We've delivered another strong financial performance and continued to lay the foundations for

164 Pages·2012·6.89 MB·English

Annual Report 2012
We’ve delivered another
Corporate Corporate Operational
headquarters office headquarters
strong financial performance
Experian plc Experian Experian Experian Serasa Experian
Newenham House Cardinal Place Landmark House 475 Anton Boulevard Alameda dos Quinimuras, 187
Northern Cross 80 Victoria Street Experian Way Costa Mesa CEP 04068-900
and continued to lay the
Malahide Road London NG2 Business Park CA 92626 Planalto Paulista
Dublin 17 SW1E 5JL Nottingham United States São Paulo
Ireland United Kingdom NG80 1ZZ Brazil
United Kingdom
foundations for sustaining
T [phone] T [phone] T [phone] T [phone] T [phone]
F [phone] F [phone] F [phone] F [phone] F [phone]
growth into the future.

I want to congratulate the
men and women of Experian
on these achievements
and to thank them for
their boundless energy,
creativity and commitment.
A
n
n
u
a
l Don Robert

R
Chief Executive Officer
e
p
o
r
t

2
0
Company website Corporate Responsibility Report 2012 1
www.experianplc.com www.experianplc.com/crreport 2
Annual Report 2012 About Experian
www.experianplc.com/annualreport www.experianplc.com/aboutexperian
Experian Annual Report 2012
Highlights
We delivered good growth across all regions, with organic revenue
growth of 23% in Latin America, 8% in the UK and Ireland, 7% in
EMEA/Asia Pacific and 6% in North America.
We delivered good growth across our four global business lines, with
organic revenue growth of 12% in Credit Services, 9% in Marketing
Services, 8% in Decision Analytics and 7% in Interactive.
We met or exceeded each of our financial objectives, namely to
deliver mid-high single digit organic revenue growth, maintain or
improve margin and deliver cash flow conversion of over 90%.
We executed well on our global growth programme, positioning us
strongly for the future.
Revenue US$4.5bn EBIT US$1.2bn Full year dividend
US 32.0c
Revenue from continuing activities EBIT margin from continuing activities
up 15% and organic revenue growth up 50 basis points to 26.2%.
of 10%, at constant exchange rates. Dividends per share up 14%.
12 4,485 12 1,175 12 32.0
11 3,859 11 991 11 28.0
10 3,803 10 935 10 23.0

This annual report has been produced using ISO 14001 and FSC certified environmental print
Continuing activities only. 2011 restated to exclude 2011 restated to exclude comparison shopping and
technology, together with vegetable-based inks and a single-site production facility that required no
comparison shopping and lead generation lead generation businesses in North America and
transport between processes. The report is printed on an environmentally responsible paper that uses
businesses in North America and UK and Ireland UK and Ireland (now classified as discontinued
50% certified de-inked post consumer waste and 50% certified virgin fibre from sustainable sources.
(now classified as discontinued operations). operations).
Produced by Accrue* Printed by Royle Print Limited
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Contents
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Business overview Governance u
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2 Chairman’s statement 51 Chairman’s introduction s
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4 What we do 52 Board of directors o
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6 How we do it 54 Corporate governance statement e
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8 How we’re getting there 66 Report on directors’ remuneration v
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10 Credit Services 83 Directors’ report w
12 Decision Analytics
14 Marketing Services
16 Interactive
18 Our people, our strength Financial statements
22 Key performance indicators
24 Risks and uncertainties
87 Group audit report
88 Group income statement B
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89 Group statement of s
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comprehensive income n
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Business review 90 Group balance sheet s
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91 Group statement of changes r
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28 Chief Executive’s review in total equity v
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32 North America review 92 Group cash flow statement w
34 Latin America review 93 Notes to the Group financial statements
36 UK and Ireland review 149 Parent company audit report
38 EMEA/Asia Pacific review 150 Parent company profit and loss account
40 Financial review 151 Parent company balance sheet
47 Corporate responsibility 152 Notes to the parent company
financial statements
159 Shareholder information
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To help you get the most from this report, we have used the v
following page reference symbol to indicate where additional e
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information can be found.Pxx n
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Highlights e
Benchmark profit Basic EPS US 66.2c
before tax US$1,128m
Profit before tax from continuing operations of Benchmark earnings per share up 18% to
US$689m, up 5%, and Benchmark profit before US 78.9c and basic EPS of US 66.2c, up 14%. F
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tax of US$1,128m, up 23%. n
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12 1,128 12 66.2 i
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11 920 11 57.9 t
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10 854 10 59.0
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See note 7 to the Group financial statements for definition Benchmark earnings per share movement is based on ts
of Benchmark profit before tax. 2011 restated to exclude 2011 restated to exclude comparison shopping and lead
comparison shopping and lead generation businesses generation businesses in North America and UK and
in North America and UK and Ireland (now classified as Ireland (now classified as discontinued operations).
discontinued operations).
22 EExxppeerriiaann AAnnnnuuaall RReeppoorrtt 22001122 BBuussiinneessss oovveerrvviieeww
Chairman’s statement
This has been another excellent year for Experian. Each of the Group’s four regions
and four global business lines has delivered strong organic revenue growth. We
have also continued to invest throughout the business and made a number of
important strategic moves that will help secure our long-term growth.
Sir John Peace
Chairman
Sustained value creation remains Experian’s telecommunications where operators are
top priority and I believe we can be proud focusing hard on building customer loyalty,
of our achievements in this respect. In the in the utility market where the challenge is
five years since demerger, notwithstanding preventing fraud and energy theft, and in the
the often challenging conditions in some of public sector where there is a major drive
our biggest markets, Experian has provided for greater efficiency. In the US, we’re also
shareholders with returns totalling more helping physicians and hospitals to manage
than 90%, which compares with an average billings as patients become responsible for a
of 16% for the FTSE 100. larger proportion of their healthcare bills.
We made further strides during the year
Driving growth across the Group
towards Experian’s goal of becoming the
Expanding our operations into major global leader in digital marketing services.
emerging consumer economies is one of In EMEA/Asia Pacific, for instance, this is
several key drivers of growth for Experian, now our single largest revenue contributor
with over a third of our revenue now coming as marketers look for more cost-effective
from fast developing markets outside of the ways to reach their customers and develop
US and UK. A particular highlight this year more personalised communications. In
was the acquisition of Computec, which Brazil, we accelerated our digital marketing
has expanded our credit bureau presence development with the acquisition of Virid, the
into Colombia, Peru and Venezuela. country’s leading email marketing business.
Latin America is a very attractive region
We continued to strengthen our position
economically for us and we are finding no
as a trusted consumer brand for helping
shortage of further opportunities in Brazil,
individuals to manage their credit profile and
where we are continuing to extend the range
protect against the threat of identity theft.
of Experian products available and are now
In the UK, our CreditExpert product helped
preparing our clients for the legalised sharing
grow our Interactive revenues in the region
of positive credit data.
by 30%. I am pleased to say that we also
The Group has also continued its global reached an agreement to dispose of our non-
diversification outside of financial services core businesses in comparison shopping
with other industry sectors now representing and lead generation, maintaining the Group’s
68% of our revenue. We’re building clear strategic focus on data and analytics.
substantial businesses in sectors such as
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Constant product innovation underpins all lasting legacy for Experian. Paul was always almost 3,500 hours. Environmentally we have
our activities, with over 10% of our revenue a generous mentor to his team and, in exceeded our three-year target, reducing
generated from products developed in just liaison with his family, we are establishing an our energy from utilities (as a proportion of
the past five years. We’ve been investing in employee scholarship award in his name. He revenue) by 21%, while our ethical progress
new data sources around the globe and in a is missed by everyone who knew him. has been typified by achievements such
major new Decision Analytics product suite, as the successful roll out of our new global
PowerCurve, which saw the successful P52 Strengthening our Board code of conduct.
launch of the first phase last September. Our B
Since the year-end, Brian Cassin has joined Our employees continue to astound us
new Business IQ product in North America u
Experian as our new Chief Financial Officer. by the strength of their commitment to s
is also transforming the way we deliver Brian was previously with Greenhill & Co, volunteering and fundraising for all manner in
business information to clients and we’re e
the global investment banking firm and of good causes. And while we remain s
now set to introduce it to the UK. s
has 20 years’ experience in the corporate focused on financial education and support r
e
financial advisory sector. Brian was already for new entrepreneurs, our people are v
Engaging our workforce i
well known to us as a strategic advisor and also deeply connected to the issues of e
w
Experian’s success owes a great deal I am confident that he will make a great importance within their local communities.
to the outstanding efforts of a very contribution to Experian in the years ahead.
We are especially mindful of the
committed workforce, which is why
I am also pleased to tell you that the Board challenges that communities face in our
the Group’s ability to attract and inspire
and its committees have been further emerging markets and this year our senior
talented people has always been a priority
strengthened by the appointment of Deirdre management conference takes place in
for us. Since the introduction of our annual
Mahlan and George Rose as non-executive Mumbai where our leaders will see and
Global People Survey in 2007, Experian’s
directors from September 2012. Both have experience a range of local social issues.
employee engagement scores have
extensive boardroom experience and will We want to use this to give them a greater
steadily improved and we are now intent
bring a wealth of management and financial awareness of the wider social context for our
on closing the remaining gap with global G
expertise to Experian. I believe they have the business and its continued growth.
high-performing organisations. o
personal qualities and experience that are v
Listening to and taking account of the views e
A major Group-wide initiative is underway, important to us in continuing to create value r
of stakeholders underpins all our actions n
led by our CEO, Don Robert, to unite our for our shareholders. a
and we have recently embarked upon a n
people around a common understanding In order to provide continuity following comprehensive stakeholder engagement c
e
of what makes Experian special and to
Paul Brooks’ death, David Tyler has kindly project, involving shareholders, clients,
ensure that these defining characteristics
agreed to remain on the Board until suppliers, employees and our communities.
help shape every aspect of how we work
31 December 2012, when he will retire. You can read about this and about our
together across the world. We’ve called it
David played a key role in the successful broader progress in Experian’s latest
P18 the Heart of Experian and are using it to demerger of Experian in 2006 as the finance corporate responsibility report at
strengthen the qualities that have made us director of our former parent company www.experianplc.com/crreport.
who we are, while continuing to embrace and we are very grateful to him for his wise
the diversity that is the hallmark of any counsel and support since then. A business in excellent shape
successful global business. F
Experian has come a long way in less than in
Paul Brooks P47 Recognising our responsibilities six years as a public company and this last an
With growth comes an even greater year has again combined strong financial c
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It was with the greatest sadness that we awareness of our wider social, ethical and performance with real strategic progress. al
learnt of the death in January of Paul environmental responsibilities and we have There’s no doubt that the business is in s
t
Brooks, our Chief Financial Officer. Paul was made good progress again on a number excellent shape today with a first class at
an immensely talented and inspirational of fronts. The community programme management team and a colossal sense em
leader, who played a central role in building continues to grow and all our regions now of purpose. I want to thank everyone at e
the Group we are today. He was admired have employees engaged in raising funds Experian for all their hard work and to nt
s
both inside and outside the Group as an and giving their time. Volunteering overall, congratulate them on an outstanding
exceptionally able CFO and leaves behind including time outside of normal working achievement.
a very strong finance team that will be a hours spent on Experian projects, was up by
4 Experian Annual Report 2012 Business overview
What we do
Experian helps organisations to manage credit risk, prevent fraud, target marketing
offers and automate decision making. We also provide credit monitoring and
identity protection services to millions of consumers via the internet.
Credit Services
47%*
Credit Services provides information to
Data and organisations to help them manage the
risks associated with extending credit and
preventing fraud.
Analytics
Our focus is on providing data Revenue by region
and analytical tools across our
42% c
four core business lines. 37% cifi
North America Latin America UK and Ireland11% EMEA/Asia Pa10%
*Proportion of Group revenue
We are extending our global lead through geographic expansion,
product innovation and entry into new market sectors
Revenue by industry Revenue by region Revenue by client
Financial North Top 10
services 32% America clients 9%
47%
Direct-to- Top 50
consumer 21% Latin clients 21%
America
Retail 14% 21% All other
clients 79%
Automotive 5% UK and
Telecoms and Ireland
utilities 5% 18%
Insurance 4% EMEA/
Asia Pacific
Public sector and 14%
education 3%
Other 16%
5
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Decision Analytics Marketing Services Interactive
11%* 21%* 21%*
Decision Analytics applies expert Marketing Services helps organisations Interactive enables consumers to monitor B
consulting, analytical tools and software to target and engage their customers the accuracy of their credit report online, u
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to help organisations make accurate and through sophisticated marketing to check their credit score and protect in
relevant decisions at each stage of their strategies and to build profitable and themselves against identity theft. e
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relationships with customers. lasting relationships. s

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Revenue by region Revenue by region Revenue by region
84%
42% c 42% c
cifi cifi
North America27% Latin America 4% UK and Ireland EMEA/Asia Pa27% North America Latin America 5% UK and Ireland25% EMEA/Asia Pa28% North America UK and Ireland16%
*Proportion of Group revenue *Proportion of Group revenue *Proportion of Group revenue
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We are generating and preserving n
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We are the global market leader value for our shareholders n
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Competitive position (Global revenue US$m)
• Market leading positions
4,4851 • Potential for long-term growth
International
% • High barriers to entry
3
5 North America
• Global reach
F
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Source: n
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Latest annual revenue, n
1,9602
from company and SEC filings c
Experian 47% Equifax 19%81% Dun & Bradstreet1,729%71%592 Acxiom1,114%86%*603 TransUnion1,021%79%*242 Fair Isaac 637%63%*204 *1234 UYYYYSeeee oaaaanrrrr leeeeynnnnddddeeeedddd 33331110 MDMSeeaapcrrccteehhmm 22bb00e11er12r 2 2001111 ial statements
6 Experian Annual Report 2012 Business overview
How we do it
Experian owns and operates comprehensive databases of information, to which we
apply our proprietary analytics and software, helping our clients to manage their
customer portfolios and marketing campaigns, to create significant value for our
clients and consumers.
Credit Services Decision Analytics and Interactive
Credit Credit
Electoral
repayment & reports
register
application
Company Court
register judgments Scores
We aggregate, We apply
cleanse, sort our analytical
Data
and enhance models to the
Summary
data data
Bankruptcy Collections characteristic
reports
Suspected
Vehicle
fraudulent
applications history Indices
Marketing Services
Client Customer
Demographic proprietary profiles
We aggregate, We apply We group
Market Data Online cleanse, sort our analytical Market consumer
research and enhance models to the insight profiles
data data reports into related
categories
Behavioural Social Competitor
insight
reports
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Credit Services Decision Analytics and Interactive
Clients’ internal risk policies
Our clients
Look for new customers
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Financial services u
Telecommunications s
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Utilities n
Process applications e
Our Insurance s
Clients Automotive s
decisioning
benefit Healthcare re
tools help Identify and prevent fraud and from Public sector v
our clients to: ie
risk of default improved w
manage their
business
customer
decisions
portfolios Manage collections and Consumers
debt recovery
Manage and develop existing
customer relationships
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Marketing Services
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Internet
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We help our e s benefit from
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campaigns eteto customer ci
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8 Experian Annual Report 2012 Business overview
How we’re getting there
Our vision is for Experian’s people, data and technology to become a necessary
part of every major consumer economy. We are committed to driving long-term
shareholder value by focusing on data and analytics, driving profitable growth and
optimising capital efficiency.
We have five strategic goals
We continue to extend and build data assets by investing in rental, income, payday loan, and utilities data, enabling
us to develop new products for risk management and fraud prevention. In Brazil, Spain and Denmark, we are building
Extend our global lead in credit information and analytics
positive data files. In Australia we are establishing new consumer and business credit bureaux, in partnership with
the major banks.
We expanded our addressable market in US healthcare payments with the acquisition of Medical Present Value, and in the
UK, we increased services we offer to small and medium enterprises in the credit reference sector with the acquisition of
Create successful businesses in new customer segments
LM Group. We are helping telecommunication providers better manage their collections processes, and in the UK we are
partnering with the public sector to assist government departments to authenticate benefit claimants and to prevent fraud.
The acquisition of Computec extended our geographic presence to Colombia, Peru and Venezuela. In Brazil
we have invested in new sources of negative data in partnership with a major retail association. We have also launched
Build large-scale operations in our major emerging consumer economies
credit risk and business information services in India and fraud prevention services in Russia.
With the acquisition of an email marketing business in Brazil, we now offer email marketing across ten of the largest
advertising markets in the world. We have deepened our social media capabilities, with the launch of social research
Become the global leader in digital marketing services
and media campaign platforms. And we have developed a sophisticated digital advertising platform that allows our
clients to manage their online campaigns.
We continue to enhance the services we provide to consumers. For example, in the UK we are offering greater value to
subscribers of credit reference products by bundling vehicle history checks and property valuation reports. We have added
Become the most trusted consumer brand for credit information services and identity protection
new identity protection services including wider web monitoring and protection for children when online in the
US. And we are the first credit reporting agency in the US to offer personalised, live telephone-based credit education.
And three financial objectives
Deliver sustainable mid-to-high single digit organic revenue growth Organic revenue growth KPI on page 22
Maintain or improve EBIT margins EBIT margin KPI on page 22
Convert at least 90% of EBIT into operating cash flow Cash flow conversion KPI on page 22
All of which are underpinned by our six corporate responsibilities
Create social and economic
Use and protect Inform and empower
benefit through Experian’s
data properly consumers
products and services