Experian Regulatory News (EXPN)

news release

Half-yearly financial report

7am, 12 November 2019 ─ Experian plc, the global information services company, today issues its half-yearly financial report for the six months ended 30 September 2019.

Brian Cassin, Chief Executive Officer, commented:

"We have started the year well. First-half organic revenue growth was 7%, with acceleration in Q2. This reflects successful execution on big new addressable market opportunities, the global roll out of our innovative platforms and considerable momentum in Consumer Services as we invest in Experian Boost.

"We now expect full-year organic revenue growth in the 7-8% range, at the upper end of our previous guidance. We continue to expect EBIT growth at or above revenue growth and strong progress in Benchmark earnings per share, all at constant currency, and for the full year we expect operating cash conversion of around 90%."

1 See Appendix 1 (page 13) and note 6 to the financial statements (pages 25-26) for definitions of non-GAAP measures.

2 Benchmark measures are restated for exited business activities which comprise certain B2B businesses. 3 Organic revenue growth at constant exchange rates.

4 See page 13 for reconciliation of Benchmark EBIT from ongoing activities to Profit before tax.

·; Strong first half performance.

o Q2 organic revenue growth of 7% and H1 organic revenue growth of 7%.

o B2B organic revenue growth of 6%.

o Consumer Services organic revenue growth of 11% with rapidly growing new product portfolio.

o Benchmark EBIT (ongoing activities) growth at constant rates of 6%.

o Benchmark EBIT margin of 26.9%, down 50 basis points at both constant rates and actual rates, including one-off launch costs for Experian Boost.

o Benchmark EPS growth of 3% at constant rates.

·; Operational highlights.

o Strong momentum as we accelerate our global B2B innovation plays; Ascend, Experian One, open banking (Trusso and Verdus) and CrossCore all progressed strongly in the half, and considerable momentum in Experian Boost with quadrupling of revenues in CreditMatch.

o Good momentum in North America, as B2B innovations take-hold and with double-digit Consumer Services growth.

o Double-digit organic revenue growth in Latin America; preparing for positive data.

o Generating audiences at scale as global free consumer memberships reach 70m across our three major markets, up from c. 45m last year.

o Significant progress in Experian Boost, unique account connections of 2m US consumers.

o Further strategic progress with US$437m investments in acquisitions, including Compuscan, and additional acquisitions and minority investments.

·; Continuing commitment to shareholder returns and disciplined capital allocation.

o First interim dividend up 4% to 14.5 US cents per ordinary share.

o Completed US$181m of the share repurchase programme to 8 November 2019, of which US$137m was in the first half.

Contacts

Experian

Nadia Ridout-Jamieson Investor queries +44 (0)20 3042 4215

Gerry Tschopp Media queries

Finsbury

Rollo Head +44 (0)20 7251 3801

Jenny Davey

There will be a presentation today at 9.30am (UK time) to analysts and investors at the Bank of America Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ. The presentation can be viewed live via the link from the Experian website at www.experianplc.com and can also be accessed live via a telephone dial-in facility: 0800 783 0906 (UK primary) or 01296 480 100 (UK direct) or +44 1296 480 100 (International direct), using access code 559 971 33. The supporting slides and an indexed replay will be available on the website later in the day.

Experian will update on third quarter trading for FY20 on 17 January 2020.

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.

Definitions

B2B - Business-to-Business.

B2B2C - business-to-business-to-consumer.

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 page 12 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 17,200 people operating across 44 countries and every day we're investing in new technologies, talented people and innovation to help all our clients maximise every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.

Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the Group.

Chief Executive Officer's review

This was another half of good progress with strong momentum in North America, Latin America back to strong levels of growth, and pleasing progress in Consumer Services. All of which has its roots in our technology investments, new product innovation, new data sets and strong sales execution. We are experiencing expansion on many fronts as we address new opportunities to grow with existing clients and as we win new customers all around the world. We are also engaging with consumers in new ways and now reach tens of millions of people across our three major markets through our free offers. This gives us great confidence as we look out to H2 and beyond and we have therefore raised our full year organic revenue guidance to 7-8 %, the top half of our previous guidance range.

Financial highlights:

·; Total revenue growth of 8% at constant currency and organic revenue growth of 7%. At actual exchange rates total revenue growth was 6%. Organic revenue growth was 6% in Q1 accelerating to 7% in Q2.

·; Double-digit organic revenue growth in North America and Latin America, while UK and Ireland was flat and EMEA/Asia Pacific saw modest decline.

·; Continued momentum in B2B, with organic revenue growth of 6% at constant exchange rates with good demand for new sources of data and as we scale our global platforms.

·; Strong growth in Consumer Services, with organic revenue up 11% at constant exchange rates as we empower consumers to take control of their data and as we build relationships with millions of consumers.

·; Growth in Benchmark EBIT of 6% at constant exchange rates, 4% at actual exchange rates.

·; Benchmark EBIT margin at constant currency and actual rates was 26.9%, down 50 basis points, as we invested behind the launch of Experian Boost (80 basis points one-off launch costs) and saw higher depreciation on technology investments.

·; Growth in Benchmark earnings per share of 3% at constant exchange rates and 1% at actual exchange rates.

·; Conversion of Benchmark EBIT into Benchmark operating cash flow was 51%, in the seasonally weaker half of the year for cash flow.

We delivered further progress in B2B:

·; Our Data segment delivered organic revenue growth of 8% at constant exchange rates, with all regions contributing positively. This reflects investment in a wide range of unique sources of data, strength in consumer information across all territories, strong recovery in Brazil and a growing contribution from our bureaux in EMEA/Asia Pacific.

·; The total contract value for Ascend has now reached US$270m, as we secure new engagements for existing modules and introduce new modules to the platform. Ascend is currently live in the USA, UK, Brazil, and Italy and we expect to launch in more countries during this financial year.

·; While Decisioning revenue was flat in the half against strong prior-year comparables, pipelines are growing. We secured new contracts for PowerCurve; we have made excellent progress in fraud and identity, including with CrossCore; and Experian One, our new cloud-based decisioning platform, secured new wins during the half.

·; Experian Health delivered further good progress as we expand our position with healthcare providers and successfully extend our suite of services.

We made significant progress in Consumer Services as we:

·; Secured direct relationships with 70m consumers for free Experian offers (up from over 45m in FY19). We now have 24m free members in the USA, 39m in Brazil and 6.6m the UK.

·; Delivered strong growth in credit marketplace (lead generation) revenues in both the US and the UK and our consumer activities in Brazil have made significant progress towards meaningful revenue-generation.

·; Expanded our Experian Boost membership, with unique account connections of 2m US consumers since launch.

With regards to capital allocation and uses of cash:

·; We have made further strategic progress having completed the acquisition of Compuscan in the half plus other smaller investments, such as MyHealthDirect. We also purchased the remaining 45% of our subsidiary Experian MicroAnalytics and, after the end of the half-year took a controlling interest in RAMCI, a credit bureau in Malaysia, and we acquired Auto I.D., Inc., a leading provider of automotive solutions and services in the USA.

·; We made equity investments in Grab and CompareAsiaGroup. We also agreed new commercial agreements to help power their consumer financial marketplaces.

·; We are announcing a first interim dividend of 14.5 US cents per share, up 4% year-on-year. This will be paid on 31 January 2020 to shareholders on the register at the close of business on 3 January 2020.

·; We completed US$137m in net share repurchases in the first half, as part of our US$400m share repurchase programme this year, and as at 8 November 2019 that has increased to US$181m.

·; Net debt at the end of the first half was US$4,060m, which places us at 2.4 times Benchmark EBITDA, within our target leverage range of 2.0 to 2.5 times net debt to Benchmark EBITDA.

Regional highlights

We delivered strong organic revenue growth in North America and Latin America, whilst UK and Ireland was flat and EMEA/Asia Pacific was slightly lower.

1 Ongoing activities only, at constant exchange rates.

2 B2B = Business-to-Business segment consists of Data and Decisioning business sub-divisions.

See note 6 to the financial statements on pages 25-26 for definition of organic revenue growth.

North America

Revenue in North America was US$1,573m, with total and organic revenue growth of 10%.

North America B2B delivered organic revenue growth of 8% at constant exchange rates. Data saw strength in core profiles, as well as in mortgage, and a very strong contribution from Clarity Services. We are excited about our prospects as we launch new suites of credit score products which combine traditional credit, alternative credit and trended data assets covering a wider proportion of the US population and helping more people gain access to fair and affordable credit. Revenues for Ascend have also grown significantly as we secure new customers for existing modules and introduce new versions. In total five modules of Ascend have been successfully launched in the USA with further modules pending. Automotive also performed well in the half, reflecting good demand for our superior data assets, integrated cross-Experian propositions and new client wins for the automotive version of the Ascend sandbox.

Decisioning performed well, revenue was up 6% at constant exchange rates, as we delivered on significant new client engagements for fraud and identity management services. We have also secured a healthy pipeline for software including for Experian One, our cloud-based decisioning platform. Experian health performed well as we extend our position with healthcare providers. Our clients want to deliver better engagement with their patients and to provide greater transparency on payments. This is driving demand across our product suite, including for patient engagement, coverage discovery and identity management offers. The acquisition of MyHealthDirect further strengthens our proposition as it will help to simplify and automate the appointment, scheduling and payment processes for both healthcare providers and for patients.

In Consumer Services, we have had a tremendous response to the introduction of Experian Boost, the new unique service we introduced in March 2019. Experian Boost gives consumers the ability to make positive choices about using their data to build out their credit files using non-traditional sources like utility or mobile phone bills. In the USA 2m unique consumers have now connected their accounts, and "Experian Boost" is now one of the top 10 most searched keyword terms in the credit monitoring category. In total we have now signed 24m consumers to free membership offers, up from 16m at H1 FY19 and we stepped up marketing investment in the half to promote the service and drive traffic to our sites and mobile application.

Revenue performance in Consumer Services was strong, up 13% at constant exchange rates. This was in part driven by a quadrupling in lead generation revenue in the half through CreditMatch as consumers engage with Experian and are matched to suitable credit offers. Growth also reflected ongoing strength in identity management offers and a considerably-reduced drag in paid-for credit monitoring services. Partner Solutions also performed well, to some extent benefitting from a one-off data breach resolution contract win. During the second half, we expect the Consumer Services business to continue to grow well, with growth rates reflecting the material breach contract recorded in the second half of the previous year.

We have recently completed the acquisition of Auto I.D., Inc. a leading provider of solutions and services to automotive lenders in the US. We already have a successful, fast-growing automotive business in North America and adding Auto I.D.'s capabilities in recovering loss, mitigating risk, improving compliance and identifying fraud will allow us to offer an even more extensive range of products to our automotive clients.

North America Benchmark EBIT increased by 11% to US$544m. The Benchmark EBIT margin increased by 20 basis points year-on-year to 34.6%. This reflected strong operating leverage in B2B, offset by investments in customer acquisition to support the roll out of Experian Boost.

Latin America

Revenue in Latin America was US$352m, with total and organic revenue growth of 10% at constant exchange rates.

In Brazil, we have seen further improvements to economic and business confidence. Our business grew double-digit in H1 as this greater confidence combined with our innovation-led strategy which helped drive strong revenue performance. We have seen good growth across both consumer and business information, as well as a growing revenue contribution from our consumer-activities as we engage with millions of consumer members. Our base continues to grow quickly, and we now have 39m free members or over 18% of the population, giving us material scale.

In October, we received formal accreditation from the Central Bank in Brazil to incorporate positive credit payment data as part of our operations. This is a big and welcome change which will mean consumers and companies in Brazil will be automatically included in a positive credit registry. We believe it will help drive greater access to credit in Brazil at more affordable rates, reduce levels of credit distress and, in time, create the conditions for more customised credit offers. We estimate that over 150m people will be included in the positive data bureau with the advent of positive data.

We have now started to receive the positive data and expect to launch new products during FY20 and FY21. We believe we will have new opportunities to develop better scores, to increase adoption of advanced analytical and cloud-based decisioning tools, and that positive data will give rise to enhanced services for consumers. Our plans are well advanced as we have pre-invested in our technology platform and have a detailed roadmap for the roll out of positive data propositions.

Growth in Spanish Latin America was driven by a strong performance in Colombia, as we extend the range of services we offer to our B2B clients and we signed a number of significant new contracts. We see good prospects as we introduce more of our global Experian platforms into the region, including Ascend, CrossCore and Experian One and direct-to-consumer.

Benchmark EBIT in Latin America was US$97m, up 6% at constant exchange rates. Benchmark EBIT margin was 27.6% (2018: 28.9%) reflecting revenue mix effects and investments in consumer, positive data preparation and our technology platforms.

UK and Ireland

Revenue in the UK and Ireland was US$371m. Total and organic revenue growth was flat at constant exchange rates. B2B declined (1)% while Consumer Services delivered organic revenue growth of 3%.

Within B2B, Data delivered revenue growth of 4% at constant exchange rates, with a strong performance across the consumer credit bureau operations. This reflects the investments we have made in unique propositions, such as trended data and open banking (Trusso and Verdus), and in our B2B platform strategy. We are delivering services to digitise the process of applying for a mortgage, with several new client engagements, take-up rates for our open-data aggregation platform have been strong and we have established significant scale in personalised eligibility services for B2B marketplaces. Other parts of our Data operations were somewhat weaker however, particularly on the more cyclical marketing side of our business. Decisioning also experienced weakness, with organic revenue down (8%). This was as we lapped strong prior-year comparables and saw a subdued macroeconomic backdrop impact the pace of client investments in new software installations. We expect this to continue to be a headwind in the near-term given ongoing political and economic uncertainty in the UK.

In Consumer Services, we have made steady progress with the business back to growth in H1, driven by significant expansion of our CreditMatcher comparison service. This more than offset modest declines in paid memberships. Our free membership base has reached 6.6m consumers and we will continue to add exciting new features to help consumers better manage their money.

Benchmark EBIT was US$75m, down (20)% at constant exchange rates. This reflected the reduction in Decisioning revenue, as well as increased depreciation and further investment related to technology infrastructure to support the roll out of our global platforms. The Benchmark EBIT margin was 20.2% (2018: 25.7%).

EMEA/Asia Pacific

In EMEA/Asia Pacific, revenue was US$199m, with total revenue growth of 5% and organic growth of (3)% at constant rates. The difference relates to the contribution from the Compuscan acquisition.

We delivered good growth in Data, where organic revenue was up 7% at constant exchange rates. This reflected good progress in our bureaux in EMEA and significant growth across our consumer credit bureaux in India and Australia. We also benefitted from first time revenue contributions for Ascend, as we secure new client engagements, and for affordability solutions, for example through Trusso, our open data platform. In its first few months under Experian ownership Compuscan, our new credit bureau in South Africa performed well and we are excited about the opportunities for the combined business.

Decisioning revenue declined by (12%) at constant exchange rates, reflecting solid progress in EMEA offset by weakness in Asia Pacific as we lapped a small number of large decisioning contracts in the prior year. Notwithstanding this, pipelines are very strong, and we have secured several contracts across our PowerCurve suite. We therefore have good line of sight to improving revenue growth momentum as we exit this financial year.

We made several strategic investments in both EMEA and Asia Pacific during the half. We are delighted to welcome RAMCI to Experian. RAMCI is a credit bureau in Malaysia in which we previously held a minority stake and which now moves to control. We have also taken minority equity stakes in Grab and CompareAsiaGroup. We also agreed commercial agreements to supply scores and decisioning software to power their consumer credit portals.

Benchmark EBIT was US$(5)m (2018: US$(9)m). At actual exchange rates Benchmark EBIT growth was 36% and at constant exchange rates it was 46%. Benchmark EBIT margin from ongoing activities at actual rates increased 200 basis points to (2.5)% as our operations grow in scale.

Other financial developments

Our Benchmark PBT was US$604m, up 4% at constant currency and 2% at actual rates, after higher Benchmark net interest expense of US$66m (2018: US$56m), reflecting higher Net debt largely due to the acquisitions made in the half and a US$5m IFRS16 related interest charge (see note 3 to the financial statements for further information). We now expect net interest of c.US$130m for the full year including the effects of IFRS16. While IFRS16 will have no material impact on our overall financial results, it will reduce total operating expense by around $10m and increase interest expense by a similar amount in FY20.

The Benchmark tax rate was 26.2% (2018: 25.3%). The increase reflected the mix of profit in the half. We expect the Benchmark tax rate to be c. 26% in FY20 reflecting the mix of profits and prevailing tax rates by territory.

Our Benchmark EPS was 49.1 US cents, an increase of 3% at constant currency and 1% at actual rates, as the weighted average number of ordinary shares (WANOS) reduced to 903m (2018: 907m) as a result of our share repurchase programme.

Benchmark operating cash flow declined 29% at actual rates and our Benchmark operating cash flow conversion was 51% (2018: 74%), as we saw our investment programme phased more to the first half of the year which is also our traditionally weaker half of the year for cash generation. We continue to expect a conversion of Benchmark EBIT to operating cash flow of around 90% for the year ending 31 March 2020.

Consistent with our capital allocation framework, uses of cash were balanced between growth investment and returns to shareholders. Net capital expenditure was US$223m, which represented 9% of total revenue in the half. We continue to expect net capital expenditure to be in the range of 9-10% of revenue in FY20 as we invest in new products and innovation. After acquisition and investment expenditure of US$499m, ordinary dividends paid of US$294m, and net share purchases of US$137m, we ended the half year with Net debt of US$4,060m, placing us at 2.4 times EBITDA, within our target range of 2.0 to 2.5 times net debt to EBITDA.

Foreign exchange translation was a 2% headwind to EPS in the half year. This was predominantly due to the Brazilian real, which weakened by 4% relative to the US dollar versus the prior year, and weakness in GBP sterling. Assuming recent rates stay the same for the rest of the year, we now expect a full-year EBIT headwind of c.1-2%.

Group financial results

Revenue by region

1 Results for 2018 are restated for the reclassification to exited business activities of certain B2B businesses.

See Appendix 1 (page 13) and note 6 to the financial statements (pages 25-26) for definitions of non-GAAP measures.

See Appendix 2 (page 13) for analyses of revenue, Benchmark EBIT and Benchmark EBIT margin from ongoing activities by business segment.

Income statement, earnings and Benchmark EBIT margin analysis

1 Results for 2018 are restated for the reclassification to exited business activities of certain B2B businesses.

See Appendix 1 (page 13) and note 6 to the financial statements (pages 25-26) for definitions of non-GAAP measures.

See Appendix 2 (page 13) 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 continued to make good progress during the period, revenue increased by 6% to US$2,495m (2018: US$2,364m), reflecting an improved underlying performance by both business segments.

Statutory operating profit and profit before tax

Operating profit for the six months ended 30 September 2019 decreased to US$556m from US$580m in the prior period, largely due to the charge for Exceptional items. Profit before tax increased to US$480m (2018: US$470m). We benefitted from a gain on an associate's business disposal which increased our share of the post-tax profit of associates by US$37m in the period.

Statutory Basic EPS

Basic EPS was up 10% to 39.0 US cents (2018: 35.3 US cents). The increase reflects a mix of factors including a higher profit before tax, a lower tax charge and a lower number of shares in issue as a consequence of our continuing share repurchase programme.

Statutory cash flow

Cash generated from operations was US$552m (2018: US$638m) reflecting movements in working capital. New borrowings totalled US$839m, reflecting the funding required for the increased acquisition activity (US$353m), cash outflows in respect of net share purchases (US$137m) and payment of the second interim dividend (US$295m) during the half year. Undrawn committed borrowing facilities were US$2,175m at 30 September 2019, a reduction of US$450m from 31 March 2019, as committed facilities were drawn down.

Tax

The effective rate of tax based on profit before tax is 26.0%, a reduction from the comparative period which was 31.7%, and unusually high as a result of a non-recurring tax charge in North America.

Balance sheet commentary

Net assets

At 30 September 2019, net assets amounted to US$2,317m (2018: US$2,282m). Capital employed, as defined in note 6(q) to the condensed half-yearly financial statements, was US$6,657m (2018: US$6,092m). Following the implementation of IFRS 16, right-of-use assets and lease liabilities have been recognised on the Group balance sheet. Further detail on the transition to IFRS 16 is included in note 3.

Equity

There was a decrease in equity of US$177m from US$2,494m at 31 March 2019 with movements detailed in the Group statement of changes in total equity on page 18.

Key movements in equity during the half include:

·; Profit for the period of US$355m.

·; Currency translation losses of US$112m.

·; Remeasurement gains of US$44m in respect of defined benefit pension plans.

·; Dividends of US$295m and a movement of US$137m in connection with net share purchases.

Seasonality

In recent years, our Benchmark EBIT performance has tended to be weighted towards the second half of the year reflecting revenue seasonality. This pattern is expected to continue during the year ending 31 March 2020.

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.

The impact of currency movements on revenue from ongoing activities is set out in note 7(c).

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.

Risks

We continue to see heightened legislative and regulatory activity, particularly as it relates to privacy and information security matters. Except for these matters, the principal risks and uncertainties we face in the remaining six months of the year remain largely unchanged from those explained in detail on pages 52 to 59 of our Annual Report for the year ended 31 March 2019:

• Loss or inappropriate use of data and systems;

• Failure to comply with laws and regulations;

• Non-resilient IT/business environment;

• Business conduct risk;

• Dependence on highly skilled personnel;

• Adverse and unpredictable financial markets or fiscal developments;

• New legislation or changes in regulatory enforcement;

• Increasing competition; and

• Undesirable investment outcomes.

'Data ownership, access and integrity' reported as a principal risk in our Annual Report for the year ended 31 March 2019 overlaps with other risks such as legislative, regulatory and compliance. Consequently, we no longer identify 'data ownership, access and integrity' as a standalone principal risk. None of the risk information in this category has been eliminated but is covered within the other principal risks noted above.

In the first half of the financial year, we note that new laws, new interpretations of existing laws, changes to existing regulations and regulatory scrutiny continue to increase. Recent examples include the California Consumer Privacy Act and the Brazilian General Data Protection Law.

We continue to experience an increasing number of consumer and class actions in the USA.

We note continued uncertainty in the development of tax legislation in our key regions.

We are also still closely monitoring trends in geopolitical risks given the uncertainty related to Brexit and populist agendas across a number of regions.

Further information on financial risk management is given in note 24 to the condensed half-yearly financial statements.

The Chief Executive Officer's, Business and Group financial reviews on pages 3 to 11 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

Having reassessed the principal risks at the time of approving these condensed half-yearly financial statements, the directors considered it appropriate to adopt the going concern basis of accounting.

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 measures. These non-GAAP measures are not intended to be a substitute for any IFRS measures of performance but we have included them as these are considered to be key measures used within the business for assessing the underlying performance of our ongoing businesses. Information on certain of our non-GAAP measures is set out below in the further appendices. Definitions of all our non-GAAP measures are given in note 6 to the condensed half-yearly financial statements.

The reconciliation of revenue from ongoing activities is set out in note 7(c) on page 28, Benchmark EBIT and Benchmark PBT in Appendix 3 below and Benchmark EPS in note 13 on page 32.

2. Revenue, Benchmark EBIT and Benchmark EBIT margin by business segment

1. Comparative information is restated following the reclassification to exited business activities of certain B2B businesses.

3. Summary reconciliation of Benchmark EBIT to statutory profit before tax

2. See note 9.

Appendices (continued)

4. Cash flow and Net debt summary

5. Total investment

Condensed half-yearly financial statements

Group income statement

for the six months ended 30 September 2019

1. Total Benchmark EBIT and other Benchmark items are non-GAAP measures, defined in note 6 to the condensed half-yearly financial statements.

2. The loss before tax for non-benchmark items of US$124m (2018: US$123m) is analysed in note 9 to the condensed half-yearly financial statements.

3. The non-benchmark share of post-tax profit of associates of US$36m (2018: US$nil) includes a gain of US$38m relating to a business disposal by an associate.

Condensed half-yearly financial statements

Group statement of comprehensive income

for the six months ended 30 September 2019

1. Amounts reported within Other comprehensive income (OCI) are in respect of continuing operations and, except as reported for post-employment benefit assets and obligations, there is no associated tax. Currency translation items are recognised in the translation reserve within other reserves. Other items within Other comprehensive income are recognised in retained earnings.

Condensed half-yearly financial statements

Group balance sheet

at 30 September 2019

Condensed half-yearly financial statements

Group statement of changes in total equity

for the six months ended 30 September 2019

Group statement of changes in total equity

for the six months ended 30 September 2018

Condensed half-yearly financial statements

Group cash flow statement

for the six months ended 30 September 2019

Notes to the condensed half-yearly financial statements

for the six months ended 30 September 2019

1. Corporate information

Experian plc (the Company) is the ultimate parent company of the Experian group of companies (Experian or the Group). Experian is a leading global information services group.

The Company is incorporated and registered in Jersey as a public company limited by shares and is resident in Ireland. The Company's registered office is at 22 Grenville Street, St Helier, Jersey JE4 8PX, Channel Islands.

The Company's ordinary shares are traded on the London Stock Exchange's Regulated Market and have a Premium Listing.

There has been no change in this information since the Annual Report for the year ended 31 March 2019.

2. Basis of preparation

The condensed half-yearly financial statements are prepared on the going concern basis and in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting' (IAS 34) as adopted by the European Union (the EU).

The condensed half-yearly financial statements:

·; comprise the consolidated results of the Group for the six months ended 30 September 2019 and 30 September 2018;

·; were approved for issue on 11 November 2019;

·; have not been audited but have been reviewed by the Company's auditor with their report set out on page 45; 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 2019.

No significant events impacting the Group, other than those disclosed in this document, have occurred between 30 September 2019 and 11 November 2019.

The Group's statutory financial statements comprise the Annual Report and audited financial statements which are prepared in accordance with International Financial Reporting Standards (IFRS or IFRSs) as adopted by the EU (EU-IFRS). The most recent such financial statements, for the year ended 31 March 2019, were approved by the directors on 14 May 2019 and subsequently delivered to the Jersey Registrar of Companies. The auditor's report was unqualified and did not contain a statement under Article 111(2) or Article 111(5) 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 Newenham House, Northern Cross, Malahide Road, Dublin 17, D17 AY61, Ireland.

The financial information for the year ended 31 March 2019 included in the condensed half-yearly 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 half-yearly 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 2019, except for the changes to accounting standards set out in note 3.

Notes to the condensed half-yearly financial statements

for the six months ended 30 September 2019

3. Changes in accounting standards

IFRS 16 'Leases'

With effect from 1 April 2019, the Group has adopted IFRS 16 'Leases' which replaces IAS 17 'Leases'.

IFRS 16 removes the distinction between finance and operating leases, bringing the majority of leases onto the balance sheet for the first time. As a lessee, we have recognised both right-of-use assets and lease liabilities on our balance sheet, increasing both assets and financial liabilities.

In accordance with the IFRS 16 transition guidance, we have adopted the new rules using the modified retrospective approach which allows the matching of the opening right-of-use assets with the opening lease liabilities on 1 April 2019. Under this approach, no restatement of comparative information is required.

We have used the following practical expedients when adopting IFRS 16:

·; Applied a single discount rate to a portfolio of leases with similar characteristics.

·; Relied on our previous assessment as to whether leases are onerous under IAS 37 'Provisions, Contingent Liabilities and Contingent Assets', at 31 March 2019, rather than performing impairment tests on transition.

·; Excluded initial direct costs from the measurement of the right-of-use assets at 1 April 2019.

The weighted average incremental borrowing rate applied to lease liabilities on initial recognition at 1 April 2019 was 4.5%.

There was no material difference between the operating lease commitments disclosed at 31 March 2019 under IAS 17, discounted using the incremental borrowing rate on initial recognition, and the lease liabilities recognised in the Group balance sheet at 1 April 2019.

The impact of adoption on the Group's financial results is set out below. In addition, we have updated our definition of Net debt and Net funding to exclude lease liabilities.

1. Total Benchmark EBIT is a non-GAAP measure, defined in note 6 to the condensed half-yearly financial statements.

The operating lease expense previously reported under IAS 17 on a straight-line basis has been replaced by depreciation of the right-of-use assets and interest on the lease liabilities.

We also made lease payments of US$6m in respect of low-value assets which continue to be recognised as an expense, on a straight-line basis, in the Group income statement. This treatment utilises the exemption available in IFRS 16 for such assets. We have chosen not to apply the exemption for short-term leases. We have no material sub-lease income. 

Notes to the condensed half-yearly financial statements

for the six months ended 30 September 2019

3. Changes in accounting standards (continued)

IFRS 16 'Leases' (continued)

The Group's lease portfolio consists of 33 significant property leases across the countries in which we operate. In addition, we lease approximately 170 smaller properties, 800 motor vehicles, and a small number of hardware assets. At 30 September 2019 we hold right-of-use assets with a net book value of US$206m comprising property assets of US$174m and US$32m for plant and equipment. The corresponding lease liabilities at 30 September 2019 are valued at US$222m split between current (US$50m) and non-current (US$172m) borrowings in the Group balance sheet.

The Group's future commitments for leases committed to but not yet commenced total US$7m and do not form part of the lease liabilities or right-of-use assets.

In the Group cash flow statement, principal lease payments are now presented within cash flows used in financing with the associated interest recorded as a cash outflow from operating activities. Previously lease payments were recognised as cash outflows from operating activities. During the six months ended 30 September 2019, we recognised total payments for leases of US$30m which comprised US$26m for repayments of principal and US$4m for payments of interest.

Notes to the condensed half-yearly financial statements

for the six months ended 30 September 2019

4. Accounting policies, estimates and judgments

(a) Introduction

The preparation of the condensed half-yearly financial statements requires management to make estimates and assumptions that affect the reported amount of revenues, expenses, assets, liabilities and the disclosure of contingent liabilities. If in the future such estimates and assumptions, which are based on management's best judgment at the date of these condensed half-yearly 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 2019, and no change in estimate has had a material effect on the current period.

Except as described in note 3, the accounting policies applied in the condensed half-yearly financial statements are the same as those applied in the Annual Report and Group financial statements for the year ended 31 March 2019.

(b) Goodwill

Goodwill held in the Group's balance sheet is tested annually for impairment and details of the methodology used are set out in the Group's statutory financial statements for the year ended 31 March 2019.

During the six months ended 30 September 2019 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 half-yearly financial statements. The actuarial assumption with the most significant impact at 30 September 2019 is the discount rate of 1.8% (2018: 2.7%). The discount rate used in the year ended 31 March 2019 was 2.3%.

(d) Revenue recognition (note 7)

Revenue is stated net of any sales taxes, rebates and discounts.

Revenue is recognised to represent the transfer of promised services to customers in a way that reflects the consideration expected to be received in return. 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.

·; Revenue in respect of the provision and processing of transactional data is recognised in the period in which the service is provided.

·; Revenue from batch data arrangements which include an ongoing update service are apportioned across each delivery to the customer.

·; Subscription and membership fees are recognised on a straight-line basis over the period to which they relate.

·; Software licence and delivery services are primarily accounted for as a single performance obligation, with revenue recognised when the combined offering is delivered to the customer. These services are distinguished between Experian-hosted solutions, where revenue is spread over the period that the service is available to the customer, and on-premise software licence arrangements, where revenue is recognised on delivery completion.

·; The delivery of support and maintenance agreements is generally considered to be a separate performance obligation and revenue is recognised on a straight-line basis over the term of the maintenance period.

·; Professional services revenues which form a separate performance obligation are recognised as the services are delivered.

Sales are typically invoiced in the geographic area in which the customer is located. As a result, the geographic location of the invoicing undertaking is used to attribute revenue to individual countries.

Accrued income balances, which represent the right to consideration in exchange for goods or services that we have transferred to a customer, are assessed as to whether they meet the definition of a contract asset:

·; When the right to consideration is conditional on something other than the passage of time, a balance is classified as a contract asset. This arises where there are further performance obligations to be satisfied as part of the contract with the customer and typically includes balances relating to software licensing contracts;

Notes to the condensed half-yearly financial statements

for the six months ended 30 September 2019

4. Accounting policies, estimates and judgments (continued)

(d) Revenue recognition (note 7) (continued)

·; 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.

Certain costs incurred prior to the satisfaction or partial-satisfaction of a performance obligation are also deferred as contract costs and these are amortised on a systematic basis consistent with the pattern of transfer of the related goods or services.

·; Costs to obtain a contract predominantly comprise sales commissions costs.

·; Costs to fulfil a contract predominantly comprise of labour costs directly relating to the implementation services provided.

Contract liabilities arise when we have an obligation to transfer future goods or services to a customer for which we have received consideration, or the amount is due, from the customer and include both deferred income balances and specific reserves.

(e) Tax (note 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.

 (f) Leases

The Group undertakes an assessment of whether a contract is or contains a lease at its inception. The assessment establishes whether the Group obtains substantially all the economic benefits from the use of an asset and whether we have the right to direct its use.

Low-value lease payments are recognised as an expense, on a straight-line basis over the lease term. For other leases we recognise both a right-of-use asset and a lease liability at the commencement date of a lease contract.

The right-of-use asset is initially measured at cost, comprising the initial amount of the lease liability adjusted for payments made at or before the commencement date, plus initial direct costs and an estimate of the cost of any obligation to refurbish the asset or site, less lease incentives.

Subsequently, right-of-use assets are measured at cost less accumulated depreciation and impairment losses and are adjusted for any remeasurement of the lease liability. Depreciation is calculated on a straight-line basis over the lower of the useful life of the right-of-use asset and the period of the lease.

The lease term comprises the non-cancellable period of a lease, plus periods covered by an extension option, if it is reasonably certain to be exercised, and periods covered by a termination option if it is reasonably certain not to be exercised.

The lease liability is initially measured at the present value of lease payments that are not paid at the commencement date, discounted at the interest rate implicit in the lease or if that rate cannot be easily determined the Group's incremental borrowing rate.

Lease payments comprise payments of fixed principal, less any lease incentives, variable elements linked to an index, guaranteed residuals or buy-out options that are reasonably certain to be exercised. It includes payments in respect of optional renewal periods where these are reasonably certain to be exercised or early termination payments where the lease term reflects such an option.

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When a lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recognised in the Group income statement if the asset is fully depreciated.

The Group presents right-of-use assets within property, plant and equipment and lease liabilities within borrowings in the Group balance sheet. 

Notes to the condensed half-yearly financial statements

for the six months ended 30 September 2019

5. Accounting developments

There are no new standards, amendments to existing standards or interpretations that are not yet effective that would be expected to have a material impact on the Group. Such developments are routinely reviewed by the Group and its financial reporting systems are adapted as appropriate.

6. Use of non-GAAP measures in the condensed half-yearly 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 measures. These non-GAAP measures are not intended to be a substitute for any IFRS measures of performance but management has included them as they consider them to be key measures used within the business for assessing the underlying performance of the Group's ongoing businesses.

(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 made to derive Benchmark PBT are explained as follows:

·; Charges for the amortisation and impairment of acquisition intangibles are excluded from the calculation of Benchmark PBT because these charges are based on judgments about their value and economic life and bear no relation to the Group's underlying ongoing performance. Impairment of goodwill is similarly excluded from the calculation of Benchmark PBT.

·; Acquisition and disposal expenses (representing the incidental costs of acquisitions and disposals, one-time integration costs and other corporate transaction expenses) relating to successful, active or aborted acquisitions and disposals are excluded from the definition of Benchmark PBT as they bear no relation to the Group's underlying ongoing performance or to the performance of any acquired businesses. Adjustments to contingent consideration are similarly excluded from the definition of Benchmark PBT.

·; Charges and credits for financing fair value remeasurements within finance expense in the Group income statement are excluded from the definition of Benchmark PBT. These include retranslation of intra-Group funding, and that element of the Group's derivatives that is ineligible for hedge accounting, together with gains and losses on put options in respect of acquisitions. Amounts recognised generally arise from market movements and accordingly bear no direct relation to the Group's underlying performance.

(b) Benchmark earnings before interest and tax (Benchmark EBIT) and margin (Benchmark EBIT margin) (note 7(a))

Benchmark EBIT is defined as Benchmark PBT before the net interest expense charged therein and accordingly excludes Exceptional items as defined below. Benchmark EBIT margin is Benchmark EBIT from ongoing activities expressed as a percentage of revenue from ongoing activities.

(c) Benchmark earnings before interest, tax, depreciation and amortisation (Benchmark EBITDA)

Benchmark EBITDA is defined as Benchmark EBIT before the depreciation and amortisation charged therein.

(d) Exited business activities

Exited business activities are businesses sold, closed or identified for closure during a financial year. These are treated as exited business activities for both revenue and Benchmark EBIT purposes. The results of exited business activities are disclosed separately with the results of the prior period re-presented in the segmental analyses as appropriate. This measure differs from the definition of discontinued operations in IFRS 5.

(e) Ongoing activities

The results of businesses trading at 30 September 2019, which are not disclosed as exited business activities, are reported as ongoing activities.

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. 

Notes to the condensed half-yearly financial statements

for the six months ended 30 September 2019

6. Use of non-GAAP measures in the condensed half-yearly financial statements (continued)

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.