group no
longer has significant influence over Vector and accordingly our interest in
this company has been recognised as a trade investment from 4 February 2022.
Interest of US$4m was recognised on the promissory note in the six months
ended 30 September 2021.
Transactions with associates are made on normal market terms and in the period
ended 30 September 2022 comprised the provision and receipt of services to
other associates of US$nil (2021: US$8m) and US$5m (2021: US$3m) respectively.
No amounts were owed by associates at 30 September 2022 or 30 September 2021,
other than Vector. Amounts due to associates were US$1m (2021: US$nil).
During the six months ended 30 September 2022, US$18m (2021: US$35m) was paid
by the Group to related undertakings, in connection with the provision of
post-employment pensions benefits. Amounts paid have reduced during the
period, following the transition in the second half of FY22 to a new UK
defined contribution pension plan, which is independently managed. In the six
months ended 30 September 2022, US$3m was paid by the Group to Experian
Medical Plan Limited (EMPL) in connection with the provision of healthcare
benefits. The FY22 payment to EMPL of US$3m was made in October 2021.
26. 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 2011 with no further right of appeal. The Brazilian tax
authorities had raised similar assessments in respect of the 2012 to 2016 tax
years, in which approximately US$143m was claimed, and may raise similar
claims in respect of other years. In August 2022, the Brazilian courts found
in favour of Experian in relation to 2012 and the formal decision was
published in October 2022. This US$17m element of the assessments can now be
considered closed. The possibility of the remaining years, 2013 onwards
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.
Notes to the condensed interim financial statements
for the six months ended 30 September 2022
26. Contingencies (continued)
(b) UK marketing services regulation
We have received 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. We disagree with the ICO's decision and have appealed, during which time
all requirements will be stayed. At this stage we do not know what the final
outcome will be, but 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 being vigorously defended, including some that are in enforcement (from
the Consumer Financial Protection Bureau in the USA and the Information
Commissioner's Office in the UK). 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.
27. Events occurring after the end of the reporting period
First interim dividend
Details of the first interim dividend approved by the Board on 15 November
2022 are given in note 13.
28. Company website
The Company has a website which contains up-to-date information on Group
activities and published financial results. The directors are responsible for
the maintenance and integrity of statutory and audited information on this
website. The work carried out by the auditor does not involve consideration of
these matters. Jersey legislation and UK regulation governing the preparation
and dissemination of financial information may differ from requirements in
other jurisdictions.
Statement of directors' responsibilities
The directors are responsible for preparing the half-yearly financial report
for the six months ended 30 September 2022 in accordance with applicable law,
regulations and accounting standards.
The directors confirm that these condensed interim financial statements have
been prepared in accordance with IAS 34 'Interim Financial Reporting' as
issued by the IASB and as adopted for use in the UK and the EU, and that, to
the best of their knowledge, the interim management report herein includes a
fair review of the information required by:
(a) DTR 4.2.7R of the UK Financial Conduct Authority Disclosure Guidance and
Transparency Rules Sourcebook, being an indication of important events that
have occurred during the first six months of the financial year and the impact
on these condensed interim financial statements; and a description of the
principal risks and uncertainties for the remaining six months of the
financial year; and
(b) DTR 4.2.8R of the UK Financial Conduct Authority Disclosure Guidance and
Transparency Rules Sourcebook, being related party transactions that have
taken place in the first six months of the financial year and that have
materially affected the financial position or performance of the enterprise
during that period; and any changes in the related party transactions
described in the last annual report that could do so.
The names and biographical details of the directors of Experian plc at 17 May
2022 were listed in the Group's statutory financial statements for the year
ended 31 March 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.
Kathleen DeRose and Louise Pentland were appointed as new independent
non-executive directors on 1 November 2022.
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
15 November 2022
Independent review report to Experian plc
Conclusion
We have been engaged by the Company to review the Condensed interim financial
statements in the half-yearly financial report for the six months ended 30
September 2022 which comprises the Group income statement, the Group statement
of comprehensive income, the Group balance sheet, the Group statement of
changes in equity, the Group cash flow statement and the related explanatory
notes.
Based on our review, nothing has come to our attention that causes us to
believe that the Condensed interim financial statements in the half-yearly
financial report for the six months ended 30 September 2022 is not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted for use in the UK and the EU, and as issued by the IASB,
and the Disclosure Guidance and Transparency Rules (the DTR) of the UK's
Financial Conduct Authority (the UK FCA).
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity (ISRE (UK) 2410) issued for use in the UK. A
review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
contained in the half-yearly financial report and consider whether it contains
any apparent misstatements or material inconsistencies with the information in
the Condensed interim financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with UK-adopted international accounting standards and
International Financial Reporting Standards as adopted for use in the EU and
as issued by the IASB.
The directors are responsible for preparing the Condensed interim financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK and the EU, and as issued by the IASB.
In preparing the Condensed interim financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the Condensed
interim financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
Independent review report to Experian plc (continued)
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Zulfikar Walji
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
United Kingdom
15 November 2022
Shareholder information
Company website
A full range of investor information is available at www.experianplc.com.
Electronic shareholder communication
Shareholders may register for Share Portal, an electronic communication
service provided by Link Market Services (Jersey) Limited, via the Company
website at www.experianplc.com (http://www.experianplc.com) /shares. The
service is free and it facilitates the use of a comprehensive range of
shareholder services online.
When registering for Share Portal, shareholders can select their preferred
communication method - email or post. Shareholders will receive a written
notification of the availability on the Company's website of shareholder
documents unless they have elected to either (i) receive such notification via
email or (ii) receive paper copies of shareholder documents where such
documents are available in that format.
Dividend information
Dividends for the year ending 31 March 2023
A first interim dividend in respect of the year ending 31 March 2023 of 17.0
US cents per ordinary share will be paid on 3 February 2023 to shareholders on
the register at the close of business on 6 January 2023. Unless shareholders
elect by 6 January 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 13 January 2023.
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 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 6 January 2023.
Dividend Reinvestment Plan (DRIP)
The DRIP enables those shareholders who receive their dividends under the IAS
arrangements to use their cash dividends to buy more shares in the Company.
Eligible shareholders, who wish to participate in the DRIP in respect of the
first interim dividend for the year ending 31 March 2023 to be paid on 3
February 2023, should return a completed and signed DRIP application form, to
be received by the registrars by no later than 6 January 2023. Shareholders
should contact the registrars for further details.
American Depositary Receipts (ADR)
Experian has a sponsored Level 1 ADR programme, for which J.P. Morgan Chase
Bank, N.A. acts as depositary. This ADR programme is not listed on a stock
exchange in the USA and trades on the highest tier of the US over-the-counter
market, OTCQX, under the symbol EXPGY. Each ADR represents one Experian plc
ordinary share. Further information can be obtained by contacting:
Shareowner Services
J.P. Morgan Chase Bank, N.A.
PO Box 64504
St. Paul, MN 55164-0504
USA
T +1 651 453 2128 (from the USA: 1 800 990 1135)
E Visit www.shareowneronline.com
(https://urldefense.com/v3/__http:/www.shareowneronline.com__;!!MfzFaTml5A!ys1WHD-koMbeUMWgVggHZIPnaFnMKLuJrWnHT3extrcXUrYSy_vyE49M4b_wbYGGaQ$)
, then select 'Contact Us'
W www.adr.com
(https://urldefense.com/v3/__http:/www.adr.com__;!!MfzFaTml5A!0aGDuQts0NUpYNHqxAzQy11LTs_WwOsyp-82yELpSaVo0RuSzaJ3j9O914K83VDEAQ$)
Shareholder information (continued)
Financial calendar
First interim ex-dividend date 5 January 2023
First interim dividend record date 6 January 2023
First interim dividend exchange rate determined 13 January 2023
Trading update, third quarter 17 January 2023
First interim dividend payment date 3 February 2023
Preliminary announcement of full-year results 17 May 2023
Trading update, first quarter 13 July 2023
Annual General Meeting 19 July 2023
Contact information
Corporate headquarters
Experian plc
2 Cumberland Place,
Fenian Street,
Dublin 2,
D02 HY05
Ireland
T +353 (0) 1 846 9100
F +353 (0) 1 846 9150
Investor relations
E investors@experian.com (mailto:investors@experian.com)
Registered office
Experian plc
22 Grenville Street
St Helier
Jersey
JE4 8PX
Channel Islands
Registered number - 93905
ISIN - GB00B19NLV48
Registrars
Experian Shareholder Services
Link Market Services (Jersey) Limited
12 Castle Street
St Helier
Jersey
JE2 3RT
Channel Islands
Shareholder helpline 0371 664 9245 (+44 800 141 2952 for calls from outside
the UK)
E experian@linkregistrars.com (mailto:experian@linkregistrars.com)
Calls are charged at the standard geographic rate and will vary by provider.
Calls from outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 8.30am and 5.30pm (UK time), Monday
to Friday excluding public holidays in England and Wales.
Stock exchange listing information
Exchange: London Stock Exchange, Premium Main Market
Index: FTSE 100
Symbol: EXPN
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