Debt Information

Capital allocation policy and outstanding debt

 

  Capital allocation policy

  Our free cash flow has consistently been strong which has been a key pillar of our disciplined capital allocation.

- Our first priority is to invest in organic innovation to drive growth in the company.

- Secondly we aim to grow the dividend in line with underlying earnings growth.

- Thirdly we look at selective acquisitions which fit with our strategic priorities.

- And we also consider share repurchases. 

 

 Financing strategy

- Our leverage policy is to target benchmark Net debt in the range of 2.0–2.5x EBITDA, commensurate with maintaining a strong investment grade rating (BBB+ / Baa1 or above).

- When refinancing we aim to space out our debt maturities to mitigate refinancing risk in any one year.

- We hold substantial undrawn committed bank facilities in order to maintain liquidity.

  

 Bank facilities

 As at 31 August 2020 we had:

- Undrawn committed bank revolving credit facilities totalling US$2.5bn: 4 years average remaining tenor and includes core US$1.95bn club facility, committed until December 2024

- US$3.9bn of bonds and drawn bank facilities: 6 years average remaining tenor and no bank repayments until April 2022, no bond repayments until October 2021

- Cash and Cash equivalents of US$129m

 Our drawn and undrawn banking facilities have one financial covenant of Benchmark EBIT being 3x net interest. 

 As at 31 August 2020 this was 12x.

 Interest rate risk

- Our policy is to have 50% - 100% of our net funding at fixed rates, with the remainder at floating rates.

- We use interest rate swaps used to adjust the balance between fixed and floating rate liabilities.

- Around two-thirds of our net funding is at fixed rates, with around one-third floating rate. Our debt levels are usually lower at 31 March due to strong cash inflows in H2, which increases the proportion of our debt that is fixed rate. Conversely, debt levels are usually higher at 30 September as we pay staff incentives in June and the final dividend in July, which then reduces the proportion of debt which is at fixed rates.

 

 FX risk

- In business trading our revenues and costs are substantially in the same currency for each country, minimising transactional risk. There is a translation effect when local currencies are converted into USD.

- Our borrowings are in USD, GBP and Euro. We aim for borrowings broadly in the currencies of our earnings, though we do not borrow in Brazilian Real or Colombian Peso. We use FX contracts used to manage residual currency risk exposure.

 

 Credit ratings

 Our aim is to maintain a strong investment grade (BBB+ / Baa1 or above). Our current credit ratings are:

 

Standard & Poor’s

Moody’s

Long term

A-

Baa1

Long term outlook

Stable

Stable

Short term

A-1

P-2

 

 Bond maturity profile

 Experian aims to maintain a smooth profile for its bond debt to minimise refinancing risk in any given year.

 Calendar years. The values are after swaps and the FX rate for GBP and EUR bonds is at 31 August 2020.

 

 Outstanding debt

Bond debt Issuer Currency Amount (mils) Coupon Redemption date Issue date Series Rating
Euronotes  Experian Finance plc GBP 400 3.25% 7 Apr 2032 April 2020 EMTN A- stable outlook / Baa1 stable outlook
US Notes Experian Finance plc USD 750 2.75% 8 March 2030 December 2019 144A A- stable outlook / Baa1 stable outlook
US Notes Experian Finance plc USD 500 4.25% 1 Feb 2029 January 2019 144A A- stable outlook / Baa1 stable outlook
Euronotes  Experian Finance plc  GBP 400 2.125% 27 Sept 2024 June 2018 EMTN A- stable outlook / Baa1 stable outlook
Euronotes Experian Finance plc  EUR 500 1.375%  25 Jun 2026  May 2017  EMTN A- stable outlook / Baa1 stable outlook
Euronotes Experian Finance plc GBP 400 3.50% 15 Oct 2021 Feb 2014 EMTN A- stable outlook / Baa1 stable outlook