REG - Experian plc - Half-year Report
15/11/2023 07:00
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RNS Number : 4599T Experian plc 15 November 2023
news release
Good growth in H1: strong strategic execution
7am, 15 November 2023 ─ Experian plc, the global information services
company, today issues its financial report for the six months ended 30
September 2023.
Brian Cassin, Chief Executive Officer, commented:
"We delivered good growth in H1. We grew in every region and across both B2B
and Consumer Services. Our growth is due to the breadth of our portfolio,
contributions from new products and ongoing new customer wins. Overall, we are
successfully executing our strategy for growth and this continues to help us
to navigate the macroeconomic environment well. Revenue growth was in line
with our expectations, up 6% at actual exchange rates from ongoing activities
and 5% at constant exchange rates, with organic revenue growth of 5%.
Benchmark EBIT margin expansion was up 20 basis points at constant currency,
and we delivered Benchmark earnings per share up 8%.
"For FY24, we continue to expect organic revenue growth in the range of 4% to
6% and modest margin accretion, all at constant exchange rates and on an
ongoing basis."
Benchmark and Statutory financial highlights
2023 2022 Actual rates growth % Constant rates growth % Organic growth %(2)
US$m
US$m
Benchmark¹
Revenue - ongoing activities(3) 3,414 3,224 6 5 5
Benchmark EBIT - ongoing activities(3,4) 929 877 6 6 n/a
Total Benchmark EBIT 928 873 6 6 n/a
Benchmark EPS USc 70.4 USc 65.4 8 8 n/a
Statutory
Revenue 3,424 3,247 5 n/a n/a
Operating profit 799 513 56 n/a n/a
Profit before tax 763 517 48 n/a n/a
Basic EPS USc 62.3 USc 33.5 86 n/a n/a
First interim dividend USc 18.0 USc 17.0 6 n/a n/a
1. See Appendix 1 (page 14) and note 6 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 2022 have
been re-presented for the reclassification to exited business activities of
certain Business-to-Business (B2B) businesses, detail is provided in notes
7(a) and 8 to the condensed interim financial statements.
4. See page 15 for reconciliation of Benchmark EBIT from ongoing activities to
Profit before tax.
Highlights
· Good H1 progress. Q1 organic revenue growth was 5%, with Q2
organic revenue growth also at 5%, taking total revenue growth from ongoing
activities to 5% at constant exchange rates and 6% at actual rates.
· Consumer Services organic revenue up 6%. We now serve 178 million
free members, up 21 million year-on-year.
· B2B organic revenue growth of 4%. Superior data, new product
performance and successful new business development drive growth.
· All regions contribute positively. Double-digit growth in Latin
America, a good performance in North America, improvement in EMEA and Asia
Pacific, and resilient growth in UK and Ireland.
· Benchmark EBIT from ongoing activities rose 6% to US$929m, with
the Benchmark EBIT margin of 27.2%, up 20 basis points at constant currency
and stable at actual exchange rates.
· Strong financial position. Net debt to EBITDA of 1.8x and low
average interest rates, c.3%, on our Net debt due to our forward rate fixing
programme.
· Good progress in EPS. Benchmark EPS up 8%, at constant and actual
exchange rates. Basic EPS up 86%.
· Benchmark operating cash flow conversion of 77% in our seasonally
weaker half of the year for cashflow.
· Statutory profit before tax of US$763m, up 48% (FY23: US$517m),
due to revenue growth and reduced non-benchmark costs.
· First interim dividend up 6% to USc 18.0 per ordinary share.
Experian
Nadia Ridout-Jamieson Investor
queries
+44 (0)20 3042 4220
Nick Jones Media
queries
Teneo
Graeme Wilson, Louise Male and Jessica
Reid
+44 (0)20 7353 4200
There will be a presentation today at 9.30am (UK time) to analysts and
investors via webcast. To view the slides and listen in online please go to
www.experianplc.com (http://www.experianplc.com) for the link.
Experian will update on third quarter trading for FY24 on 16 January 2024.
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 13 and note 27 to the
condensed interim financial statements for further information on risks and
uncertainties facing Experian.
Company website
Neither the content of the Company's website, nor the content of any website
accessible from hyperlinks on the Company's website (or any other website), is
incorporated into, or forms part of, this announcement.
About Experian
Experian is the world's leading global information services company. During
life's big moments - from buying a home or a car, to sending a child to
college, to growing a business by connecting with new customers - we empower
consumers and our clients to manage their data with confidence. We help
individuals to take financial control and access financial services,
businesses to make smarter decisions and thrive, lenders to lend more
responsibly, and organisations to prevent identity fraud and crime.
We have 22,400 people operating across 32 countries and every day we're
investing in new technologies, talented people, and innovation to help all our
clients maximise every opportunity. With corporate headquarters in Dublin,
Ireland, we are listed on the London Stock Exchange (EXPN) and are a
constituent of the FTSE 100 Index.
Learn more at www.experianplc.com (http://www.experianplc.com) or visit our
global content hub at our global news blog for the latest news and insights
from the Group.
Strategic report
Part 1 - Chief Executive Officer's review
We have started the year positively having delivered good growth in revenue
and good progress in Benchmark earnings per share. Our business has been very
resilient. This has been driven by our breadth and diversity and continued
good progress in new business wins. It also reflects the strategic progress we
have made over several years with new products and expansion into new
verticals and new market segments. This has positioned us to overcome the
unfavourable macroeconomic backdrop. Highlights include the progress we have
made across credit risk and fraud prevention, very strong progress in
diversifying our business in Brazil, successful expansions into markets such
as health, identity and verifications and the exceptional progress we continue
to make towards becoming the world's largest, most inclusive financial
services platform for consumers.
H1 organic revenue growth was 5%, composed of growth of 5% in each of Q1 and
Q2. Consumer Services delivered organic revenue growth of 6% and B2B delivered
4%. All regions contributed positively, with double-digit progress in Latin
America, a solid performance in North America, a much-improved picture in EMEA
and Asia Pacific and modest growth in UK and Ireland (UK&I). We delivered
on our EBIT margin expectations, helped by our productivity initiatives which
has enabled us to sustain growth investment.
First-half financial highlights
· Revenue growth was in line with our expected performance range.
Revenue growth from ongoing activities was 6% at actual exchange rates and 5%
at constant currency. Organic revenue growth is determined on a constant
currency basis and for ongoing activities.
· All four of our regions contributed positively to our
performance. Organic revenue growth was 4% in North America, 11% in Latin
America, 1% in UK&I and 8% in EMEA and Asia Pacific.
· By quarter, organic revenue growth was 5% in Q1 and 5% in Q2.
· Consumer Services organic revenue was up 6%. We expanded free
memberships to 178m, up 21m year-on-year, delivered significant progress in
Brazil and benefitted from elevated premium subscription revenue in the USA.
· B2B organic revenue growth was 4%. Growth in revenue from our key
strategic initiatives as well as portfolio and client mix have substantially
offset weaker credit issuance conditions across some client categories in the
USA and the UK.
· We delivered good progress in Benchmark EBIT, up 6% at both
constant and actual exchange rates. EBIT margin increased by 20 basis points
at constant exchange rates and was stable at 27.2% at actual exchange rates.
· We delivered strong growth in Benchmark earnings per share, which
increased by 8% driven by revenue performance, margin expansion and a lower
tax rate. Basic EPS was USc 62.3 (2022: USc 33.5), up 86%.
· Cash flow conversion of Benchmark EBIT into Benchmark operating
cash flow was 77%, in our seasonally weaker half of the year for cash flow.
Benchmark operating cash flow at actual exchange rates was US$711m, compared
to US$769m year-on-year.
· We continued to invest in data, technology and new products
through capital expenditure, which represented 9% of revenue, in line with our
expectations for the full year ending 31 March 2024.
· We invested US$206m in acquisitions to support our strategic
initiatives and spent a net US$68m of our US$150m share repurchase programme
(of which US$21m was settled after the period end).
· We ended the period with Net debt to Benchmark EBITDA of 1.8x on
a twelve-month basis, compared to our target range of 2.0-2.5x.
· We have announced a first interim dividend of USc 18.0 per share,
up 6%. This will be paid on 2 February 2024 to shareholders on the register at
the close of business on 5 January 2024.
First-half strategic highlights
Our strategy has been to position Experian to take advantage of secular growth
opportunities across our markets. We have invested to broaden our
capabilities, unlock synergies across our business and expand into additional
areas of clients spend. This strategy, enabled by our investments over many
years, has provided us with new market opportunities which are driving our
growth. It has extended our competitive position in many areas and reduced our
cyclicality. As we look ahead, we are confident that the strategic choices we
made position us well to accelerate growth as market conditions improve.
Strategic highlights this half include:
· In Business-to-Business:
o We have added to the depth and breadth of our datasets. Recent
developments include the addition of further Experian Boost and Go records in
the USA, the addition of c.40m Buy Now Pay Later records in the UK and, in
Brazil, the inclusion of utilities positive data and open receivables records.
o We have extended our platforms. PowerCurve delivered good growth. Ascend
continues its growth trajectory. Ascend now has 511 clients globally and Total
Contract Value of US$490m.
o Verifications and Employer Services in North America is on track to
achieve revenues of over US$190m in FY24. Record count has grown to 52 million
(at 31 October 2023) and we have added new clients for both employment
services and Experian Verify. We also have contracted access to over 80% of
the UK PAYE workforce, with approximately 50% of records now live and we are
trialling concepts with leading UK financial institutions. We are also
launching early-stage propositions in Brazil.
o In North America Automotive, we have delivered significant new revenue
growth through our Experian Marketing Engine. We have introduced new digital
audience categories and vehicle measurement capabilities, and we have added
new statistics to track electric vehicle sales.
o In North America Targeting, we now source the majority of our revenue from
digital identity services and our audiences are now available on leading
digital advertising platforms.
o In North America Health, we have unlocked additional opportunities with
clients by leveraging our new AI Advantage products, including our
award-winning Claims module.
o In Brazil, have started to scale a series of investments which unlock new
growth opportunities and diversify our portfolio. These include the expansion
of our Small and Medium Enterprise activities. We have added to our
agribusiness capabilities and have extended our fraud prevention capabilities.
o In the UK and Ireland, we continue to capitalise on successful new
business performance. We continue to add data assets to extend our data
superiority.
o In EMEA and Asia Pacific, our focus on scaled markets has led to improved
growth and profitability. We continue to enhance our analytics and scores,
extend our cloud solutions, add new datasets and expand our fraud prevention
capabilities.
· In Consumer Services:
o We have added to our free membership base. Globally, memberships grew to
178 million including 14 million members from Spanish Latin America. On a
like-for-like basis, consumer memberships are up 13% year-on-year from 157
million.
o We have added to the North America premium experience for our paid-for
members. New features include BillFixer which has helped our members
collectively save approximately US$5m since launch.
o We launched Experian Smart Money in North America. This is a new no-fee
Experian digital checking account to help individuals build their credit
score, an important milestone in our financial inclusion strategy.
o We see good client adoption for Experian Activate. Approximately 30% of
our card and loan offers in our North America Consumer Services marketplace
now run through this capability (as at 31 October 2023).
o We launched Boost for Insurance. This has added 600,000 tradelines and
helps us to build engagement. We also secured new contracts, including with a
direct insurance carrier in the USA. This represents a further step in our
strategy to scale our North America Consumer Services insurance marketplace.
o In Brazil, we have broadened the range of services available through our
app.
Other financial developments
Benchmark profit before tax (PBT) was US$860m, up 6% at actual exchange rates,
after a net interest expense of US$68m (2022: US$62m). Benchmark net finance
expense increased only modestly despite the large increase in market interest
rates thanks to the protection from our high proportion of fixed rate debt.
This kept the average interest rate on our Net debt broadly stable at around
3%. For FY24, we continue to expect net interest expense to be in the range of
US$125-130m.
The Benchmark tax rate was 25.1% (2022: 26.0%). For FY24, we continue to
expect a rate of around 26-27%, taking into account expected profit mix for
the year and an increase in the UK corporate tax rate.
Our Benchmark EPS was USc 70.4, an increase of 8% at both constant and actual
exchange rates. For FY24, we continue to expect weighted average number of
ordinary shares (WANOS) of c.914m.
Foreign exchange translation was neutral to Benchmark EPS in the half. For
FY24, we continue to expect a foreign exchange translation effect of c. 0% to
+1% impact on revenue and Benchmark EBIT, assuming recent foreign exchange
rates prevail.
Non-benchmark items:
· Statutory PBT was US$763m, up US$246m, as a result of growth, the
charge for a goodwill impairment in the prior year and reduced non-benchmark
costs.
· We have incurred a charge of US$24m (2022: US$66m) for increased
contingent consideration due to over-performance on prior acquisitions.
Reconciliation of statutory to Benchmark measures for the six months ended 30
September 2023
Statutory Non-benchmark and other items Benchmark
Investment- Amortisation of acquisition intangibles Non-cash financing items Exceptional items(2)
related items(1)
US$m US$m US$m US$m US$m US$m
3,414 - - - - 3,414 Ongoing
10 - - - - 10 Exited
Revenue 3,424 - - - - 3,424 Revenue
800 33 95 - 1 929 Ongoing
(1) - - - - (1) Exited
Operating profit 799 33 95 - 1 928 Benchmark EBIT
Profit before tax 763 32 95 (31) 1 860 Benchmark PBT
Basic EPS USc 62.3 2.7 7.8 (2.5) 0.1 70.4 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 9 to the condensed interim
financial statements.
Environmental, Social and Governance (ESG)
· We have continued to create innovative products that financially
empower consumers, to help improve financial health for all. Experian Smart
Money is a further step on this journey.
· More than 14 million US consumers have now connected to Experian
Boost, helping millions to improve their credit score.
· In the UK we launched Support Hub, which gives disabled people
and those with additional support needs an easy, one-stop portal to tell
organisations what support they need to access essential services. It has been
adopted by a growing number of financial institutions and utility companies.
· We further advanced our 'people first' culture. We have been
certified as a Great Place to Work in 24 countries, increasing our scores in
key areas for another year. 94% of employees who participated agreed that
people are treated fairly regardless of their sexual orientation, race, age
and gender, 93% agreed that Experian's flexible ways of working enable people
to work productively, and 87% agreed that Experian is a great place to work.
· We have continued to make progress towards reducing our Scope 1
and 2 emissions. To reduce our Scope 3 emissions, we are trialling a new
initiative that requires suppliers to have Science Based targets aligned to
the 1.5 degree scenario and disclose emissions data. This is in pilot with a
small number of suppliers.
Part 2 - Regional highlights for the six months ended 30 September 2023
Year-on-year % change in organic¹ revenue - for the six months ended 30 Benchmark
September 2023
EBIT
margin²
% of Group revenue³ Data Decisioning B2B Consumer Services Total Total
North America 67 3 6 4 4 4 33.9%
Latin America 15 6 12 7 32 11 26.7%
UK and Ireland 12 3 2 3 (4) 1 19.4%
EMEA and Asia Pacific 6 3 23 8 n/a 8 1.9%
Total global 100 3 7 4 6 5 27.2%
1. At constant exchange rates.
2. At actual exchange rates.
3. Percentage of Group revenue from ongoing activities calculated based on
FY24 H1 revenue at actual exchange rates.
North America
North America delivered good growth with revenue of US$2,288m, representing
total and organic revenue growth of 4%.
B2B delivered organic revenue growth of 4%. Our expanded product offers have
enabled us to secure competitive wins and deepen existing client
relationships. We have achieved this through the introduction of new datasets
and integrated solutions. These new revenue streams have helped us to offset
the effects of tighter lending standards and lower lending origination volumes
in some client categories. We benefitted in the half from expanded client
relationships and new implementations for our unmatched Ascend platform. This
platform enables clients to access a wide range of data, and build, test and
seamlessly deploy models for credit risk, marketing, decisioning and fraud
prevention. We benefitted from growth across Tier One financial institution
clients who have expanded their positions with Experian. We saw strong growth
in low-income credit data where we have introduced new analytics and model
building solutions. We have also continued to expand our position in income
and employment verification services where we have added to our record count,
which now stands at 52 million US records. We have also secured new clients
for verification services and Experian Verify.
Our Automotive, Targeting and Health verticals also performed well. In
Automotive, new vehicle production and new vehicle sales have continued to
rise over pandemic lows. Inventory increases have stimulated industry
marketing activity and driven demand for our solutions, such as Experian
Audience Engine. In Targeting, we have benefitted from growth across digital
channels, and this has offset some moderation in activity across retail
channels linked to the macroeconomic environment. Health delivered another
half of good progress. Our healthcare clients seek to address administrative
complexity, improve revenue capture and enhance patient experiences, and they
continue to leverage Experian's products in order to do so.
Consumer Services delivered organic revenue growth of 4%. Our goal is to
deepen and grow our member relationships by helping consumers to manage their
financial health. We have made good progress towards this ambition. Free
memberships have been an important contributor to our growth and have risen to
67 million, up 10 million year-on-year. We have also benefitted from the
diversity of our revenue sources. Strength in paid acquisition and partner
solutions have offset contraction in card and loan marketplace revenue. We
continue to invest in new propositions to bring new value to our members
throughout the Experian ecosystem. Early indications for our recently
introduced digital checking account, Experian Smart Money, have been
encouraging. The launch of Experian Activate last year has led to competitive
outperformance in the current environment. It enables lenders to target their
offers more precisely and to secure higher conversion rates, and this has
helped us to capture a larger share of eligible credit offers. Our nascent
insurance vertical also delivered a positive contribution. We have secured new
contracts, including one with a major insurance carrier which we are now in
the process of onboarding. We also introduced Experian Boost for insurance to
continue to drive member engagement in this category.
Benchmark EBIT rose 4% to US$775m. The Benchmark EBIT margin improved by 10
basis points to 33.9%.
Latin America
Latin America performed strongly. We delivered revenue of US$514m, with
organic revenue growth of 11% and total revenue growth at constant currency of
13%. Acquisitions included the new bureau in Panama and three small
acquisitions in Brazil, Agrosatélite, MOVA and Flexpag.
B2B organic revenue growth was 7%.
In Brazil, we continue to see many opportunities to expand access to
affordable credit for consumers and small and medium enterprises (SMEs).
Demand for positive data scores, attributes and models was strong, and we
introduced more predictive analytics and sophisticated software platforms. We
have benefitted from greater integration of credit and fraud solutions. This
has led to expanded positions with existing clients and new client wins. We
also continue to expand our position in the SME market, including an
early-stage investment in a receivables marketplace which will help SMEs to
use trade receivables as collateral to access credit.
Spanish Latin America performed well. We have expanded the extent of our
footprint in the region which now includes bureau operations in Colombia,
Peru, Chile and Panama. We have extended our data assets and have introduced
Ascend into the region. We have benefitted from the combination of our
superior data sources with our advanced analytical capabilities, and
cloud-based decisioning and analytical platforms. We continue to invest to
expand our position with SMEs and to further extend our position with larger
clients through integrated solutions.
Consumer Services delivered organic revenue growth of 32%. We continue to
build our brand in Brazil, where we have become one of the most recognised
financial services brands. Our app now ranks at number two of Brazil's top
financial services apps (per data.ai). We added eight million consumer
memberships year-on-year, to take our total free membership base in Brazil to
84 million. We continue to enhance our ecosystem of offers to drive engagement
and add further value for our members. We also continue to develop services
for consumers more widely across Latin America and our free membership count
for Spanish Latin America has reached 14 million.
Benchmark EBIT in Latin America was US$137m, up 13% at constant exchange
rates. The Benchmark EBIT margin from ongoing activities at actual exchange
rates was 26.7%, up 20 basis points.
UK and Ireland
The UK and Ireland delivered modest growth. Revenue was US$397m, with both
total and organic revenue growth at constant exchange rates of 1%. Organic
revenue improved sequentially during the half, from 1% in Q1 to 2% in Q2.
B2B was resilient in H1. It delivered organic revenue growth of 3%, helped by
strength in our core consumer bureau in Q2, which reflected good progress in
new business performance. There was good demand for a wide range of
propositions, including for affordability, originations and portfolio
management. These factors outweighed the effects of weaker UK credit
conditions. Fraud and identity management also performed well, with a positive
trajectory in win rates and new business bookings. We continue to invest to
extend and deepen our data assets, including in income verification. We have
also invested further in our data quality suite, including an extension to the
Experian Aperture Data Studio.
Organic revenue in Consumer Services was down (4)%. Premium subscription
memberships declined modestly in the half, and tight credit conditions
continued to affect volumes in the credit marketplace. We have enhanced the
product offering to ensure we are well positioned for when credit conditions
improve. We are encouraged by the performance of CreditLock, a new feature
introduction, and will roll-out further enhancements to the user experience in
the months to come. Free memberships were 13 million.
Benchmark EBIT from ongoing activities was US$77m, stable at constant exchange
rates. The Benchmark EBIT margin from ongoing activities was 19.4%, stable at
constant exchange rates and down by 20 basis points at actual exchange rates.
EMEA and Asia Pacific
In EMEA and Asia Pacific, revenue from ongoing activities was US$215m, with
organic growth of 8% and total growth at constant exchange rates of 9%. The
difference relates to the acquisition of a small cloud-based decisioning
business. Data delivered organic revenue growth of 3% while Decisioning
delivered strong growth, up 23%.
The transformation of our EMEA and Asia Pacific operations continues to
progress well. Having largely executed our transformation plans, we have
turned our attention to scaling our activities with innovation-led growth. We
have begun to roll-out new scores and attributes and, new fraud prevention
capabilities, and we plan new Ascend introductions across key markets. By
geography:
· Australia and New Zealand - delivered very positive progress,
attributable to strength in cloud-based decisioning capabilities and data
quality.
· DACH (Germany, Austria and Switzerland) - continued to experience
weakness due to economic headwinds and lower volumes.
· India - delivered strong growth, driven by credit volume
expansion and fraud prevention expansion.
· Italy - delivered strong growth driven by bureau volumes,
decisioning and fraud prevention expansion.
· South Africa - delivered good bureau growth.
· Spain - delivered modest growth helped by new client wins.
Our actions have improved Benchmark EBIT performance, which for ongoing
activities was US$4m, up year-on-year from US$(3)m. The Benchmark EBIT margin
for ongoing activities improved to 1.9% from (1.5)% in FY23.
FY24 modelling considerations
Organic revenue growth 4-6%
Benchmark EBIT margin¹ Modest margin improvement
Foreign exchange c. 0 to +1% on revenue and Benchmark EBIT
Net interest c. US$125-130m
Benchmark tax rate 26-27%
WANOS² c.914m
Capital expenditure c.9% of revenue
OCF³ conversion >90%
Share repurchases US$150m
1. At constant exchange rates.
2. Weighted average number of shares.
3. Benchmark operating cash flow.
Group financial results
Business mix including % change in organic revenue year-on-year for the six
months ended 30 September 2023
Segment Business unit % of Group revenue¹ Organic revenue growth %²
Q1 Q2 H1
North America 67% 4% 4% 4%
Data CI / BI bureaux 23% 1% 2% 1%
- CI / BI bureaux, excluding mortgage 21% 2% 2% 2%
- Mortgage 2% (8)% (3)% (6)%
Automotive 5% 8% 7% 8%
Targeting 4% 9% 5% 7%
Decisioning Health 8% 9% 6% 8%
DA / Other 5% 3% 2% 3%
Consumer Consumer Services 22% 3% 5% 4%
Latin America 15% 13% 10% 11%
Data CI / BI bureaux 9% 9% 6% 7%
Other 0% 0% (29)% (17)%
Decisioning DA / Other 3% 15% 9% 12%
Consumer Consumer Services 3% 26% 38% 32%
UK and Ireland 12% 1% 2% 1%
Data CI / BI bureaux 5% 1% 6% 4%
Targeting / Auto 1% 6% (1)% 2%
Decisioning DA / Other 3% 0% 3% 2%
Consumer Consumer Services 3% (2)% (5)% (4)%
EMEA and Asia Pacific 6% 8% 8% 8%
Total global 100% 5% 5% 5%
1. Percentage of Group revenue from ongoing activities calculated based on
FY24 H1 revenue at actual exchange rates.
2. Ongoing activities, at constant exchange rates.
CI = Consumer Information, BI = Business Information, DA = Decision Analytics.
Revenue by region
Six months ended 30 September 2023 2022¹ Growth %
US$m US$m
Total at actual exchange rates Total at constant exchange rates Organic at constant exchange rates
North America
Data 1,101 1,071 3 3
Decisioning 427 403 6 6
Business-to-Business 1,528 1,474 4 4
Consumer Services 760 730 4 4
Total ongoing activities 2,288 2,204 4 4 4
Exited business activities - -
Total North America 2,288 2,204
Latin America
Data 320 288 9 6
Decisioning 97 83 13 12
Business-to-Business 417 371 9 7
Consumer Services 97 70 34 32
Total ongoing activities 514 441 17 13 11
Exited business activities 2 8
Total Latin America 516 449
UK and Ireland
Data 201 186 4 3
Decisioning 110 105 2 2
Business-to-Business 311 291 3 3
Consumer Services 86 87 (4) (4)
Total ongoing activities 397 378 5 1 1
Exited business activities - -
Total UK and Ireland 397 378
EMEA and Asia Pacific
Data 152 148 3 3
Decisioning 63 53 25 23
Total ongoing activities 215 201 7 9 8
Exited business activities 8 15
Total EMEA and Asia Pacific 223 216
Total revenue - ongoing activities 3,414 3,224 6 5 5
Total revenue - exited business activities 10 23
Revenue 3,424 3,247 5 5
1. The results for the six months ended 30 September 2022 have been
re-presented for the reclassification to exited business activities of certain
B2B businesses, detail is provided in notes 7(a) and 8 to the condensed
interim financial statements.
See Appendix 1 (page 14) and note 6 to the condensed interim financial
statements for definitions of non-GAAP measures.
See Appendix 3 (page 15) for analyses of revenue, Benchmark EBIT and Benchmark
EBIT margin from ongoing activities by business segment.
Income statement, earnings and Benchmark EBIT margin analysis
Six months ended 30 September 2023 2022¹ Growth %
US$m US$m
Total at actual exchange rates Total at constant exchange rates
Benchmark EBIT by geography
North America 775 745 4
Latin America 137 117 13
UK and Ireland 77 74 0
EMEA and Asia Pacific 4 (3) 231
Benchmark EBIT before Central Activities 993 933 6 6
Central Activities - central corporate costs (64) (56)
Benchmark EBIT from ongoing activities 929 877 6 6
Exited business activities (1) (4)
Benchmark EBIT 928 873 6 6
Net interest (68) (62)
Benchmark PBT 860 811 6 6
Exceptional items 4 (27)
Amortisation of acquisition intangibles (95) (93)
Impairment of goodwill - (152)
Acquisition and disposal expenses (13) (21)
Adjustment to the fair value of contingent consideration (24) (66)
Interest on uncertain tax provisions - 6
Financing fair value remeasurements 31 59
Profit before tax 763 517 48
Tax charge (191) (210)
Profit after tax 572 307 86
Benchmark earnings
Benchmark PBT 860 811 6 6
Benchmark tax charge (216) (211)
Total Benchmark earnings 644 600
Owners of Experian plc 643 598 8 8
Non-controlling interests 1 2
Benchmark EPS USc70.4 USc65.4 8 8
Basic EPS USc62.3 USc33.5 86
Weighted average number of ordinary shares 914 914
Benchmark EBIT margin - ongoing activities
North America 33.9% 33.8%
Latin America 26.7% 26.5%
UK and Ireland 19.4% 19.6%
EMEA and Asia Pacific 1.9% (1.5)%
Benchmark EBIT margin 27.2% 27.2%
1. Benchmark results for the six months ended 30 September 2022 have been
re-presented for the reclassification to exited business activities of certain
B2B businesses, detail is provided in notes 7(a) and 8 to the condensed
interim financial statements.
See Appendix 1 (page 14) and note 6 to the condensed interim financial
statements for definitions of non-GAAP measures.
See Appendix 3 (page 15) for analyses of revenue, Benchmark EBIT and Benchmark
EBIT margin from ongoing activities by business segment.
Group financial review
Key statutory measures
Statutory revenue
We delivered a good performance in the period, notwithstanding a challenging
global economy and tougher trading conditions. Growth was in line with
guidance and revenue increased by 5% to US$3,424m (2022: US$3,247m).
Statutory operating profit and profit before tax
Operating profit for the six months ended 30 September 2023 improved by 56% to
US$799m (2022: US$513m), there was no repeat of the FY23 goodwill impairment
charge of US$152m, and a reduced expense for adjustments to contingent
consideration on prior acquisitions of US$24m (2022: US$66m). 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 increased to US$37m (2022: net finance income US$3m), impacted by
movements in financing fair value remeasurements of US$28m and an uplift in
average market interest rates. Profit before tax improved to US$763m (2022:
US$517m).
Statutory Basic EPS
Basic EPS increased to 62.3 US cents (2022: 33.5 US cents), reflecting a
higher profit before tax and a reduced effective tax rate.
Statutory cash flow
Cash generated from operations declined to US$973m (2022: US$1,024m) due
primarily to working capital movements. Net borrowing inflows were US$263m
(2022: US$361m). Cash outflows for net share purchases were US$47m (2022:
US$113m), offsetting deliveries under employee share plans. Undrawn committed
bank borrowing facilities at 30 September 2023 totalled US$2.3bn (2022:
US$2.4bn).
Tax
The effective rate of tax based on profit before tax was 25.0%, a decrease of
15.6 percentage points from the comparative period, largely attributable to
the absence of a non-deductible goodwill impairment charge and a reduction in
other non-deductible expenses.
Net assets
Net assets at 30 September 2023 increased to US$4,173m (2022: US$3,605m).
Capital employed, as defined in note 6(p) to the condensed interim financial
statements, was US$8,501m (2022: US$7,932m).
Equity
There was an increase in equity of US$209m from US$3,964m at 31 March 2023,
with movements detailed in the Group statement of changes in equity on page
20.
Key movements in equity during the half include:
· Profit for the period of US$572m.
· Remeasurement losses of US$22m in respect of defined benefit
pension plans.
· Employee share awards and options cost of US$57m.
· Ordinary dividends of US$345m and a movement of US$68m in
connection with net share purchases.
Seasonality
We anticipate Benchmark EBIT to be somewhat weighted towards the second half
of the year reflecting revenue seasonality and historical performance.
Risks
Identifying and managing risk is key to our purpose and the delivery of our
strategy and objectives. Our risk management process is designed to identify,
assess, respond to, report on and monitor the risks that threaten our ability
to do this.
The principal risks and uncertainties we face in the remaining six months of
the year remain consistent with those explained in detail on pages 78 to 85 of
our Annual Report for the year ended 31 March 2023:
· Data loss/misuse;
· Legislative/regulatory change and compliance;
· Macroeconomic;
· Resiliency;
· Business conduct;
· Talent acquisition and retention;
· Competition; and
· Investment outcomes.
There are no changes to our assessments of our principal risks in the first
half of the financial year, when compared with those reported in our Annual
Report for the year ended 31 March 2023. Overall risks remain stable, and we
continue to develop our responses to these and other risks on an ongoing
basis. The below matters are noted as part of our ongoing assessment.
Data Loss/misuse - External cyber security threats to businesses continue to
increase in complexity and evolve in their nature and scope. Our
threat-informed defence programme concurrently monitors and targets the most
active threats to mitigate and reduce risks.
Legislative/regulatory change and compliance - Risks associated with new laws,
new interpretations of existing laws, changes to existing regulations and
regulatory scrutiny continue at a heightened level. The global focus remains
on privacy and a general trend towards more consumer access and control over
data, as well as developments which relate to our credit reference and
consumer services businesses in our larger markets. Recent examples include:
continued scrutiny and rulemaking by the US Consumer Financial Protection
Bureau and US Federal Trade Commission; a growing number of states have
enacted or are considering privacy laws and US Congress is exploring changes
to financial data privacy standards; the ongoing interpretation of data
protection laws in several jurisdictions in which we operate, including the
UK's revised Data Protection and Digital Information Bill; and the UK
Financial Conduct Authority's Consumer Duty, which came into force on 31 July
2023.
We continue to vigorously defend a number of consumer litigation cases,
particularly in the USA and Brazil. Additionally, the hearing date for the UK
Information Commissioner's Office appeal against the First Tier Tribunal's
decision on matters of law has now been fixed for February 2024.
Macroeconomic - Moving into FY24, macroeconomic risk continues to remain
uncertain in our three core economies, with 2024 GDP forecasts now less
positive. Inflation appears more entrenched, which has seen further monetary
interventions in the USA and UK throughout the first half of the year. Given
this picture, we continue to monitor the macroeconomic trends to respond
quickly to any deterioration in the current position.
Further information on financial risk management is given in note 25 to the
condensed interim financial statements.
The Chief Executive Officer's, Business and Group financial reviews on pages 3
to 12 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 78 to 87 of
our Annual Report for the year ended 31 March 2023.
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 solid with cash flow
conversion of 77% (2022: 88%). Our undrawn committed bank borrowing facilities
at 30 September 2023 were US$2.3bn (2022: US$2.4bn) and have an average
remaining tenor of two years (2022: three years).
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 consider them to be key
measures used for assessing the underlying performance of our business.
The table below summarises our non-GAAP measures. There is a fuller
explanation, and references to where the measures are used and reconciled, in
note 6 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 that are not disclosed as exited business
activities.
Constant exchange rates Results and growth calculated after translating both years' performance at the
prior year's average exchange rates.
Total growth This is the year-on-year change in the performance of Experian's activities at
actual exchange rates.
Organic revenue growth This is the year-on-year change in the revenue of ongoing activities,
translated at constant exchange rates, excluding acquisitions until the first
anniversary of their consolidation.
Benchmark earnings Benchmark PBT less attributable tax and non-controlling interests.
Total Benchmark earnings Benchmark PBT less attributable tax.
Benchmark EPS Benchmark earnings divided by the weighted average number of ordinary shares.
Exceptional items Exceptional items include those arising from the profit or loss on disposal of
businesses, closure costs of significant operations (including associated
onerous global support costs), costs of significant restructuring programmes,
and other financially significant one-off items.
Benchmark operating cash flow Benchmark EBIT plus amortisation, depreciation and charges for share-based
incentive plans, less net capital expenditure and adjusted for changes in
working capital, principal lease payments and the Group's share of the
Benchmark profit or loss retained in continuing associates.
Cash flow conversion Benchmark operating cash flow expressed as a percentage of Benchmark EBIT.
Net debt and Net funding Net debt is borrowings (and the fair value of derivatives hedging borrowings)
excluding accrued interest, less cash and cash equivalents. Net funding is
borrowings (and the fair value of the effective portion of derivatives hedging
borrowings) excluding accrued interest, less cash held in Group Treasury.
Return on capital employed (ROCE) Benchmark EBIT less tax at the Benchmark rate divided by average capital
employed, in continuing operations, over the year. Capital employed is net
assets less non-controlling interests and right-of-use assets, plus or minus
the net tax liability or asset and plus Net debt.
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.
Six months ended Six months ended Year ended
30 September 2023 30 September 2022 31 March 2023
US dollar : Brazilian real 4.92 5.08 5.16
Pound sterling : US dollar 1.26 1.21 1.20
Euro : US dollar 1.09 1.04 1.04
US dollar : Colombian peso 4,233 4,151 4,469
US dollar : South African rand 18.65 16.31 17.00
The impact of foreign currency movements on revenue from ongoing activities is
set out in note 7(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 2023 30 September 2022 31 March 2023
US dollar : Brazilian real 5.02 5.41 5.08
Pound sterling : US dollar 1.22 1.11 1.24
Euro : US dollar 1.06 0.98 1.09
US dollar : Colombian peso 4,043 4,574 4,623
US dollar : South African rand 18.88 17.99 17.71
3. Revenue, Profit before tax and Benchmark EBIT margin by business segment
Six months ended 30 September Growth %
Total at constant exchange Organic at constant exchange
2023 2022(1)
US$m US$m rates rates
Revenue
Data 1,774 1,693 4 3
Decisioning 697 644 8 7
Business-to-Business 2,471 2,337 5 4
Consumer Services 943 887 6 6
Ongoing activities 3,414 3,224 5 5
Exited business activities 10 23 n/a
Total 3,424 3,247 5
Benchmark EBIT
Business-to-Business 754 736 2
Consumer Services 239 197 21
Business segments 993 933 6
Central Activities - central corporate costs (64) (56) n/a
Ongoing activities 929 877 6
Exited business activities (1) (4) n/a
Total Benchmark EBIT 928 873 6
Net interest expense (68) (62) n/a
Benchmark PBT 860 811 6
Exceptional items(2) 4 (27)
Other adjustments made to derive Benchmark PBT(2) (101) (267)
Profit before tax 763 517
Benchmark EBIT margin - ongoing activities
Business-to-Business 30.5% 31.5%
Consumer Services 25.3% 22.2%
Benchmark EBIT margin(3) 27.2% 27.2%
1. Revenue and Benchmark EBIT for the six months ended 30 September
2022 have been re-presented for the reclassification to exited business
activities of certain B2B businesses. See notes 7(a) and 8 to the condensed
interim financial statements.
2. See note 9 to the condensed interim financial statements.
3. Benchmark EBIT margin for ongoing activities is calculated by
dividing Benchmark EBIT for ongoing activities by revenue from ongoing
activities.
Appendices (continued)
4. Cash flow and Net debt summary
Six months ended 30 September 2023 2022
US$m US$m
Benchmark EBIT 928 873
Amortisation and depreciation charged to Benchmark EBIT 252 240
Benchmark EBITDA 1,180 1,113
Net capital expenditure (Appendix 5) (307) (280)
Increase in working capital (194) (97)
Principal lease payments (24) (30)
Benchmark profit retained in associates (1) -
Charge for share incentive plans 57 63
Benchmark operating cash flow(1) 711 769
Net interest paid (84) (68)
Tax paid (251) (227)
Benchmark free cash flow 376 474
Acquisitions(2) (206) (287)
Disposal of operations(3) 5 (3)
Purchase of investments (5) (7)
Disposal of investments - 1
Movement in Exceptional and other non-benchmark items (57) (34)
Ordinary dividends paid (345) (327)
Net cash outflow (232) (183)
Net debt at 1 April (4,030) (3,950)
Net share purchases (47) (113)
Non-cash lease obligation additions and disposals (35) (11)
Principal lease payments 24 30
Additions through business combinations (7) -
Foreign exchange and other movements 27 79
Net debt at 30 September (4,300) (4,148)
1. A reconciliation of Cash generated from operations to Benchmark operating
cashflow is provided in note 17(g) to the condensed interim financial
statements.
2. See note 17(d) to the condensed interim financial statements.
3. Includes the disposal of operations classified as held-for-sale.
5. Reconciliation of net investment
Six months ended 30 September 2023 2022
US$m US$m
Capital expenditure as reported in the Group cash flow statement 310 281
Disposal of property, plant and equipment (1) (1)
Disposal of assets classified as held-for-sale (2) -
Net capital expenditure 307 280
Acquisitions 206 287
Purchase of investments 5 7
Disposal of operations and investments (5) 2
Net investment 513 576
Condensed interim financial statements
Group income statement
for the six months ended 30 September 2023
Six months ended 30 September 2023 Six months ended 30 September 2022
Benchmark(1) Non-benchmark(2) Total Benchmark(1) Non-benchmark(2) Total
US$m US$m US$m US$m US$m US$m
Revenue (note 7(a)) 3,424 - 3,424 3,247 - 3,247
Total operating expenses (2,497) (128) (2,625) (2,375) (359) (2,734)
Operating profit/(loss) 927 (128) 799 872 (359) 513
Finance income 9 - 9 5 - 5
Finance expense (77) 31 (46) (67) 65 (2)
Net finance (expense)/income (note 10(a)) (68) 31 (37) (62) 65 3
Share of post-tax profit of associates 1 - 1 1 - 1
Profit/(loss) before tax (note 7(a)) 860 (97) 763 811 (294) 517
Tax (charge)/credit (note 11(a)) (216) 25 (191) (211) 1 (210)
Profit/(loss) for the period 644 (72) 572 600 (293) 307
Attributable to:
Owners of Experian plc 643 (74) 569 598 (292) 306
Non-controlling interests 1 2 3 2 (1) 1
Profit/(loss) for the period 644 (72) 572 600 (293) 307
Total Benchmark EBIT(1) (note 7(a)) 928 873
US cents US cents US cents US cents US cents US cents
Earnings/(loss) per share (note 12(a))
Basic 70.4 (8.1) 62.3 65.4 (31.9) 33.5
Diluted 70.0 (8.1) 61.9 65.1 (31.8) 33.3
1. Total Benchmark EBIT and other Benchmark items are non-GAAP
measures, defined in note 6 to the condensed interim financial statements.
2. The loss before tax for non-benchmark items of US$97m (2022:
US$294m) is analysed in note 9(a) to the condensed interim financial
statements.
Condensed interim financial statements
Group statement of comprehensive income
for the six months ended 30 September 2023
Six months ended 30 September
2023 2022
US$m US$m
Profit for the period 572 307
Other comprehensive income
Items that will not be reclassified to profit or loss:
Remeasurement of post-employment benefit assets and obligations (note 16(b)) (22) (35)
Changes in the fair value of investments revalued through OCI (12) (42)
Deferred tax credit 6 8
Items that will not be reclassified to profit or loss (28) (69)
Items that are or may be reclassified subsequently to profit or loss:
Currency translation gains/(losses) 10 (260)
Fair value loss on cash flow hedge (6) (93)
Hedging loss reclassified to profit or loss (note 10(c)) 8 81
Items that are or may be reclassified subsequently to profit or loss 12 (272)
Other comprehensive expense for the period(1) (16) (341)
Total comprehensive income/(expense) for the period 556 (34)
Attributable to:
Owners of Experian plc 555 (28)
Non-controlling interests 1 (6)
Total comprehensive income/(expense) for the period 556 (34)
1. Amounts reported within OCI are in respect of continuing operations
and, except as reported for post-employment benefit assets and obligations,
there is no associated tax. Currency translation items, not reclassified to
profit or loss, are recognised in the hedging or translation reserve within
other reserves and in non-controlling interests. Other items within OCI are
recognised in retained earnings.
Condensed interim financial statements
Group balance sheet
at 30 September 2023
30 September 31 March
2023 2022 2023
Notes US$m US$m US$m
Non-current assets
Goodwill 14 5,727 5,448 5,575
Other intangible assets 2,352 2,195 2,289
Property, plant and equipment 380 370 382
Investments in associates 13 4 12
Deferred tax assets 49 26 37
Post-employment benefit assets 16(a) 151 144 174
Trade and other receivables 151 125 140
Financial assets revalued through OCI 311 326 313
Other financial assets 204 181 148
9,338 8,819 9,070
Current assets
Trade and other receivables 1,584 1,373 1,519
Current tax assets 41 41 50
Other financial assets 6 7 7
Cash and cash equivalents - excluding bank overdrafts 18(b) 195 146 202
1,826 1,567 1,778
Assets classified as held-for-sale 24 10 35 16
1,836 1,602 1,794
Current liabilities
Trade and other payables (1,785) (1,626) (1,955)
Borrowings 18(b) (816) (237) (156)
Current tax liabilities (141) (135) (135)
Provisions (29) (55) (56)
Other financial liabilities (57) (20) (6)
(2,828) (2,073) (2,308)
Liabilities classified as held-for-sale 24 - (1) (3)
(2,828) (2,074) (2,311)
Net current liabilities (992) (472) (517)
Total assets less current liabilities 8,346 8,347 8,553
Non-current liabilities
Trade and other payables (226) (216) (186)
Borrowings 18(b) (3,479) (3,731) (3,943)
Deferred tax liabilities (150) (273) (223)
Post-employment benefit obligations 16(a) (35) (37) (39)
Provisions (4) (4) (3)
Financial liabilities revalued through OCI (28) (78) (24)
Other financial liabilities (251) (403) (171)
(4,173) (4,742) (4,589)
Net assets 4,173 3,605 3,964
Equity
Called-up share capital 20 97 96 96
Share premium account 20 1,815 1,796 1,799
Retained earnings 20,661 20,087 20,447
Other reserves (18,435) (18,406) (18,413)
Attributable to owners of Experian plc 4,138 3,573 3,929
Non-controlling interests 35 32 35
Total equity 4,173 3,605 3,964
Condensed interim financial statements
Group statement of changes in equity
for the six months ended 30 September 2023
Called-up share capital Share premium account Retained earnings Other reserves Attributable to owners of Experian plc Non-controlling interests Total equity
(Note 20) (Note 20)
US$m US$m US$m US$m US$m US$m US$m
At 1 April 2023 96 1,799 20,447 (18,413) 3,929 35 3,964
Comprehensive income:
Profit for the period - - 569 - 569 3 572
Other comprehensive income/(expense) - - (28) 14 (14) (2) (16)
Total comprehensive income - - 541 14 555 1 556
Transactions with owners:
Employee share incentive plans:
- value of employee services - - 57 - 57 - 57
- shares issued on vesting 1 16 - - 17 - 17
- purchase of shares by employee trusts - - - (56) (56) - (56)
- other vesting of awards and exercises of share options - - (36) 49 13 - 13
- other payments - - (4) - (4) - (4)
Purchase of shares held as treasury shares - - - (29) (29) - (29)
Transactions with non-controlling interests - - 1 - 1 (1) -
Dividends paid - - (345) - (345) - (345)
Transactions with owners 1 16 (327) (36) (346) (1) (347)
At 30 September 2023 97 1,815 20,661 (18,435) 4,138 35 4,173
Group statement of changes in equity
for the six months ended 30 September 2022
Called-up share capital Share premium account Retained earnings Other reserves Attributable to owners of Experian plc Non-controlling interests Total equity
(Note 20) (Note 20)
US$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
Condensed interim financial statements
Group cash flow statement
for the six months ended 30 September 2023
Six months ended 30 September
2023 2022
Notes US$m US$m
Cash flows from operating activities
Cash generated from operations 17(a) 973 1,024
Interest paid (90) (71)
Interest received 6 3
Dividends received from associates - 1
Tax paid (251) (227)
Net cash inflow from operating activities 638 730
Cash flows from investing activities
Purchase of other intangible assets 17(c) (292) (251)
Purchase of property, plant and equipment (18) (30)
Disposal of property, plant and equipment 1 1
Disposal of assets classified as held-for-sale 2 -
Purchase of other financial assets (5) (7)
Acquisition of subsidiaries, net of cash acquired 17(d) (194) (267)
Disposal of operations 9(b) 5 (3)
Disposal of investment in associate 9(c) - 1
Net cash flows used in investing activities (501) (556)
Cash flows from financing activities
Cash inflow in respect of shares issued 17(e) 17 16
Cash outflow in respect of share purchases 17(e) (64) (129)
Other payments on vesting of share awards (4) (5)
New borrowings 270 362
Repayment of borrowings (7) (1)
Principal lease payments (24) (30)
Net receipts/(payments) for cross-currency swaps and foreign exchange contracts 12 (65)
Equity swap settlement (1) -
Dividends paid (345) (327)
Net cash flows used in financing activities (146) (179)
Net decrease in cash and cash equivalents (9) (5)
Cash and cash equivalents at 1 April 198 176
Exchange movements on cash and cash equivalents 4 (25)
Cash and cash equivalents at 30 September 17(f) 193 146
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
1. Corporate information
Experian plc (the Company) is the ultimate parent company of the Experian
group of companies (Experian or the Group). Experian is the leading global
information services group.
The Company is incorporated and registered in Jersey as a public company
limited by shares and is resident in Ireland. The Company's registered office
is at 22 Grenville Street, St Helier, Jersey JE4 8PX, Channel Islands.
The Company's ordinary shares are traded on the London Stock Exchange's
Regulated Market and have a Premium Listing.
There has been no change in this information since the Annual Report for the
year ended 31 March 2023.
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 2023 and 30 September 2022;
· were approved for issue on 14 November 2023;
· have not been audited but have been reviewed by the Company's
auditor with their report set out on pages 54 and 55; 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 2023.
The Group's statutory financial statements comprise the Annual Report and
audited financial statements which are prepared in accordance with the
Companies (Jersey) Law 1991 and both UK-adopted International Accounting
Standards (UK-IFRS) and International Financial Reporting Standards (IFRS or
IFRSs) as adopted for use in the 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 2023, were approved by the directors on 16 May 2023 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 2023 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 2023.
No significant events impacting the Group, other than those disclosed in this
document, have occurred between 1 October and 14 November 2023.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
2. Basis of preparation (continued)
Going concern
Our going concern assessment focuses on immediately available sources of
liquidity to fund our anticipated trading pattern, plus anticipated
acquisition spend, returns to shareholders and capital investment, ensuring we
always maintain a comfortable margin of headroom in case of the unexpected. We
also perform a review of indicators typical of emerging going concern issues,
and have identified none.
The directors believe that the Group 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 solid cash performance in the period and the substantial undrawn
committed bank borrowing facilities of US$2.3bn (2022: US$2.4bn), which have
an average remaining tenor of two years (2022: three years).
3. Climate-related matters
As an information services business, our main environmental impact is the
carbon footprint generated from our operations and value chain. The majority
of our footprint is made up of greenhouse gas emissions from purchased goods
and services, upstream leased assets including third-party data centres and
capital goods, with emissions from our direct operations making up
approximately 5%.
We are committed to reducing our carbon emissions and to becoming carbon
neutral in our own operations by 2030. We continue to develop our plans to
decarbonise our business further and reduce energy consumption at our data
centres and across the Group.
We recognise the importance of identifying and effectively managing the
physical and transitional risks that climate change poses to our operations
and consider the impact of climate-related matters, including legislation, on
our business. The current climate change scenario analyses undertaken in line
with Task Force on Climate-related Financial Disclosures (TCFD)
recommendations did not identify any material impact on the Group's financial
results or on going concern or viability.
The following climate change considerations were made in preparing these
condensed interim financial statements:
· The impact in the going concern period or on the viability of the
Group over the next three years.
· The impact on factors such as residual values, useful lives and
depreciation methods that determine the carrying value of non-current assets.
· The impact on forecasts of cash flows used in impairment
assessments for the value-in-use of non-current assets including goodwill
(note 14).
· The impact on forecasts of cash flows used in the fair value
measurement of assets and liabilities (note 25(d)).
· The impact on post-employment benefit assets (note 16).
At present, there is no material impact of climate-related matters on the
Group's financial results or on going concern or viability.
4. Accounting and other developments
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 Group's consolidated results or
financial position.
On 23 May 2023, the IASB published final amendments to IAS 12 'Income Taxes'
to provide a temporary mandatory relief from deferred tax accounting arising
from the jurisdictional implementation of the Organisation for Economic
Co-operation and Development's (OECD) Pillar Two model rules. The Group has
applied the exception with immediate effect.
There are no other 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.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
5. 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 and 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 2023, and no change in an estimate has had a material effect in the
current period.
Except, as described in note 4, 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 2023.
(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 2023.
During the six months ended 30 September 2023 the annual tests were performed
with no impairment identified.
(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 2023 is the
discount rate of 5.7% (2022: 5.3%). The discount rate used in the year ended
31 March 2023 was 4.9%.
(d) Provisions and contingencies
A provision is recognised when the Group has a present obligation as a result
of a past event, it is probable that an outflow of resources will be required
to settle the obligation, and a reliable estimate can be made of the amount of
the obligation.
The provision is measured at the best estimate of the expenditure required to
settle the obligation at the reporting date, discounted at a pre-tax rate
reflecting current market assessments of the time value of money and risks
specific to the liability. The unwinding of the discount is recognised as a
finance expense in the Group income statement. In making its estimates,
management takes into account the advice of legal counsel.
Restructuring provisions are recognised only when the Group has approved a
detailed formal plan that identifies the business or part of the business
concerned, and the restructuring has commenced or its main features have been
announced to those affected by it. Future operating losses are not provided
for.
In the case of pending and threatened litigation claims, management forms a
judgment as to the likelihood of ultimate liability. No liability is
recognised where the likelihood of any loss arising is possible rather than
probable.
(e) Revenue recognition (note 7)
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;
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
5. Accounting policies, estimates and judgments (continued)
(e) Revenue recognition (note 7) (continued)
- 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.
· 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 licencing 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.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
5. Accounting policies, estimates and judgments (continued)
(e) Revenue recognition (note 7) (continued)
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 these 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 to fulfil a contract predominantly comprise labour costs
directly relating to the implementation services provided.
If evidence emerges that a contract is loss making, no further costs are
capitalised and any related contract assets are reviewed for impairment. A
provision for future losses is established when the unavoidable costs of the
contract exceed the economic benefits expected to be received.
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.
(f) Tax (note 11)
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.
(g) Contingent consideration (note 25 (c))
The initially recorded cost of any acquisition includes a reasonable estimate
of the fair value of any contingent amounts expected to be payable in the
future. Any cost or benefit arising when such estimates are revised is
recognised in the Group income statement (note 9(a)).
Where part or all of the amount of disposal consideration is contingent on
future events, the disposal proceeds initially recorded include a reasonable
estimate of the value of the contingent amounts expected to be receivable and
payable in the future. The proceeds and profit or loss on disposal are
adjusted when revised estimates are made, with corresponding adjustments made
to receivables and payables as appropriate, until the ultimate outcome is
known and the related consideration received.
(h) Segment information policy and presentation principles (notes 7 and 8)
We are organised into, and managed on a worldwide basis through, operating
segments, which are based on geographic areas and supported by central
functions. As a result of a strategic review and restructuring our Europe,
Middle East and Africa (EMEA) and Asia Pacific regions were formally combined
into a single operating segment with effect from 1 April 2023. Our reportable
operating segments from that date are:
· North America
· Latin America
· UK and Ireland
· EMEA and Asia Pacific
We previously reported the 'All other segments' category as EMEA/Asia Pacific
in the condensed interim financial statements. This combined information in
respect of the EMEA and Asia Pacific segments, as neither of those operating
segments was individually reportable under IFRS 8 'Operating Segments', on the
basis of their percentage share of the Group's revenue, reported profit or
loss, or assets. Amounts for the six months ended 30 September 2022 presented
for the combined EMEA/Asia Pacific regions have been re-captioned EMEA and
Asia Pacific, with no impact on results or balances.
We separately present information equivalent to segment disclosures in respect
of the costs of our central functions, under the caption 'Central Activities',
as management believes that this information is helpful to users of the
financial statements. Costs reported for Central Activities include costs
arising from finance, treasury and other global functions.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
5. Accounting policies, estimates and judgments (continued)
(h) Segment information policy and presentation principles (notes 7 and 8)
(continued)
Inter-segment transactions are entered into under the normal commercial terms
and conditions that would be available to third parties. Such transactions do
not have a material impact on the Group's results.
Segment assets consist primarily of property, plant and equipment, intangible
assets including goodwill, derivatives designated as hedges of future
commercial transactions, contract assets and receivables. They exclude tax
assets, cash and cash equivalents, and derivatives designated as hedges of
borrowings. Segment liabilities comprise operating and contract liabilities,
including derivatives designated as hedges of future commercial transactions
and lease obligations. They exclude tax liabilities, borrowings, other than
lease obligations, and related hedging derivatives. Net assets reported for
Central Activities comprise corporate head office assets and liabilities,
including certain post-employment benefit assets and obligations, and
derivative assets and liabilities. Capital expenditure comprises additions to
property, plant and equipment and intangible assets, other than additions
through business combinations or to right-of-use assets.
Information required to be presented also includes analysis of the Group's
revenues by groups of service lines. This is supplemented by voluntary
disclosure of the profitability of those groups of service lines. For ease of
reference, we use the term 'business segments' when discussing the results of
groups of service lines. Our two business segments, are:
· Business-to-Business
· Consumer Services.
The North America, Latin America and the UK and Ireland operating segments
derive revenues from both of the Group's business segments. The EMEA and Asia
Pacific segment does not currently derive revenue from the Consumer Services
business segment.
Reportable segment information provided to the chief operating decision maker
is set out in note 7.
6. 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 for assessing the
underlying performance of our business.
(a) Benchmark profit before tax (Benchmark PBT) (note 7(a) and note 8)
Benchmark PBT is disclosed to indicate the Group's underlying profitability.
It is defined as profit before amortisation and impairment of acquisition
intangibles, impairment of goodwill, acquisition expenses, adjustments to
contingent consideration, Exceptional items, financing fair value
remeasurements, tax (and interest thereon) and discontinued operations. It
includes the Group's share of continuing associates' Benchmark post-tax
results.
An explanation of the basis on which we report Exceptional items is provided
below. Other adjustments, in addition to Exceptional items, made to derive
Benchmark PBT are explained as follows:
· Charges for the amortisation and impairment of acquisition
intangibles are excluded from the calculation of Benchmark PBT because these
charges are based on judgments about their value and economic life and bear no
relation to the Group's underlying ongoing performance. Impairment of goodwill
is similarly excluded from the calculation of Benchmark PBT.
· Acquisition and disposal expenses (representing the incidental
costs of acquisitions and disposals, one-time integration costs and other
corporate transaction expenses) relating to successful, active or aborted
acquisitions and disposals are excluded from the definition of Benchmark PBT
as they bear no relation to the Group's underlying ongoing performance or to
the performance of any acquired businesses. Adjustments to contingent
consideration are similarly excluded from the definition of Benchmark PBT.
· Charges and credits for financing fair value remeasurements
within finance expense in the Group income statement are excluded from the
definition of Benchmark PBT. These include retranslation of intra-Group
funding, and that element of the Group's derivatives that is ineligible for
hedge accounting, together with gains and losses on put options in respect of
acquisitions. Amounts recognised generally arise from market movements and
accordingly bear no direct relation to the Group's underlying performance.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
6. Use of non-GAAP measures in the condensed interim financial statements
(continued)
(b) Benchmark earnings before interest and tax (Benchmark EBIT) and margin
(Benchmark EBIT margin) (note 7(a) and note 8)
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) (Appendix 4)
Benchmark EBITDA is defined as Benchmark EBIT before the depreciation and
amortisation charged therein.
(d) Exited business activities (note 7(a) and note 8)
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 (note 7(a) and note 8)
The results of businesses trading at 30 September 2023, that are not disclosed
as exited business activities, are reported as ongoing activities.
(f) Constant exchange rates
To highlight our organic performance, we discuss our results in terms of
growth at constant exchange rates, unless otherwise stated. This represents
growth calculated after translating both years' performance at the prior
year's average exchange rates.
(g) Total growth (note 7(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 7(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.
(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 11(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 11(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 9(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.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
6. Use of non-GAAP measures in the condensed interim financial statements
(continued)
(m) Benchmark operating and Benchmark free cash flow (note 17(g) and Appendix 4)
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 (note 17(g))
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) (note 7(e)(iii))
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 2023
7. Segment information
(a) Income statement
North Latin UK and Ireland EMEA and Asia Pacific Total operating segments Central Total
America America Activities Group
Six months ended 30 September 2023 US$m US$m US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 2,288 514 397 215 3,414 - 3,414
Exited business activities - 2 - 8 10 - 10
Total 2,288 516 397 223 3,424 - 3,424
Reconciliation from Benchmark EBIT to
profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 791 136 71 994 (65) 929
(4)
Transfer pricing and other adjustments (16) 1 6 8 (1) 1 -
Ongoing activities 775 137 77 4 993 (64) 929
Exited business activities - 1 1 (3) (1) - (1)
Total 775 138 78 1 992 (64) 928
Net interest (expense)/income included in Benchmark PBT (2) (1) 1 - (2) (66) (68)
(note 10(b))
Benchmark PBT 773 137 79 1 990 (130) 860
Exceptional items (note 9(a)) (1) - - 5 4 - 4
Amortisation of acquisition intangibles (55) (10) (3) (27) (95) - (95)
Acquisition and disposal expenses 4 (8) (5) (4) (13) - (13)
Adjustment to the fair value of contingent consideration (21) (3) - - (24) - (24)
Financing fair value remeasurements (note 10(c)) - - - - - 31 31
Profit/(loss) before tax 700 116 71 (25) 862 (99) 763
North Latin UK and Ireland EMEA and Asia Pacific Total operating segments Central Total
America America Activities Group
Six months ended 30 September 2022(1) US$m US$m US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 2,204 441 378 201 3,224 - 3,224
Exited business activities - 8 - 15 23 - 23
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 761 116 68 (11) 934 (57) 877
Transfer pricing and other adjustments (16) 1 6 8 (1) 1 -
Ongoing activities 745 117 74 (3) 933 (56) 877
Exited business activities - 5 - (9) (4) - (4)
Total 745 122 74 (12) 929 (56) 873
Net interest (expense)/income included in Benchmark PBT (2) (1) 1 (1) (3) (59) (62)
(note 10(b))
Benchmark PBT 743 121 75 (13) 926 (115) 811
Exceptional items (note 9(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 10(a)) - - - - - 6 6
Financing fair value remeasurements (note 10(c)) - - - - - 59 59
Profit/(loss) before tax 619 96 68 (216) 567 (50) 517
1. Revenue of US$9m and Benchmark EBIT of US$4m for the six months ended
30 September 2022 have been re-presented for the reclassification to exited
business activities of certain B2B businesses.
Additional information by operating segment, including that on total and
organic growth at constant exchange rates is provided within pages 3 to 11.
(b) Revenue by business segment
The additional analysis of revenue from external customers provided to the
chief operating decision-maker and accordingly reportable under IFRS 8 is
given within note 8. This is supplemented by voluntary disclosure of the
profitability of groups of service lines. For ease of reference, we continue
to use the term 'business segments' when discussing the results of groups of
service lines.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
7. Segment information (continued)
(c) Reconciliation of revenue from ongoing activities
North Latin UK and Ireland EMEA and Asia Pacific Total ongoing activities
America America
US$m US$m US$m US$m US$m
Revenue for the six months ended 30 September 2022(1) 2,204 441 378 201 3,224
Adjustment to constant exchange rates - (9) (3) (2) (14)
Revenue at constant rates for the six months ended 30 September 2022 2,204 432 375 199 3,210
Organic revenue growth 84 49 4 16 153
Revenue from acquisitions - 9 1 1 11
Revenue at constant rates for the six months ended 30 September 2023 2,288 490 380 216 3,374
Adjustment to actual exchange rates - 24 17 (1) 40
Revenue for the six months ended 30 September 2023 2,288 514 397 215 3,414
Organic revenue growth at constant exchange rates 4% 11% 1% 8% 5%
Revenue growth at constant exchange rates 4% 13% 1% 9% 5%
1. Revenue for the six months ended 30 September 2022 has been
re-presented for the reclassification to exited business activities of certain
B2B businesses.
The table above demonstrates the application of the methodology set out in
note 6 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 and Asia Pacific Total operating segments
America America
Six months ended 30 September 2023 US$m US$m US$m US$m US$m
Revenue from external customers
Data 1,101 320 201 152 1,774
Decisioning 427 97 110 63 697
Business-to-Business 1,528 417 311 215 2,471
Consumer Services 760 97 86 - 943
Total ongoing activities 2,288 514 397 215 3,414
North Latin UK and Ireland EMEA and Asia Pacific Total operating segments
America America
Six months ended 30 September 2022(1) US$m US$m US$m US$m US$m
Revenue from external customers
Data 1,071 288 186 148 1,693
Decisioning 403 83 105 53 644
Business-to-Business 1,474 371 291 201 2,337
Consumer Services 730 70 87 - 887
Total ongoing activities 2,204 441 378 201 3,224
1. Revenue for the six months ended 30 September 2022 has been
re-presented for the reclassification to exited business activities of certain
B2B businesses, and includes Latin America and EMEA and Asia Pacific Data
revenue of US$8m and US$1m respectively.
Total revenue comprises revenue from ongoing activities as well as revenue
from exited business activities. Revenue in respect of exited business
activities of US$10m (2022: US$23m) comprises Latin America Data revenue of
US$2m (2022: US$8m) and EMEA and Asia Pacific Data and Decisioning revenue of
US$1m (2022: US$5m) and US$7m (2022: US$10m) respectively.
Data revenue is predominantly transactional with a portion from licence fees.
Decisioning revenue is derived from:
· software and system sales, and includes recurring licence fees,
consultancy and implementation fees, and transactional charges;
· credit score fees which are primarily transactional; and
· analytics income comprising a mix of consultancy and professional
fees as well as transactional revenue.
Consumer Services revenue primarily comprises monthly subscription and one-off
fees, and referral fees for credit products and white-label partnerships.
The timing of revenue recognition in relation to these revenue streams is
discussed in note 5(e).
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
7. Segment information (continued)
(e) Balance sheet
(i) Net assets/(liabilities) North Latin UK and Ireland EMEA and Asia Pacific Total operating segments Central Total
America America Activities and other Group
At 30 September 2023 US$m US$m US$m US$m US$m US$m US$m
Goodwill 3,662 874 718 473 5,727 - 5,727
Investments in associates 4 - 9 - 13 - 13
Right-of-use assets 63 15 36 19 133 5 138
Assets classified as held-for-sale - - - - - 10 10
Other assets 2,467 812 533 469 4,281 1,005 5,286
Total assets 6,196 1,701 1,296 961 10,154 1,020 11,174
Lease obligations (79) (18) (36) (20) (153) (4) (157)
Other liabilities (1,218) (401) (256) (168) (2,043) (4,801) (6,844)
Total liabilities (1,297) (419) (292) (188) (2,196) (4,805) (7,001)
Net assets/(liabilities) 4,899 1,282 1,004 773 7,958 (3,785) 4,173
North Latin UK and Ireland EMEA and Asia Pacific Total operating segments Central Total
America America Activities and other Group
At 30 September 2022 US$m US$m US$m US$m US$m US$m US$m
Goodwill 3,660 667 638 483 5,448 - 5,448
Investments in associates 4 - - - 4 - 4
Right-of-use assets 74 14 16 21 125 5 130
Assets classified as held-for-sale - - 24 1 25 10 35
Other assets 2,332 592 422 480 3,826 978 4,804
Total assets 6,070 1,273 1,100 985 9,428 993 10,421
Lease obligations (93) (16) (16) (23) (148) (3) (151)
Liabilities classified as held-for-sale - - - (1) (1) - (1)
Other liabilities (1,193) (292) (235) (281) (2,001) (4,663) (6,664)
Total liabilities (1,286) (308) (251) (305) (2,150) (4,666) (6,816)
Net assets/(liabilities) 4,784 965 849 680 7,278 (3,673) 3,605
(ii) Central Activities and other
30 September
2023 2022
Assets Liabilities Net assets/ Assets Liabilities Net assets/
(liabilities) (liabilities)
US$m US$m US$m US$m US$m US$m
Central Activities 733 (170) 563 776 (108) 668
Net debt(1) 197 (4,344) (4,147) 150 (4,150) (4,000)
Tax (current and deferred) 90 (291) (201) 67 (408) (341)
1,020 (4,805) (3,785) 993 (4,666) (3,673)
1. Total Net debt comprises Net debt included within Central Activities
plus lease obligations included in operating segments of US$153m (2022:
US$148m).
(iii) Capital employed
30 September
2023 2022
US$m US$m
North America 4,899 4,784
Latin America 1,282 965
UK and Ireland 1,004 849
EMEA and Asia Pacific 773 680
Total operating segments 7,958 7,278
Central Activities 563 668
Add: Lease obligations in operating segments 153 148
Less: Right-of-use assets (138) (130)
Less: Non-controlling interests (35) (32)
Capital employed attributable to owners 8,501 7,932
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
8. Information on business segments (including non-GAAP disclosures)
Business-to- Consumer Services Total business segments Central Total
Business Activities Group
Six months ended 30 September 2023 US$m US$m US$m US$m US$m
( )
Revenue from external customers
Ongoing activities 2,471 943 3,414 - 3,414
Exited business activities 10 - 10 - 10
Total 2,481 943 3,424 - 3,424
Reconciliation from Benchmark EBIT to
profit/(loss) before tax
Benchmark EBIT
Ongoing activities before transfer pricing and other adjustments 750 244 994 (65) 929
Transfer pricing and other adjustments 4 (5) (1) 1 -
Ongoing activities 754 239 993 (64) 929
Exited business activities (2) 1 (1) - (1)
Total 752 240 992 (64) 928
Net interest expense included in Benchmark PBT (note 10(b)) (1) (1) (2) (66) (68)
Benchmark PBT 751 239 990 (130) 860
Exceptional items (note 9(a)) 4 - 4 - 4
Amortisation of acquisition intangibles (79) (16) (95) - (95)
Acquisition and disposal expenses (8) (5) (13) - (13)
Adjustment to the fair value of contingent consideration (24) - (24) - (24)
Financing fair value remeasurements (note 10(c)) - - - 31 31
Profit/(loss) before tax 644 218 862 (99) 763
Business-to- Consumer Services Total business segments Central Total
Business Activities Group
Six months ended 30 September 2022(1) US$m US$m US$m US$m US$m
Revenue from external customers
Ongoing activities 2,337 887 3,224 - 3,224
Exited business activities 23 - 23 - 23
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 732 202 934 (57) 877
Transfer pricing and other adjustments 4 (5) (1) 1 -
Ongoing activities 736 197 933 (56) 877
Exited business activities (4) - (4) - (4)
Total 732 197 929 (56) 873
Net interest expense included in Benchmark PBT (note 10(b)) (2) (1) (3) (59) (62)
Benchmark PBT 730 196 926 (115) 811
Exceptional items (note 9(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 10(a)) - - - 6 6
Financing fair value remeasurements (note 10(c)) - - - 59 59
Profit/(loss) before tax 397 170 567 (50) 517
1. Revenue of US$9m and Benchmark EBIT of US$4m for the six months ended
30 September 2022 have been re-presented for the reclassification to exited
business activities of certain B2B businesses.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
9. Exceptional items and other adjustments made to derive Benchmark PBT
(a) Net charge for Exceptional items and other adjustments made to derive
Benchmark PBT
Six months ended 30 September
2023 2022
US$m US$m
Exceptional items:
(Profit)/loss on disposal of operations (note 9(b)) (5) 3
Profit on disposal of associate (note 9(c)) - (1)
Restructuring costs (note 9(d)) - 20
Onerous global support costs (note 9(e)) - 8
Legal provisions movements (note 9(f)) 1 (3)
Net (credit)/charge for Exceptional items (4) 27
Other adjustments made to derive Benchmark PBT:
Amortisation of acquisition intangibles 95 93
Impairment of goodwill (note 14) - 152
Acquisition and disposal expenses 13 21
Adjustment to the fair value of contingent consideration (note 25(c)) 24 66
Interest on uncertain tax provisions (note 10(a)) - (6)
Financing fair value remeasurements (note 10(c)) (31) (59)
Net charge for other adjustments made to derive Benchmark PBT 101 267
Net charge for Exceptional items and other adjustments made to derive 97 294
Benchmark PBT
By income statement caption:
Within total operating expenses 128 359
Within operating profit 128 359
Within finance expense (31) (65)
Net charge for Exceptional items and other adjustments made to derive 97 294
Benchmark PBT
(b) (Profit)/loss on disposal of operations
The profit in the period of US$5m on the disposal of operations comprises a
gain on the sale of interests in a number of small subsidiary undertakings in
EMEA and Asia Pacific, two of which were classified as held-for-sale. Costs of
US$3m were incurred in the six months ended 30 September 2022 following the
cessation of our activities in Russia.
(c) Profit on disposal of associate
On 18 November 2020, the Group disposed of its 18.6% interest in Finicity
Corporation. During the six months ended 30 September 2022 further
consideration of US$1m 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 associated with a strategic review and restructuring,
primarily in the EMEA and Asia Pacific regions, were recognised in the six
months ended 30 September 2022. The charge included a loss on disposal and
asset write-downs and impairments of US$7m, and US$11m was labour related. The
associated cash outflow was US$9m.
(e) Onerous global support costs
The charge incurred in the six months ended 30 September 2022 comprised costs
that were directly attributable to exited businesses or incurred solely to
support sub-scale, multi-country markets.
(f) Legal provisions movements
Movements have occurred in provisions held for a number of historical legal
claims, and reflects legal costs in North America of US$1m (2022: US$25m),
offset by insurance recoveries of US$nil (2022: US$28m).
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
10. Net finance expense/(income)
(a) Net finance expense/(income) included in profit before tax
Six months ended 30 September
2023 2022
US$m US$m
Interest income:
Bank deposits, short-term investments and loan notes (6) (3)
Interest on pension plan assets (note 16(b)) (3) (2)
Interest income (9) (5)
Finance expense:
Interest on borrowings and derivatives 73 63
Interest on leases 4 4
Credit in respect of financing fair value remeasurements (note 10(c)) (31) (59)
Interest on uncertain tax provisions - (6)
Finance expense 46 2
Net finance expense/(income) included in profit before tax 37 (3)
(b) Net interest expense included in Benchmark PBT
Six months ended 30 September
2023 2022
US$m US$m
Interest income (9) (5)
Interest expense 77 67
Net interest expense included in Benchmark PBT 68 62
(c) Analysis of credit in respect of financing fair value remeasurements
Six months ended 30 September
2023 2022
US$m US$m
Foreign exchange losses on Brazilian real intra-Group funding(1) 2 30
Foreign currency loss on cross currency-swaps designated as a 8 81
cashflow hedge - transfer from OCI
Other financing fair value gains(2) (41) (170)
Credit in respect of financing fair value remeasurements (31) (59)
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$8m (2022: US$81m) of fair value gains on borrowings which are in a
cashflow hedge relationship.
11. Tax
(a) Tax charge and effective rate of tax
Six months ended 30 September
2023 2022
US$m US$m
Tax charge(1) 191 210
Profit before tax 763 517
Effective rate of tax based on profit before tax 25.0% 40.6%
1. The tax charge comprises a current tax charge of US$267m (2022:
US$253m) and a deferred tax credit of US$76m (2022: US$43m).
Tax charged in the six months ended 30 September 2023 has been calculated by
applying the effective rate of tax which is expected to apply to the Group for
the year ending 31 March 2024 using rates substantively enacted by 30
September 2023 as required by IAS 34 'Interim Financial Reporting'.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
11. Tax (continued)
(a) Tax charge and effective rate of tax (continued)
The decrease in the effective rate of tax from the comparative period is
largely attributable to the absence of a non-deductible goodwill impairment
charge and a reduction in other non-deductible expenses.
The Group's tax charge will continue to be influenced by the profile of
profits earned in different countries in which the Group's subsidiaries
operate, in particular our material markets, being North America, Brazil and
the UK. Tax reform continues in 2023 and is expected in future years, driven
by the OECD's project to address the tax challenges arising from the
digitalisation of the economy including the enactment of global minimum tax
legislation in the UK, and Ireland's announcement to implement legislation in
line with the OECD timetable. We continue to analyse the implications for the
Group from these model rules. This may result in significant changes to
established tax principles and an increase in tax authority disputes. In turn,
this could adversely affect Experian's effective tax rate or could result in
higher cash tax liabilities.
(b) Reconciliation of the tax charge to the Benchmark tax charge
Six months ended 30 September
2023 2022
US$m US$m
Tax charge 191 210
Tax relief on adjustments made to derive Benchmark PBT 25 1
Benchmark tax charge 216 211
Benchmark PBT 860 811
Benchmark tax rate 25.1% 26.0%
12. Earnings per share disclosures
(a) Earnings per share (EPS)
Six months ended 30 September
Basic Diluted
2023 2022 2023 2022
US cents US cents US cents US cents
EPS 62.3 33.5 61.9 33.3
Add: Exceptional items and other adjustments made to derive Benchmark PBT, net 8.1 31.9 8.1 31.8
of related tax
Benchmark EPS (non-GAAP measure) 70.4 65.4 70.0 65.1
(b) Analysis of earnings
Six months ended
30 September
2023 2022
US$m US$m
Profit for the period attributable to owners of Experian plc 569 306
Add: Exceptional items and other adjustments made to derive Benchmark PBT, net 74
of related tax, attributable to owners of Experian plc
292
Benchmark earnings attributable to owners of Experian plc (non-GAAP measure) 643 598
Benchmark earnings attributable to non-controlling interests (non-GAAP 1 2
measure)
Total Benchmark earnings (non-GAAP measure) 644 600
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
12. Earnings per share disclosures (continued)
(c) Reconciliation of Total Benchmark earnings to profit for the period
Six months ended
30 September
2023 2022
US$m US$m
Total Benchmark earnings (non-GAAP measure) 644 600
Exceptional items and other adjustments made to derive Benchmark PBT, net of
related tax:
- attributable to owners of Experian plc (74) (292)
- attributable to non-controlling interests 2 (1)
Profit for the period 572 307
(d) Weighted average number of ordinary shares
Six months ended
30 September
2023 2022
million million
Weighted average number of ordinary shares 914 914
Add: dilutive effect of share incentive awards, options and share purchases 5 5
Diluted weighted average number of ordinary shares 919 919
13. Dividends on ordinary shares
Six months ended 30 September
2023 2022
US cents US cents
per share US$m per share US$m
Amounts recognised and paid:
Second interim - paid in July 2023 (2022: July) 37.75 345 35.75 327
First interim - announced 18.00 164 17.00 155
A first interim dividend of 18.0 US cents per ordinary share will be paid on 2
February 2024 to shareholders on the register at the close of business on 5
January 2024 and is not included as a liability in these condensed interim
financial statements. The first interim dividend for the six months ended 30
September 2022 was 17.0 US cents per ordinary share and the total dividend per
ordinary share for the year ended 31 March 2023 was 54.75 US cents, with a
total full year cost of US$500m. Further administrative information on
dividends is given in the Shareholder information section on pages 56 and 57.
Dividend amounts are quoted gross.
14. Goodwill
(a) Movements in goodwill
Six months ended 30 September
2023 2022
US$m US$m
Cost
At 1 April 5,821 5,790
Differences on exchange (20) (298)
Additions through business combinations (note 22(a)) 167 157
At 30 September 5,968 5,649
Accumulated impairment
At 1 April 246 53
Differences on exchange (5) (4)
Impairment charge (note 14(d)) - 152
At 30 September 241 201
Net book amount at 1 April 5,575 5,737
Net book amount at 30 September 5,727 5,448
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
14. Goodwill (continued)
(b) Goodwill by cash-generating unit (CGU)
30 September
2023 2022
US$m US$m
North America 3,662 3,660
Latin America 874 667
UK and Ireland 718 638
EMEA and Asia Pacific 473 -
EMEA - 405
Asia Pacific - 78
5,727 5,448
As a result of the restructuring activities undertaken across the EMEA and
Asia Pacific regions during FY23, we have reviewed the appropriateness of the
groups of cash-generating units identified for the purpose of goodwill
impairment testing, in line with IAS 36 'Impairment of Assets'. It has been
concluded that neither EMEA nor Asia Pacific represent separately identifiable
groups of CGUs, due to the integration and alignment of the two regions under
a single management team, and that the EMEA and Asia Pacific group of CGUs now
represents the lowest level at which goodwill is allocated and monitored for
internal management purposes.
There was no change in the goodwill allocated to the identified groups of CGUs
as a result of this change, other than to combine the carrying value of
goodwill previously allocated to the separate EMEA group of GCUs and Asia
Pacific group of CGUs into the opening carrying value of the EMEA and Asia
Pacific group of CGUs, as it was determined this approach best reflects the
goodwill associated with the reorganised units.
(c) Key assumptions for value-in-use calculations by CGU
Six months ended Year ended
30 September 2023 31 March 2023(1)
Discount rate Long-term growth rate Discount rate Long-term growth rate
% p.a. % p.a. % p.a. % p.a.
North America 10.6 3.6 11.2 2.3
Latin America 19.1 5.1 15.8 4.7
UK and Ireland 11.7 3.1 10.9 2.3
EMEA and Asia Pacific 13.8 4.1 - -
EMEA - - 12.6 3.9
Asia Pacific - - 11.2 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 2023.
As indicated in note 6(a) of the Group's statutory financial statements for
the year ended 31 March 2023, value-in-use calculations are underpinned by
financial budgets, looking forward up to five years, which continue to reflect
our current assessment of the impact of climate change and associated
commitments the Group has made. Management's key assumptions in setting the
financial budgets for the initial five-year period were as follows:
· forecast revenue growth rates were based on past experience,
adjusted for the strategic opportunities within each CGU; the forecasts used
average nominal growth rates of up to 14%, with rates of up to 12% in EMEA and
Asia Pacific.
· Benchmark EBIT was forecast based on historical margins and
expectations of future performance. These were expected to improve modestly
throughout the period in the mature CGUs and improve annually by a
mid-single-digit amount in EMEA and Asia Pacific; and
· forecast Benchmark operating cash flow conversion rates were
based on historical conversion rates achieved and performance expectations in
the respective CGUs, with long-term conversion rates of 93% used in EMEA and
Asia Pacific.
Further details of the principles used in determining the basis of allocation
by CGU and annual impairment testing are given in note 6(a) of the Group's
statutory financial statements for the year ended 31 March 2023.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
14. Goodwill (continued)
(d) Results of annual impairment review as at 30 September 2023
The recoverable amount of the EMEA and Asia Pacific CGU exceeded its carrying
value by US$137m. Any decline in the estimated value-in-use in excess of that
amount would result in the recognition of an impairment charge. The
sensitivities, which result in the recoverable amount being equal to the
carrying value, are summarised as follows:
· an absolute increase of 1.4 percentage points in the discount
rate, from 13.8% to 15.2%; or
· an absolute reduction of 2.0 percentage points in the long-term
growth rate, from growth of 4.1% to growth of 2.1%; or
· a reduction of 3.1 percentage points in the forecast FY29 profit
margin, from 24.1% to 21.0%. A reduction in the annual margin improvement of
approximately 0.6 percentage points per year over the five-year forecast
period would also reduce the recoverable amount to the carrying value; or
· an absolute reduction of 13% in the forecast FY29 profit.
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.
In the six months ended 30 September 2022, the carrying value of the EMEA CGU
was reduced to its recoverable amount through recognition of an impairment
charge of US$152m, as a result of increased discount rate assumptions used in
the value-in-use calculation, driven by increases in underlying risk-free
interest rates, combined with ongoing challenging market conditions. The
full-year FY23 goodwill impairment charge for the EMEA CGU was US$179m.
Charges were recognised within total operating expenses in the Group income
statement.
The impairment review considered the potential impact of climate change by
considering the results of the scenario analysis performed consistent with the
recommendations of the TCFD. There was no impact on the reported amounts of
goodwill as a result of this review.
15. Capital expenditure, disposals and capital commitments
(a) Additions
Six months ended 30 September
2023 2022
US$m US$m
Capital expenditure 310 281
Right-of-use-assets 39 13
349 294
(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 2023 was US$5m (2022:
US$10m), of which US$4m (2022: US$2m) related to right-of-use assets. There
was no profit or loss on disposal in the period. In the six months ended 30
September 2022 the loss on disposal of US$7m was reported within non-benchmark
items in the Group income statement, as it related to software assets
developed for markets in which we no longer operate as a result of
restructuring activity (note 9(d)).
(c) Capital commitments 30 September
2023 2022
US$m US$m
Capital expenditure for which contracts have been placed:
Other intangible assets 50 55
Property, plant and equipment 9 10
59 65
Capital commitments at 30 September 2023 included commitments of US$43m not
expected to be incurred before 30 September 2024. Capital commitments at 30
September 2022 included commitments of US$46m not then expected to be incurred
before 30 September 2023. Obligations of US$5m (2022: US$nil) were committed
to at 30 September 2023 in respect of leases for which the term had not yet
started.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
16. Post-employment benefit assets and obligations - defined benefit plans
(a) Amounts recognised in the Group balance sheet
30 September
2023 2022
US$m US$m
Retirement benefit assets/(obligations) - funded defined benefit plans:
Fair value of funded plans' assets 778 753
Present value of funded plans' obligations (627) (609)
Assets in the Group balance sheet for funded defined benefit pensions 151 144
Obligations for unfunded post-employment benefits:
Present value of defined benefit pensions - unfunded plans (33) (34)
Present value of post-employment medical benefits (2) (3)
Liabilities in the Group balance sheet (35) (37)
Net post-employment benefit assets 116 107
The net post-employment benefit assets of US$135m at 1 April 2023 (1 April
2022: US$164m) comprised assets of US$174m (1 April 2022: US$216m) in respect
of funded plans, and obligations of US$39m (1 April 2022: US$52m) in respect
of unfunded plans. The post-employment benefit assets and obligations are
denominated primarily in pounds sterling.
The funded defined benefit pension plans hold a range of assets including
equities, index-linked gilts, global corporate bonds, secured credit, and a
Liability Driven Investment strategy which is used to hedge against interest
fluctuations and inflation. The primary drivers impacting the fair value of
the plans' funded assets and obligations are changes to pound sterling
interest rates and the retranslation of assets and obligations into US
dollars.
(b) Movements in net post-employment benefit assets recognised in the Group
balance sheet
Six months ended 30 September
2023 2022
US$m US$m
At 1 April 135 164
Charge to the Group income statement within total operating expenses (1) (1)
Credit to the Group income statement within interest income 3 2
Remeasurements recognised within Other comprehensive income (22) (35)
Differences on exchange (1) (24)
Contributions paid by the Group 2 1
At 30 September 116 107
The Experian Pension Scheme was closed to the future accrual of new benefits
from 1 April 2022, contributions paid relate to unfunded post-employment
benefits. The remeasurement recognised in OCI relates to defined benefit
pension plans.
(c) Actuarial assumptions 30 September
2023 2022
% p.a. % p.a.
Discount rate 5.7 5.3
Inflation rate - based on the UK Retail Prices Index (RPI) 3.4 3.7
Inflation rate - based on the UK Consumer Prices Index (CPI) 2.9 3.2
Increase for pensions in payment - element based on the RPI (where cap is 5%) 3.1 3.4
Increase for pensions in payment - element based on the CPI (where cap is 1.9 2.0
2.5%)
Increase for pensions in payment - element based on the CPI (where cap is 3%) 2.2 2.3
Increase for pensions in deferment 2.9 3.2
Inflation in medical costs 6.3 6.8
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
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 80
basis points in the six month period from 31 March 2023.
The Group applied a 4% scaling factor to its mortality assumptions at 31 March
2023 to allow for changes in life expectancy anticipated in an updated version
of a standard UK model for projected improvements in life expectancy, which
was due to be issued based on evidence from 2022. The updated model has
subsequently been published, and the mortality assumptions at 30 September
2023 have been updated accordingly.
The Group has also considered the potential impact of climate change and, at
the present time, we do not believe there is sufficient evidence to require a
change in the long-term mortality assumptions. We will continue to monitor any
potential future impact on the mortality assumptions used.
The other demographic assumptions at 30 September 2023 remain unchanged from
those used at 31 March 2023 and disclosed in the Group's statutory financial
statements for the year then ended.
17. Notes to the Group cash flow statement
(a) Cash generated from operations
Six months ended 30 September
2023 2022
US$m US$m
Profit before tax 763 517
Share of post-tax profit of associates (1) (1)
Net finance expense/(income) 37 (3)
Operating profit 799 513
(Profit)/loss on disposal of operations (note 9(b)) (5) 3
Profit on disposal of associate (note 9(c)) - (1)
Impairment of goodwill (note 14) - 152
Amortisation and depreciation(1) 347 333
Charge in respect of share incentive plans 57 63
Increase in working capital (note 17(b)) (194) (97)
Acquisition expenses - difference between income statement charge and amount 1
paid
1
Adjustment to the fair value of contingent consideration 24 66
Movement in Exceptional and other non-benchmark items included in working (56)
capital
(9)
Cash generated from operations 973 1,024
1. Amortisation and depreciation includes amortisation of acquisition
intangibles of US$95m (2022: US$93m) which is excluded from Benchmark PBT.
Depreciation of right-of-use assets totalled US$24m (2022: US$26m).
(b) Increase in working capital
Six months ended 30 September
2023 2022
US$m US$m
Trade and other receivables (41) (16)
Trade and other payables (153) (81)
Increase in working capital(1) (194) (97)
1. There was no material change to contract assets, contract costs or loss
allowance in the current or prior period. Contract liabilities reduced by
US$57m (2022: US$80m) from 1 April predominantly due to the cyclical nature of
invoicing and exchange gains.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
17. Notes to the Group cash flow statement (continued)
(c) Purchase of other intangible assets
Six months ended 30 September
2023 2022
US$m US$m
Databases 98 96
Internally generated software 171 147
Internal use software 23 8
Purchase of other intangible assets 292 251
(d) Cash flows on acquisitions (non-GAAP measure)
Six months ended 30 September
2023 2022
US$m US$m
Purchase of subsidiaries (note 22(a)) 107 237
Less: net cash acquired with subsidiaries (note 22(a)) (16) (4)
Settlement of deferred and contingent consideration 103 34
As reported in the Group cash flow statement 194 267
Acquisition expenses paid 12 20
Cash outflow for acquisitions (non-GAAP measure) (Appendix 5) 206 287
(e) Cash outflow in respect of net share purchases (non-GAAP measure)
Six months ended 30 September
2023 2022
Notes US$m US$m
Issue of ordinary shares 20 (17) (16)
Purchase of shares by employee trusts 21 56 45
Purchase of shares held as treasury shares 21 8 78
Purchase of shares for Co-investment plan delivery - 6
Cash outflow in respect of net share purchases (non-GAAP measure) 47 113
As reported in the Group cash flow statement:
Cash inflow in respect of shares issued (17) (16)
Cash outflow in respect of share purchases 64 129
Cash outflow in respect of net share purchases (non-GAAP measure) 47 113
We executed treasury share purchases of US$29m in the six months ended 30
September 2023, of which US$21m was settled after the period end.
(f) Analysis of cash and cash equivalents
30 September
2023 2022
US$m US$m
Cash and cash equivalents in the Group balance sheet 195 146
Bank overdrafts (2) -
Cash and cash equivalents in the Group cash flow statement 193 146
Cash and cash equivalents at 31 March 2023 of US$198m in the Group cash flow
statement were reported net of bank overdrafts of US$4m.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
17. Notes to the Group cash flow statement (continued)
(g) Reconciliation of Cash generated from operations to Benchmark operating cash flow
(non-GAAP measure)
Six months ended 30 September
2023 2022
Notes US$m US$m
Cash generated from operations 17(a) 973 1,024
Purchase of other intangible assets 17(c) (292) (251)
Purchase of property, plant and equipment (18) (30)
Disposal of property, plant and equipment 1 1
Disposal of assets classified as held-for-sale 2 -
Principal lease payments (24) (30)
Acquisition expenses paid 17(d) 12 20
Dividends received from associates - 1
Cash flows in respect of Exceptional and other non-benchmark items 57 34
Benchmark operating cash flow (non-GAAP measure) (Appendix 4) 711 769
Cash flow conversion for the six months ended 30 September 2023 was 77% (2022:
88%). Benchmark free cash flow for the six months ended 30 September 2023 was
US$376m (2022: US$474m).
18. Net debt (non-GAAP measure)
(a) Analysis by nature
30 September
2023 2022
US$m US$m
Cash and cash equivalents (net of overdrafts) 193 146
Debt due within one year - commercial paper (303) (187)
Debt due within one year - bonds and notes (472) -
Debt due within one year - lease obligations (38) (49)
Debt due after more than one year - bonds and notes (3,202) (3,455)
Debt due after more than one year - bank loans (158) (176)
Debt due after more than one year - lease obligations (119) (103)
Derivatives hedging loans and borrowings (201) (324)
Net debt (4,300) (4,148)
(b) Analysis by balance sheet caption
30 September
2023 2022
US$m US$m
Cash and cash equivalents 195 146
Current borrowings (816) (237)
Non-current borrowings (3,479) (3,731)
Borrowings (4,295) (3,968)
Total of Group balance sheet line items (4,100) (3,822)
Accrued interest reported within borrowings excluded from Net debt 1 (2)
Derivatives reported within Other financial assets 2 4
Derivatives reported within Other financial liabilities (203) (328)
Net debt (4,300) (4,148)
At 30 September 2023, the fair value of borrowings was US$3,869m (2022:
US$3,563m).
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
18. Net debt (non-GAAP measure) (continued)
(c) Analysis of movements in Net debt
1 April Movements in the six months ended 30 September 2023 30 September
2023 Net Non-cash lease obligation Principal lease payments Net share purchases Additions Fair Exchange 2023
through business combinations
cash movements(1) value and other movements
flow losses
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Derivatives hedging (154) (12) - - - - (3) (32) (201)
loans and borrowings
Borrowings (4,099) (219) (35) - - (7) (4) 69 (4,295)
Liabilities from financing activities (4,253) (231) (35) - - (7) (7) 37 (4,496)
Accrued interest 21 (20) - - - - - - 1
Cash and cash equivalents 202 19 - 24 (47) - - (3) 195
Net debt (4,030) (232) (35) 24 (47) (7) (7) 34 (4,300)
1. Non-cash lease obligation movements include additions of US$39m and
disposals of US$4m (note 15).
19. Undrawn committed bank borrowing facilities
30 September
2023 2022
US$m US$m
Facilities expiring in:
Less than one year - 250
One to two years 143 150
Two to three years 2,050 75
Three to four years 150 1,950
2,343 2,425
At 31 March 2023, there were undrawn committed bank borrowing facilities of
US$2,415m.
There is one financial covenant in connection with the borrowing facilities.
Benchmark EBIT must exceed three times net interest expense before financing
fair value remeasurements. The calculation of the financial covenant excludes
the effects of IFRS 16 'Leases'. The Group monitors this, and the Net debt to
EBITDA leverage ratio, and has complied with this covenant throughout the
current and prior period.
20. Called-up share capital and share premium account
Number of Called-up share Share premium account
shares capital
million US$m US$m
At 1 April 2022 970.6 96 1,780
Shares issued under employee share incentive plans 0.6 - 16
At 30 September 2022 971.2 96 1,796
Shares issued under employee share incentive plans 0.2 - 3
At 31 March 2023 971.4 96 1,799
Shares issued under employee share incentive plans 0.6 1 16
At 30 September 2023 972.0 97 1,815
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
21. Own shares held
Number of Cost of shares
shares
million US$m
At 1 April 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
Purchase of shares held as treasury shares 2.2 71
Other vesting of awards and exercises of share options (0.2) (4)
At 31 March 2023 59.0 1,273
Purchase of shares held as treasury shares 0.9 29
Purchase of shares by employee trusts 1.5 56
Other vesting of awards and exercises of share options (3.2) (49)
At 30 September 2023 58.2 1,309
Own shares held at 30 September 2023 included 52.2 million (2022: 50.0
million) shares held as treasury shares and 6.0 million (2022: 7.0 million)
shares held in employee trusts. Own shares held at 31 March 2023 included 52.3
million shares held as treasury shares (1 April 2022: 48.5 million shares) and
6.7 million shares
(1 April 2022: 8.2 million shares) held in employee trusts.
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 six months ended 30 September 2023,
none of which are individually material.
Total
US$m
Intangible assets:
Customer and other relationships 24
Software development 41
Marketing-related acquisition intangibles 4
Other non-acquisition intangibles 6
Intangible assets 75
Property, plant and equipment 1
Trade and other receivables 15
Deferred tax assets 11
Cash and cash equivalents (note 17(d)) 16
Trade and other payables (30)
Borrowings (7)
Deferred tax liabilities (12)
Total identifiable net assets 69
Goodwill (note 14(a)) 167
Total 236
Satisfied by:
Cash and cash equivalents (note 17(d)) 107
Put options 71
Contingent consideration 58
Total 236
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
22. Acquisitions (continued)
(a) Acquisitions in the period (continued)
These provisional fair values are determined by using established estimation
techniques. Acquisition intangibles are valued using discounted cash flow
models. The fair value of contingent consideration and put option liabilities
are determined using a Monte-Carlo simulation model applied to the forecast
performance of the relevant metric linked to each liability. For the six
months ended 30 September 2023, the most significant inputs to these
calculations are the forecast financial performance, and associated risk and
volatility, for MOVA Sociedade de Empréstimo entre Pessoas S.A. (MOVA) in
Brazil, which the Group acquired a majority stake in on 3 August 2023.
The contingent consideration liability for MOVA is linked to the revenue and
Benchmark EBIT margin performance of the business for the 2024 calendar year.
Providing that certain minimum thresholds are satisfied, we expect the earnout
will pay out between an undiscounted range of US$6m to US$78m. We have
determined the fair value of the contingent consideration liability at
acquisition to be US$32m. Following application of the anticipated acquisition
method of accounting for MOVA, we have recognised a put option liability, with
the exercise price linked to the 2028 calendar year revenue and Benchmark EBIT
margin performance of the business. If exercised, we expect the likely range
of the undiscounted option exercise price to be between US$66m and US$283m. We
have determined the fair value of the put option liability at acquisition to
be US$71m. If the discount rate used in this determination increased or
decreased by a percentage point, the put option liability would decrease or
increase by approximately US$4m.
We engage with third-party valuation experts to assist with the valuation
process for all significant or complex acquisitions, including for the
valuation of the contingent consideration and put option liabilities
associated with the MOVA acquisition. Provisional fair values contain amounts
which will be finalised no later than one year after the date of acquisition.
Provisional amounts, predominantly for intangible assets, associated tax
balances, contingent consideration, and put option liabilities have been
included at 30 September 2023, as a consequence of the timing and complexity
of the acquisitions.
Goodwill represents the synergies, assembled workforces and future growth
potential of the acquired businesses. The goodwill in relation to two
acquisitions is currently deductible for tax purposes.
(b) Additional information in respect of acquisitions in the period
Total
US$m
Increase/(decrease) in book value of net assets from provisional fair value
adjustments:
Intangible assets 72
Deferred tax assets 7
Trade and other payables (8)
Deferred tax liabilities (12)
Increase in book value of net assets from provisional fair value adjustments 59
Gross contractual amounts receivable in respect of trade and other receivables 15
Pro forma revenue from 1 April 2023 to date of acquisition 9
Revenue from date of acquisition to 30 September 2023 5
Loss before tax from date of acquisition to 30 September 2023 1
At the dates of acquisition, the gross contractual amounts receivable in
respect of trade and other receivables of US$15m were expected to be collected
in full. If the transactions had occurred on the first day of the financial
year, the estimated additional contribution to profit before tax would have
been US$nil.
(c) Prior year acquisitions
Contingent consideration of US$102m (2022: US$34m) was settled in the period
in respect of acquisitions made in earlier years. These cash flows principally
relate to the acquisitions of Tax Credit Co, LLC (TCC) US$30m (2022: US$30m)
in FY22, and BrScan Processamento de Dados e Tecnologia Ltda (BrScan) US$60m
(2022: US$nil) in FY21. Further detail on contingent
consideration fair value adjustments recognised in the period is provided in
note 25(c).
The Group made five acquisitions in the six months ended 30 September 2022,
including that of CIC Plus, Inc. in the USA. A cash outflow of US$233m was
reported in the Group cash flow statement for that period, after deduction of
US$4m in respect of net cash acquired.
There have been no other material gains, losses, corrections or other
adjustments recognised in the six months ended 30 September 2023 that relate
to acquisitions in earlier years.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
22. Acquisitions (continued)
(d) Post balance sheet acquisition
On 1 November 2023, the Group completed the acquisition of the entire share
capital of AllowMe Tecnologias Ltda. in Brazil for R$210m (c. US$42m),
supplementing our identity and anti-fraud services.
The fair value of goodwill and other assets and liabilities in respect of this
acquisition will be reported in the Experian Annual Report 2024, following
completion of the initial accounting.
23. Disposals
During the period we disposed of interests in a number of small subsidiary
undertakings in EMEA and Asia Pacific, two of which were classified as
held-for-sale. The profit on disposal was US$5m.
24. Assets and liabilities classified as held-for-sale
The Group continues to market for sale part of its UK property portfolio, with
the sale of a remaining property expected within 12 months. The sale of one
property completed in the period with no profit or loss recognised on
disposal. At 30 September 2022 two small subsidiaries in the EMEA region were
classified as held-for-sale. These disposals have now been finalised with a
profit on sale of US$2m recognised in the period. A further subsidiary
undertaking in the Asia Pacific region, was classified as held-for-sale at 31
March 2023. The sale is now not expected to complete, and its assets and
liabilities have been reclassified accordingly.
At 30 September 2022 a UK associate was recorded as held-for-sale. The
investment was reclassified as an associate in the Group's statutory financial
statements for the year ended 31 March 2023 as it is no longer anticipated the
sale will complete within 12 months.
30 September
2023 2022
US$m US$m
Assets classified as held-for-sale:
Investment in associate - 24
Property, plant and equipment 10 10
Trade and other receivables - 1
Assets classified as held-for-sale 10 35
Liabilities classified as held-for-sale:
Trade and other payables - (1)
Liabilities classified as held-for-sale - (1)
25. Financial risk management
(a) Financial risk factors
The Group's activities expose it to a variety of financial risks. These are
market risk, including foreign exchange risk and interest rate risk, credit
risk and liquidity risk. The nature of these risks and the policies adopted by
way of mitigation are unchanged from those reported in the Annual Report and
Group financial statements for the year ended 31 March 2023. Full information
and disclosures were contained in that document.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
25. Financial risk management (continued)
(b) Analysis by valuation method for put options and items measured at fair
value
(i) At 30 September 2023
Level 1 Level 2 Level 3 Total
US$m US$m US$m US$m
Financial assets:
Non-hedging derivatives - 198 - 198
Other financial assets at fair value through profit or loss - - 12 12
Financial assets at fair value through profit or loss - 198 12 210
Listed and trade investments(1) 65 - 246 311
65 198 258 521
Financial liabilities:
Derivatives used for hedging - fair value hedges(2) - (163) - (163)
Non-hedging derivatives - (37) - (37)
Other liabilities at fair value through profit or loss - - (124) (124)
Financial liabilities at fair value through profit or loss - (200) (124) (324)
Derivatives used for hedging - cash flow hedge(1, 2) - (28) - (28)
Put options - - (108) (108)
- (228) (232) (460)
Net financial assets/(liabilities) 65 (30) 26 61
(ii) At 30 September 2022
Level 1 Level 2 Level 3 Total
US$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)
1. Listed and trade investments, and derivatives designated as a cash flow
hedge, which are in a documented hedge accounting relationship, are revalued
through OCI.
2. Derivatives used for hedging are in documented hedge accounting
relationships.
Financial assets at fair value through profit or loss (FVPL) are reported
within Other financial assets in the Group balance sheet. 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. Cross-currency swaps in respect of the cash flow hedge are
reported within Financial assets revalued through OCI or Financial liabilities
revalued through OCI, 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 2023
25. 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 2023. 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 2023
Financial assets revalued through OCI Other financial assets at FVPL Contingent consideration Put options Total
US$m US$m US$m US$m US$m
At 1 April 2023 252 16 (139) (33) 96
Additions(1,2) 5 - (58) (71) (124)
Conversion of convertible debt to equity investments(3) 5 (5) - - -
Settlement of contingent consideration(4) - - 102 - 102
Adjustment to the fair value of contingent consideration(5) - - (24) - (24)
Valuation losses recognised in the - - - (6) (6)
Group income statement(6)
Valuation losses recognised in OCI (16) - - - (16)
Currency translation gains/(losses) recognised - - (2) 2 -
directly in OCI
Other - 1 (3) - (2)
At 30 September 2023 246 12 (124) (108) 26
1. Additions to contingent consideration comprised US$58m in respect of
acquisitions (note 22(a)).
2. Additions to put options comprised US$71m in respect of the acquisition
of MOVA.
3. Two of our investments that were previously held as financial assets at
FVPL, are now held as financial assets revalued through OCI due to the
conversion of loan notes to equity shares.
4. Contingent consideration settled principally relates to the
acquisitions of TCC US$30m and BrScan US$60m.
5. Contingent consideration in relation to TCC increased by US$22m
following fair value adjustments recognised in the period, which are
determined by revenue and profit performance up to and including FY25. There
was also an increase of US$2m for other previous acquisitions. There are
limits in place for contingent consideration payments, with the upper cap for
the remaining TCC payment being US$50m. At 30 September 2023 the liability in
respect of the TCC contingent consideration was equal to the present value of
this maximum payment. Contingent consideration liabilities are revalued at
each reporting date based on current projections of the associated targets,
with any fair value remeasurements recognised as a non-benchmark item in the
Group income statement (note 9(a)).
6. Movements in the present value of expected future payments for put
options are unrealised and are recognised in financing fair value
remeasurements in the Group income statement.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
25. Financial risk management (continued)
(c) Analysis of movements in Level 3 net financial assets/(liabilities)
(continued)
(ii) Six months ended 30 September 2022
Financial assets revalued through OCI Other financial assets at FVPL Contingent consideration Put options Total
US$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(2) - - 34 - 34
Adjustment to the fair value of contingent consideration(3) - - (66) - (66)
Valuation gains recognised in the - - 16 16
Group income statement(4) -
Valuation losses recognised in OCI (26) - - - (26)
Currency translation gains recognised - 8 23 31
directly in OCI -
Other - (1) - - (1)
At 30 September 2022 275 18 (166) (151) (24)
1. Additions to contingent consideration comprised US$35m in respect of
acquisitions.
2. Contingent consideration settled principally relates to the acquisition
of TCC US$30m.
3. Contingent consideration in relation to TCC increased by US$56m
following fair value adjustments recognised in the six months ended 30
September 2022, alongside an increase of US$10m for other previous
acquisitions. Contingent consideration liabilities are revalued at each
reporting date based on current projections of the associated targets, with
any fair value remeasurements recognised as a non-benchmark item in the Group
income statement (note 9(a)).
4. 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 economic or business circumstances that
have affected the carrying value of the Group's financial assets and
liabilities at 30 September 2023.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
26. Related party transactions
The Group's related parties were disclosed in the Group's statutory financial
statements for the year ended 31 March 2023 and there have been no material
changes during the six months ended 30 September 2023.
Transactions with associates are made on normal market terms and in the six
months ended 30 September 2023 services costing US$6m (2022: US$5m) were
purchased from associates. At 30 September 2023 US$1m (2022: US$1m) was owed
to associates.
During the six months ended 30 September 2023, US$25m (2022: US$18m) was paid
by the Group to related undertakings in connection with the provision of
post-employment pensions benefits. In the six months ended 30 September 2023,
US$3m (2022: US$3m) was paid by the Group to Experian Medical Plan Limited in
connection with the provision of healthcare benefits.
27. Contingencies
(a) Latin America tax
As previously indicated, Serasa S.A. has been advised that the Brazilian tax
authorities are challenging the deduction for tax purposes of goodwill
amortisation arising from its acquisition by Experian in 2007. The Brazilian
administrative courts have ultimately upheld Experian's position in respect of
the tax years from 2007 to 2012 with no further right of appeal. The Brazilian
tax authorities have raised similar assessments in respect of the 2013 to 2018
tax years, in relation to the goodwill amortisation related to both the
original acquisition of a majority shareholding in Serasa S.A. in 2007 and the
acquisition of the remaining holding in 2012, and also in relation to the
acquisition of Virid Interatividade Digital Ltda in 2011. Experian has claimed
a tax deduction for goodwill amortisation of US$224m across these years.
Brazilian tax authorities may raise similar claims in respect of other years.
The possibility of this resulting in a liability (which may consist of
underpaid tax, interest and penalties), 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 claims.
A similar challenge has been raised in Colombia in respect of the 2014 and
2016 tax years, in which approximately US$3m was claimed, and similar claims
in respect of other years may be raised. We are contesting these on the basis
of external legal advice.
(b) UK marketing services regulation
We successfully appealed to the First Tier Tribunal a final enforcement notice
from the UK Information Commissioner's Office (ICO) with respect to our use of
data for marketing purposes under the EU General Data Protection Regulation
(GDPR), which relates to our marketing services activities in the UK. The ICO
has subsequently appealed to the Upper Tier Tribunal, during which time all
requirements will be stayed. The hearing on the ICO's appeal is set to be
heard in February 2024. At this stage we do not know what the final outcome
will be, but if the First Tier Tribunal judgment is overturned, it may require
significant changes to business processes in our UK marketing services
business. This business represents approximately 1% of our global revenues and
we do not expect this to result in a materially adverse financial outcome for
the Group.
(c) Other litigation and claims
There continues to be an increase in regulatory activity, including a number
of pending and threatened claims and regulatory actions involving the Group
across all its major geographies which are in various stages of investigation
or enforcement, and which are being vigorously defended, including from the
Consumer Financial Protection Bureau and Federal Trade Commission in the USA.
These include investigations and potentially enforcement actions related to
the Credit Reference, Marketing Services and Consumer Services businesses, as
well as potential rulemaking and state level legislation which could impact
our Credit Reference and Marketing Services businesses in the USA. There
continue to be individual consumer and class action litigation matters in
Brazil and the USA related to our Consumer Services and Credit Reference
businesses. Some of these class action litigation matters in the USA allege
willful misconduct under the US Fair Credit Reporting Act that, if proven,
carry the potential for liability which includes statutory damages between
US$100 to US$1,000 per consumer. The directors do not believe that the outcome
of any individual action 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.
Notes to the condensed interim financial statements
for the six months ended 30 September 2023
28. Events occurring after the end of the reporting period
(a) First interim dividend
Details of the first interim dividend approved by the Board on 14 November
2023 are given in note 13.
(b) Acquisition
The Group completed the acquisition of AllowMe Tecnologias Ltda. in Brazil on
1 November 2023. Further details are provided in note 22(d).
29. 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 2023 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 16 May
2023 were listed in the Group's statutory financial statements for the year
ended 31 March 2023. There have been no subsequent changes of directors and 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
14 November 2023
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 2023 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 2023 are 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 sourcebook (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
14 November 2023
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 2024
A first interim dividend in respect of the year ending 31 March 2024 of 18.0
US cents per ordinary share will be paid on 2 February 2024 to shareholders on
the register at the close of business on 5 January 2024. Unless shareholders
elect by 5 January 2024 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 12 January 2024.
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 5 January 2024.
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 2024 to be paid on 2
February 2024, should return a completed and signed DRIP application form, to
be received by the registrars by no later than 5 January 2024. 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 4 January 2024
First interim dividend record date 5 January 2024
First interim dividend exchange rate determined 12 January 2024
Trading update, third quarter 16 January 2024
First interim dividend payment date 2 February 2024
Preliminary announcement of full-year results 15 May 2024
Annual General Meeting 17 July 2024
Contact information
Corporate headquarters
Experian plc
2 Cumberland Place,
Fenian Street,
Dublin 2,
D02 HY05
Ireland
T +353 (0) 1 846 9100
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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