Corporate governance statement

Chairman’s introduction and highlights

Board and committee structure

Role of the Board

Composition

Chairman and Chief Executive Officer

Non-executive directors

Experian’s governance framework

Operation of the Board

Nomination and Corporate Governance Committee report

Remuneration Committee report

Audit Committee report

External auditors

Internal control

Risk assessment

Engagement with shareholders and others

John Peace, Chairman

Chairman’s introduction and highlights

Experian is committed to good governance – we see it as crucial in ensuring that we conduct ourselves honestly, transparently and responsibly, and that we are appropriately accountable to stakeholders. We see it not as a ‘box-ticking’ exercise, but as a way of explaining to stakeholders how the Company and the Board take decisions to support the continued growth of our business. The Board has a central role to play in this regard in promoting the long term success of the Company, by implementing a framework of authority, accountability and risk identification/mitigation, which at the same time empowers people to make decisions that will ensure the continued success of the business.

It is fair to say that our view of governance reflects the trends in the regulatory environment. The new UK Corporate Governance Code, in particular, places the emphasis on applying the principles, rather than the letter of, the Code. Issued in June 2010, the Code does not apply for Experian until next year, but Experian has chosen voluntarily to report under the new Code this year. As Chairman, I am therefore pleased to accept the UK Financial Reporting Council’s invitation to provide, through this governance statement, an insight into how the principles relating to the role and the effectiveness of the Experian Board have been applied.

Some specific examples this year of the application of these principles are as follows:

External evaluation – in line with the new Code, Experian intends that the evaluation of the Board will continue to be facilitated externally at least every three years. Prior to the external facilitation that took place in 2010, the last such evaluation was in 2007. This year’s evaluation, facilitated by the Lygon Group, was intended to gain rigorous, honest feedback from Board members about how the Board is operating and to look for areas where there is scope for improvement. In addition, as part of the review, Board members were asked to comment on each others’ contribution to Board and committee meetings. The review also included an assessment of actions taken since the last external facilitation, for which there were no adverse findings. Further details, including some of the recommendations and proposed actions from the 2010 review, appear in this statement.

Governance review – in January and March 2011, the Board and the Nomination and Corporate Governance Committee conducted a thorough review of governance. This included consideration of the output of the external board evaluation conducted in 2010, Board and committee composition (taking into account the appointment of Sir Alan Rudge as Deputy Chairman and the non-executive appointments made in June 2010), and an evaluation of how the Board should best spend its time, in terms of site visits, to ensure the appropriate focus on the business.

Induction and training, new non-executive directors – since their appointment in June 2010, Judith Sprieser and Paul Walker have participated in a comprehensive programme that included: Experian’s history; strategy; Credit Services, Decision Analytics and Interactive businesses; corporate development; finance, audit, legal, risk, regulatory, human resources, investor relations and governance; product demonstrations; and specific geographic briefings on North America, Latin America, UK and Ireland, EMEA, Asia Pacific and India.

Induction and training, full Board – in July 2010, the full Board received presentations from senior management from the UK and Ireland business, including details of strategic initiatives and presentations on strategic clients. In September 2010, it was the turn of the North America senior management to present to the Board, and they provided a market overview and update, as well as several product demonstrations. In January 2011 and March 2011, sessions were presented to the Board on the Marketing Services business and information security respectively.

Remuneration engagement – in May 2010, the Chairman of the Remuneration Committee wrote to the Company’s top shareholders and others with details of changes to be made to remuneration arrangements in 2010 (as reported in the report on director’s remuneration). A positive result followed at the annual general meeting in favour of the 2010 report on directors’ remuneration.

Refinancing – the Board oversaw programmes to ensure that maturing financing facilities were managed on a timely basis and the necessary financial resources were in place for the business. We saw US$1,700m successfully raised through the bank markets and the issue of £400m of 2018 Euronotes.

Risk reporting – recognising the importance of identifying risk, the Audit Committee asked management to continue refining our reporting, for example, by implementing a new reporting template in response to requests for broader commentary on information security activities. The new reporting provides a greater focus on quantitative analysis, and provides a wider spectrum to include areas of success as well as opportunities for improvement.

New UK Corporate Governance Code – the Board and the Nomination and Corporate Governance Committee have received updates throughout the year on progress to ensure compliance with the new UK Corporate Governance Code. Specific actions taken in readiness for the new Code include: updating the terms of reference of the Board committees; updating my letter of appointment to clarify that, as already happens, a culture of openness and debate is promoted in the boardroom; ensuring that the risk management framework has a more formal link between key business objectives and associated risks; plan agreed in early 2011 to address individual training and development needs identified by directors; and all directors standing for re-election at the 2011 annual general meeting.

Shareholder feedback is always welcome and if you have any particular comments or observations about this corporate governance statement, please email governance@experian.com.

Compliance statement

It is the Board’s view that the Company has been compliant with the provisions set down in Section 1 of the Combined Code on Corporate Governance published by the UK Financial Reporting Council in 2008 throughout the year ended 31 March 2011. This statement, together with the diagram below, explains how the Company has applied the principles and complied with the provisions of the Combined Code during the year. Additionally, the Company has chosen to comply voluntarily with the new UK Corporate Governance Code published by the UK Financial Reporting Council in June 2010.

Back to top

Board and committee structure

To support the principles of good governance, the Board and its committees operate as described below.

Back to top

Role of the Board

The Board sets Experian’s strategic goals and ensures that the necessary financial and human resources are in place to achieve the goals. The Board reviews management and financial performance against those goals. It is accountable to shareholders for delivering financial performance and long term shareholder value. To achieve this, the Board directs and monitors the Group’s affairs within a framework of controls which enable risk to be appraised and managed effectively through clear and robust procedures and delegated authorities.

Back to top

Composition

The Board currently comprises the Chairman, three executive directors and seven independent non-executive directors including a Deputy Chairman. The Board considers that its composition is appropriate to oversee the Group’s businesses and is suitably diverse in background to address the challenges of the areas in which Experian operates. Biographical details of the directors, including details of any other major directorships, are set out elsewhere in this annual report.

In accordance with the provisions of the UK Corporate Governance Code, the Board has decided that, in future, all directors should be subject to annual re-election by shareholders. David Tyler has notified the Board of his intention not to stand for re-election to the Board at the 2012 annual general meeting, following completion of two three-year terms as a non-executive director of the Company.

As reported in the Nomination and Corporate Governance Committee report, the Committee keeps the Board structure, size, composition and succession needs under review and in 2010, in anticipation of its future needs, the Board appointed two new non-executive directors and a Deputy Chairman. In the light of David Tyler’s intended retirement from the Board, it is planned that the Committee will undertake a further analysis of the future needs of the Company, taking account of the current composition of the Board and its principal committees, to ensure that the Board and its principal committees have the required skills, experience and diversity going forward and to provide, as far as possible, succession coverage for the various roles on the Board (including for the role of Chairman).

Back to top

Chairman and Chief Executive Officer

There is a clear separation of the roles of the Chairman and the Chief Executive Officer which is set down in writing. Illustrated below is an extract from the written statement evidencing this separation.

The Chairman’s expected maximum commitment to Experian is an average of one to two days per week.

	Responsibilities
	Chairman	Chief Executive Officer (‘CEO’)
	The effective running of the Board, and ensuring that the Board as a whole plays a full and constructive part in the development and determination of the Company’s strategy and overall commercial objectives.	The running of the Group’s business, and developing the Company’s strategy and overall commercial objectives.
	Promoting the highest standards of integrity, probity and corporate governance throughout the Company and particularly at Board level.	With the executive team, implementing the decisions of the Board, its committees and the principal subsidiaries.
	Ensuring that the Board receives accurate, timely and clear information on the Company’s performance and issues, challenges and opportunities facing the Company.	Ensuring that a dialogue is maintained with the Chairman on the important and strategic issues facing the Company and that the Chairman is alerted to forthcoming complex, contentious or sensitive issues.
	Ensuring effective communication with the Company’s shareholders, including by the CEO, Chief Financial Officer (‘CFO’) and other executive management, and ensuring that members of the Board develop an understanding of the views of the major investors in the Company.	Leading the communication programme with shareholders.

Back to top

Non-executive directors

Appointment

Non-executive directors are initially appointed for a term of three years which may, subject to satisfactory performance and election/re-election by the shareholders, be extended by mutual agreement. The non-executive directors may normally serve a maximum of three, three-year, terms (i.e. nine years).

Meetings of non-executive directors

In addition to their attendance at Board and committee meetings, the non-executive directors normally meet as a group without the executive directors present at the end of each scheduled Board meeting. At these meetings, the non-executive directors examine and review the performance of executive management. The non-executive directors also meet at least once a year without the Chairman present.

Senior Independent Director

The Senior Independent Director is the Deputy Chairman, Sir Alan Rudge. In this role, Sir Alan is available to meet shareholders who have concerns that cannot be resolved through discussion with the Chairman, the CEO or the CFO, or where such contact is inappropriate.

Independence

The Board considers each of the current non-executive directors to be independent in character and judgement and also that there are no relationships or circumstances which are likely to affect (or could appear to affect) each director’s judgement.

Election and re-election

It is proposed that, in 2011, all directors of the Company will be subject to re-election in accordance with the new UK Corporate Governance Code. All directors have been subject to a performance evaluation during the year, and a peer review was done as part of the annual Board evaluation.

Back to top

Experian’s governance framework

Back to top

Operation of the Board

Governance framework

The Group’s key internal governance document is its Global Delegated Authorities Matrix, which draws together the schedule of matters reserved to the Board, the terms of reference of the Board committees as well as the authority levels for the Group’s principal subsidiaries, directors and senior executives. For matters not reserved to the Board, the matrix prescribes the cascade of authorities delegated throughout the Group by respective Group companies, together with the monetary limits of such delegations. Included among the matters that the Board has delegated to the Group’s principal subsidiaries are the approval of smaller acquisitions and disposals and the approval of capital and revenue expenditure (all within defined monetary limits). The matrix is reviewed and refreshed regularly and the Board monitors the exercise of delegations to the Group’s principal subsidiaries which are reported to it at each Board meeting.

There is an agreed annual calendar of the main business to be considered at each Board meeting. For example, as well as the other proposals that may be considered at each meeting, the focus is on strategy in January, budgets in March and results in May and November. At each Board meeting, the CEO, the Chief Operating Officer (‘COO’) and the CFO provide operational and financial updates. Depending on the nature of the proposal to be considered, senior executives are often invited to make presentations or participate in Board discussions to ensure that Board decisions are supported by a full analysis of each proposal.

Key activities of the Board include:

•	Strategy and management Approval and oversight of Experian’s long-term objectives and commercial strategy, ensuring that the necessary financial and human resources are in place to meet the objectives.
•	Management oversight Review of operating, financial and risk performance.
•	Regulatory/statutory activity Including approval of the Group’s results, key documents and the announcement of dividends.
•	Finance/Treasury Approval of the framework for the Group’s finance, banking and capital structure arrangements.
•	Appointments Approval, upon the recommendation of the Nomination and Corporate Governance Committee, of the appointment of new directors.
•	Approval of Group policies Approval of, for example, a health and safety policy, a global environmental policy, an anti-corruption policy and a global code of conduct.

There is also a Group Operating Committee in place – the remit of this executive group includes identifying, debating and achieving consensus on issues involving strategy, growth, people and culture and operational efficiency. A further focus of this group, which comprises the most senior executives from the Group, is to ensure that there is strong communication and cooperative working relationships amongst the top team. The quarterly meetings tend to be issues-oriented and focus on selected important Group issues worthy of debate.

Board meetings

The Board meets regularly during the year and on an ad-hoc basis as required. For each scheduled meeting, the directors normally meet over a two or three day period and Board committee meetings are also held during the time the directors are together. Structuring the Board and committee meetings in this way enhances the effectiveness of the Board and its committees. At least one overseas Board meeting is held each year, which provides management across the Group with the opportunity to present to the Board and meet the directors informally. During the year under review, overseas Board meetings were held in Paris and New York. The New York meeting provided the Board with a chance to receive product demonstrations, meet, and receive business presentations from, North America management and appraise the Group’s businesses in that region.

The Board and committee meeting attendance record of each director is shown in the table below. During the year, the Board met formally on six occasions and, in addition, received strategy presentations from senior management.

	Attendance by individual directors at meetings of the Board and its principal committees
			Board	Nomination and Corporate Governance Committee	Remuneration Committee	Audit Committee
	John Peace		6/6	3/3	n/a	n/a
	Don Robert		6/6	3/3	n/a	n/a
	Paul Brooks		6/6	n/a	n/a	n/a
	Chris Callero		6/6	n/a	n/a	n/a
	Fabiola Arredondo		6/6	3/3	4/4	4/4
	Roger Davis		5/6	3/3	4/4	3/4
	Alan Jebson		6/6	2/3	3/4	4/4
	Sir Alan Rudge		5/6	3/3	4/4	3/4
	Judith Sprieser*		5/5	2/2	3/3	n/a
	David Tyler		6/6	3/3	4/4	4/4**
	Paul Walker*		5/5	2/2	3/3	3/3
	*	Judith Sprieser and Paul Walker were appointed as directors on 1 June 2010
	**	Includes partial attendance at one meeting

Board evaluation

The performance and effectiveness of the Board, each of its principal committees and the directors is evaluated annually. This year’s external evaluation was facilitated by the Lygon Group (who have also provided recruitment services for non-executive directors and market research in terms of succession planning). It took place in September/October 2010, with face-to-face meetings held with most Board members and telephone meetings with some Board members. The Company Secretary and certain other regular Board or committee attendees were also interviewed. As well as looking at overall Board functions, processes and performance, Board members were asked to comment on each others’ contribution to meetings. This information was used by the Chairman as part of his evaluation of the directors and in discussing their personal development in early 2011.

The review concluded that the Board was currently functioning very well, in particular:

•	Appropriate Board processes, papers and agendas
•	Board agendas address a good balance of governance, longer term strategic goals and immediate issues
•	Strong and independent-minded non-executive directors
•	Effective committee structure
•	Continued improvement in interaction between management and the Board

In seeking to match the Board’s continuing desire to improve its functioning, the report did make recommendations on certain issues. Some examples were as follows:

	Board composition
	Recommendations	Actions
	Review current succession plans, continue to provide opportunities for the non-executive directors to meet the next generation of management, continue to keep Board and committee composition under review.	The Nomination and Corporate Governance Committee reviewed succession plans in March 2011; meetings with high potential employees will continue as part of Board business visits and Board presentations and as other opportunities present themselves; and Board and committee composition was reviewed by the Board and Nomination and Corporate Governance Committee in January and March 2011.

	Ongoing induction
	Recommendations	Actions
	Regular Board meeting induction sessions to continue; more time on the Marketing Services business line; continue to develop understanding of regulatory issues in line with current plans; continue to spend time with senior executives below Board level.	Focused sessions in January and March 2011, and planned for July and September 2011 to meet the recommendation, together with senior executives presenting to the Board as part of the normal Board cycle.

	Risk management
	Recommendations	Actions
	Risk reporting has improved significantly, but consider how best to continue to develop the presentation of risk.	Considered by the Audit Committee at its March 2011 meeting where, in particular, linkage between key risks and strategic objectives was embedded in the risk reporting.

	Board agenda, provision of papers and information
	Recommendations	Actions
	Consider electronic distribution of Board papers, provided no security issues, and whether or not a portal for Board members would be useful.	The option of receiving Board papers electronically will be offered from mid 2011, with portal functionality a feature of the software to be used to enable electronic distribution of Board papers.

Board support

The Group Corporate Secretariat, under the leadership of the Company Secretary, is responsible for providing administrative and logistical support to the Board. The Company Secretary also provides advice and support on governance and certain compliance and regulatory matters. All directors are provided with a regular supply of financial and operational information to assist them with the discharge of their duties. This information is provided on a monthly basis and Board papers are circulated in time to allow directors to be properly briefed in advance of meetings. During the year, the Group Corporate Secretariat began work on a solution for circulating papers digitally.

Directors have access to independent professional advice at the Company’s expense, if considered appropriate. No director obtained any such independent professional advice during the year ended 31 March 2011.

Induction and training

Following appointment, directors receive an induction programme. Specific highlights from this year’s induction process appear in the Chairman’s introduction to this statement.

Conflicts of interest

The articles of association of the Company allow the Board to authorise conflicts, or potential conflicts, of interest. The authorisation procedure involves the issue of guidance and a questionnaire by the Company Secretary asking directors to identify any conflicts or potential conflicts, which are considered by the Board at its next meeting. Directors are also required to advise the Company Secretary of any actual or potential conflicts as soon as they arise, so that they can be considered by the Board at the next available opportunity. It is the Board’s view that the procedure operated effectively during the year under review.

Board committees

The principal Board committees are the Nomination and Corporate Governance Committee, the Remuneration Committee and the Audit Committee. The committees operate within defined terms of reference which cover the authority delegated to them by the Board. The terms of reference are available on the Experian website at www.experianplc.com or from the Company Secretary upon request. The Company Secretary is secretary to all three principal committees.

Throughout the year, the committee chairmen provided the Board with a report of the issues considered at the meetings of the committees and the minutes of Audit Committee meetings were circulated to the Board. Reports of the activities of each of the principal Board committees follow.

Back to top

Sir Alan Rudge, Chairman of Nomination and Corporate Governance Committee

Nomination and Corporate Governance Committee report

Members

Sir Alan Rudge (Chairman)
John Peace
Don Robert
Fabiola Arredondo
Roger Davis
Alan Jebson
Judith Sprieser
David Tyler
Paul Walker

Primary roles

•	To ensure that appropriate procedures are in place for the nomination, selection, training and evaluation of directors.
•	To ensure that adequate succession plans are in place.
•	To review the Board structure, size, composition and succession needs, at all times keeping under consideration the balance of membership and the required balance of skills, knowledge and experience of the Board.
•	To identify and nominate, for the Board’s approval, suitable candidates to fill vacancies for non-executive and, with the assistance of the CEO, executive directors, such appointments to be made on merit and against objective criteria to ensure that the Board maintains its balance of skills, knowledge and experience.
•	To review legislative, regulatory and corporate governance developments and make appropriate recommendations to the Board.
•	To ensure that the standards and disclosures required by the Combined Code and the UK Corporate Governance Code are observed.

Governance

The Committee was in place throughout the year ended 31 March 2011 and met three times. Seven members of the Committee are considered by the Board to be independent non-executive directors in accordance with provision B.2.1 of the UK Corporate Governance Code. The Group Human Resources Director and the Global Talent Director attend certain meetings by invitation.

Activities

At its meetings during the year, the Committee agreed to recommend to the Board the appointment of Sir Alan Rudge as Deputy Chairman (including as Chairman of the Committee), considered the process regarding the annual Board evaluation, received updates and agreed actions in respect of the new UK Corporate Governance Code to ensure the Company’s compliance, and recommended the directors to retire at the 2011 annual general meeting.

The Committee also considered the overall structure, size and composition of the Board and its committees and the proposed actions arising from the Board and committee evaluation (as earlier described), reviewed the time commitment required from non-executive directors and reviewed its own performance and terms of reference.

In addition, the Committee also discussed and reviewed the succession plans for the Chairman, CEO and senior management, kept resources under review, and evaluated succession plans for all senior positions. This planning ensures that appropriate leadership resources are in place to achieve Experian’s strategic objectives and includes strong development programmes and cross-regional development role changes.

There is an established process used to appoint new non-executive directors which begins with the Nomination and Corporate Governance Committee agreeing the scope of the role and engaging a specialist search company to identify potential directors. The Committee reviews the short list submitted by the search company and interviews prospective candidates who are, if thought suitable, recommended to the Board, which makes the appointment. In accordance with the articles of association of the Company, directors are subject to election at the first annual general meeting following their appointment, and thereafter they must seek regular re-election.

Back to top

Roger Davis, Chairman of Remuneration Committee

Remuneration Committee report

Members

Roger Davis (Chairman)
Fabiola Arredondo
Alan Jebson
Sir Alan Rudge
Judith Sprieser
David Tyler
Paul Walker

Primary roles

•	To recommend to the Board senior management remuneration policy and the remuneration of the Chairman.
•	To determine individual remuneration packages for executive directors and certain senior executives.
•	To communicate with shareholders on remuneration policy.
•	To review and recommend to the Board the design of the Group’s short and long term incentive plans.
•	To oversee the Group’s executive pension arrangements.

Governance

The Remuneration Committee was in place throughout the year ended 31 March 2011 and met four times. All of its members are considered by the Board to be independent non-executive directors in accordance with provision D.2.1 of the UK Corporate Governance Code. The Chairman and CEO attend meetings by invitation. They do not attend when their individual remuneration is discussed and no director is involved in deciding his or her own remuneration. Other regular attendees include the Group Human Resources Director and members of the Global Reward team. The Committee meets regularly with its independent advisers. All members of the Committee were provided with an induction in the role of the Committee and the operation of its terms of reference on first appointment.

Activities

At its meetings during the year, the Committee concluded a shareholder consultation exercise in respect of the proposed performance measures, targets and operation of the Company’s long term incentive plans, initiated the invitation to employees to participate in the 2010 Sharesave scheme, discussed the 2010 bonus outcome and the preliminary 2011 bonus targets and those for long term incentive awards, received updates in respect of the long term incentive plans of the Company and agreed to make share plan awards. The Committee also considered the remuneration of the global head of the Decision Analytics business line, reviewed the fee of the Chairman and the salaries of the CEO, the CFO, the COO and a number of senior executives, taking account of remuneration arrangements throughout Experian, and reviewed its own performance and terms of reference.

The report on directors’ remuneration sets out the way in which the Company has applied corporate governance principles to directors’ remuneration.

Back to top

Alan Jebson, Chairman of Audit Committee

Audit Committee report

Members

Alan Jebson (Chairman)
Fabiola Arredondo
Roger Davis
Sir Alan Rudge
David Tyler
Paul Walker

Primary roles

•	To monitor the integrity of the financial statements.
•	To review the effectiveness of the system of internal control including the risk management systems.
•	To review the effectiveness of the audit process and the independence and objectivity of the external auditors.
•	To monitor and review the effectiveness of the internal audit function.
•	To develop and monitor policy on non-audit services to be provided by the external auditors.
•	To approve the remuneration and terms of engagement of the external auditors and make recommendations in relation to their re-appointment.

Governance

The Audit Committee was in place throughout the year ended 31 March 2011, and met four times with meetings held to coincide with key dates in the financial reporting and audit cycle. All members of the Committee are considered by the Board to be independent non-executive directors in compliance with provision C.3.1 of the UK Corporate Governance Code.

The Chairman and the executive directors attend meetings by invitation. Other regular attendees include the Global Executive Vice President Legal and Regulatory Risk and the Head of Global Internal Audit. The lead audit partner from PricewaterhouseCoopers LLP also attends all meetings. Other PricewaterhouseCoopers staff attend meetings where their particular expertise can be utilised. At each meeting, the Committee meets with the external auditors and the Head of Global Internal Audit without management present.

David Tyler, a Committee member, provides recent and relevant financial experience and also provides an in-depth knowledge of Experian’s business. The Board is confident that the collective international business experience of the Committee members enables them to act as an effective committee. The Committee has access to the financial expertise within the Group and the auditors and the Chairman of the Audit Committee is in regular contact with key members of senior management.

Activities

The activities of the Audit Committee during the year ended 31 March 2011 included the following:

•	Reviewed the 2010 preliminary and half-year results announcements and the 2010 annual report and accounts, reviewed impairment review papers as required by IAS 36 and papers supporting the preparation of relevant accounts on a going concern basis.
•	Received an overview of Project Gemstone, a project which had commenced previously with the overall aim of delivering a global accounting and HR system and integrated global reporting, planning and forecasting. The Committee noted the benefits which included improved global reporting, an enhanced control environment, a strong platform for future growth and faster integration of acquisitions, improved procurement and cash management.
•	Agreed that each meeting should receive an update in respect of UK Bribery Act 2010 actions. Specific actions during the year included the establishment of a multi-functional team, led by the Senior Vice President, Global Enterprise Risk Management, and the development of appropriate policies, to ensure that the compliance programme in respect of the Act would be robust and fully embedded in the organisation.
•	In September 2010, reviewed the in-depth evaluation by KPMG of Experian’s Internal Audit function, which focused on the positioning, people and processes of the function. The report concluded that a good service was provided, and some recommendations for improvement were also made. In November 2010, the Head of Global Internal Audit reported to the Committee on actions within the function to address the recommendations.
•	Reviewed and considered PricewaterhouseCoopers’ Audit Strategy Memorandum which included details of the basis and scope of the annual audit, the timeline, materiality thresholds and a risk assessment in respect of the 2011 audit, noting factors which would influence the assessment, including the global economic environment. The performance of PricewaterhouseCoopers was also considered – the outcome was positive and it was agreed that continued improvement had been demonstrated. The Committee noted that there would be a new lead engagement partner in place following the 2011 audit.
•	Reviewed a variety of reports on risk, as more fully described in the internal control and risk management section of this statement, and received an internal audit update at every meeting, and a fraud and whistleblowing update.
•	Reviewed the effectiveness of the Group’s system of internal control, including financial, operational, compliance and risk management on an ongoing basis.
•	Made a recommendation to the Board (for shareholder approval) in relation to the re-appointment of the external auditors and considered their engagement terms.
•	Reviewed other services provided by the external auditors, evaluated their performance and monitored their independence, concluding that they had maintained their independence throughout the year ended 31 March 2011.
•	Evaluated its own performance and concluded that its terms of reference remained appropriate.

Back to top

External auditors

PricewaterhouseCoopers LLP have been the Company’s auditors since demerger in October 2006. The Audit Committee considers that the relationship with the auditors is working well and remains satisfied with their effectiveness. Accordingly, to date the Committee has not considered it necessary to require the auditors to tender for the audit work. There are no contractual obligations restricting the Company’s choice of external auditor.

PricewaterhouseCoopers provide a range of other services to Experian and, to ensure auditor objectivity and independence, a policy has been adopted by the Company in relation to the provision of such services. The policy includes financial limits above which the Chairman of the Audit Committee must pre-approve any proposed non-audit services. The Audit Committee receives half-yearly reports containing details of assignments carried out by the external auditors in addition to their normal work, together with details of related fees. The payment of non-audit fees to the Company’s auditors is capped at 100% of fees for audit and assurance services, except in exceptional circumstances, and an analysis of fees paid to the external auditors for the year ended 31 March 2011 is set out in note 11 to the Group financial statements.

In addition to the policy summarised below, the external auditors maintain safeguards to ensure the objectivity and independence of their service teams. The safeguards include the rotation of the lead audit engagement partner and the use of separate teams, where appropriate.

	Policy on the provision of non-audit services
	Provided that the provision of such services does not conflict with the external auditors’ statutory responsibilities and ethical guidance, the following types of services may be assigned to the external auditors: Further assurance services: where the external auditors’ deep knowledge of the Group’s affairs means that they may be best placed to carry out such work. This may include, but is not restricted to, shareholder and other circulars, regulatory reports and work in connection with acquisitions and divestments. Taxation services: where the external auditors’ knowledge of the Group’s affairs may provide significant advantages which other parties would not have. Where this is not the case, the work is put out to tender. General: in other circumstances, the external auditors may provide services provided that proposed assignments are put out to tender and decisions to award work are taken on the basis of demonstrable competence and cost effectiveness. However, the external auditors are specifically prohibited from performing work related to accounting records and financial statements that will ultimately be subject to external audit; management of or significant involvement in internal audit services; any work that could compromise the independence of the external auditors; and any other work that is prohibited by UK ethical guidance.

Back to top

Internal control

Maintaining an effective system of internal control is central to identifying and managing risks that may impact on the achievement of the Company’s strategy. Having such a system supports effective and efficient operations, the development of robust and reliable internal and external reporting and compliance with laws and regulations.

The Board is required to maintain a sound system of internal control, to safeguard shareholders’ investment and the Company’s assets. In addition, as part of their responsibilities, the directors are required, at least annually, to conduct a review of the effectiveness of the Group’s system of internal control and should report to shareholders that they have done so. The review must cover all material controls, including financial, operational and compliance controls and risk management systems. A system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide reasonable, but not absolute, assurance against material financial misstatement or loss.

The Board has overall responsibility for maintaining the system of internal control for the Group and monitoring its effectiveness, and confirms that there is an ongoing process for identifying, assessing and mitigating the significant risks faced by the Group, including those risks relating to social, ethical and environmental matters. Further details on this process can be found in the risks and uncertainties section of the business review section. The process was in place throughout the year under review and up to the date of approval of the annual report and meets the requirements of the UK Corporate Governance Code. For certain joint arrangements, the Board places reliance upon the systems of internal control operating within the partners’ infrastructure and the obligations upon partners’ boards relating to the effectiveness of their own systems. In the Board’s view, the information it received was sufficient to enable it to review the effectiveness of the Group’s system of internal control in accordance with the Turnbull Guidance ‘Internal Control Revised Guidance for Directors’ contained in the UK Corporate Governance Code. At its meeting in May each year, the Audit Committee, under delegated authority from the Board, reviews the effectiveness of the Group’s system of internal control.

The principal features of Experian’s system of internal control and methods by which the Board is confident that this system operates effectively are set out below.

Back to top

Risk assessment

There is an ongoing process in place for anticipating, identifying, assessing and mitigating the significant risks faced by the Group. The process has operated throughout the year under review and up to the date of approval of the annual report.

The Group’s risk management and governance framework is designed to support the anticipation, identification, assessment and mitigation of risks that are significant to the achievement of the Group’s business objectives. There is a global risk management policy in place which governs the management and control of both financial and non-financial risks. The policy describes the global risk framework and defines risk management principles and expectations regarding management of risk across the Group; this enables a consistent approach to the management of risk at regional and business unit level.

Management monitors the Group’s risk profile on an ongoing basis. Regional risk committees oversee the management of regional risks consistent with Experian’s risk appetite, strategies and objectives. Global operational related risks, including technology and project risks, are monitored by a global operations risk management committee. This committee oversees the management of operational related risks associated with the Group’s shared service and data centres as well as global product development and delivery activities. The regional and global operations risk committees review summary risk assessments and internal audit results, evaluate significant exposures, make mitigation decisions and enforce mitigation progress, monitor changes in the regional/operational risk profile and escalate significant risks and issues to an executive risk management committee.

The primary responsibility of the executive risk management committee, which is comprised of senior Group executives, is to oversee the management of global risks. The regional, global operations and executive risk committees operate to a synchronised quarterly cycle as part of an enterprise risk management process – this ensures relevant risk information flows from the regional and global operations risk committees to the executive risk management committee and from the executive risk management committee to the Board and/or Audit Committee, as appropriate.

Control environment

The Group has an established framework, which includes the following key features:

•	Terms of reference for the Board and each of its committees.
•	A clear organisational structure, with well documented delegation of authority from the Board to principal subsidiaries and regular reporting to the Board in respect of the exercise of the delegations.
•	Principles, policies and standards to be adhered to throughout the business. These include risk management policy, accounting policies, treasury policy, information security policy and policy on fraud and whistleblowing.
•	Defined review and approval procedures for major transactions, capital expenditure and revenue expenditure.
•	Regional and global strategic project committees comprised of senior executives responsible for reviewing and evaluating all significant business investments, developments and divestments, prior to submission of relevant cases for the approval of the Board or relevant principal operating subsidiary (depending on the size of the investment) – risk assessment is an integral component of the evaluation process.
•	Appropriate strategies to deal with each significant risk that has been identified, including internal controls, insurance and specialised treasury instruments.

Information and communication

The Board, as part of the comprehensive system of budgetary control in the Group, receives a monthly finance report, which includes a Group financial summary, Group results, forecasts and sales trends and an investor relations analysis. The report also includes detailed business trading summaries and provides the Board with information required for decision-making and management review purposes. More detailed monthly performance reviews take place at a regional level.

The Audit Committee receives global risk management reports during the year which are generated through the facilitated, quarterly contribution of managers in each area of Experian’s business; including facilitated contributions from key governance functions such as Information Security, Business Continuity, Legal, Government Affairs, Compliance, Finance, Group Corporate Secretariat, Internal Audit and Technology Services. All risk assessment information is consistently captured and centrally held in a series of risk registers. Any risks inherent in material litigation cases are also specifically drawn to the Audit Committee’s attention to enable a more detailed consideration. During the year, the Audit Committee received training on information security.

On a monthly basis, the achievement of business objectives, both financial and non-financial, is assessed using a range of performance indicators. These indicators are regularly reviewed to ensure they remain relevant and reliable. In addition, the global risk management policy provides for the ongoing identification and escalation of new and emerging risks to management and the Board as appropriate.

There are fraud and whistleblowing procedures in place in the Group for employees to report suspected improprieties and the Audit Committee receives regular reports on this area from the Head of Global Internal Audit.

Monitoring

The Group has a well-developed system of planning, incorporating Board approval of Group strategy and budgets. Performance against the agreed plan is subsequently monitored and reported at each Board meeting.

The Audit Committee has delegated responsibility from the Board for the annual review of the effectiveness of the Group’s system of internal control and receives an annual report on the controls over relevant risks (including risks arising from social, ethical and environmental matters). The Committee also reviews a variety of reports on risk, including material risk reports, material litigation reports, information security reports and regulatory and compliance reports.

Each business unit is responsible for the day-to-day management of risk and for ensuring that risk exposure remains within established limits. The global risk management policy outlines, for business units, the expectations in relation to escalation of identified risks, control weaknesses or gaps. In addition, certificates are provided annually by each business unit and key function to confirm compliance with the Group’s system of internal control, Group policies, and corporate governance and corporate responsibility processes.

The Group’s internal audit function provides independent testing and verification of risk management policies, processes and practices across the Group and reports to the Audit Committee on the effectiveness of the system of internal control. The internal audit programme and methodology is aligned to the risk categories and risk assessment parameters established by the global risk management function, and makes use of risk assessment information at a business level in planning and conducting its audits.

Internal control over financial reporting

Detailed policies and procedures are in place to ensure the accuracy and reliability of financial reporting and the preparation of consolidated financial statements. A comprehensive Group Accounting Manual (‘GAM’) including details of the International Financial Reporting Standards (‘IFRS’) requirements is in place. The document is owned by the Group’s finance team and has been rolled out across the Group. All Experian companies are obliged to follow the requirements of the GAM. The aims of the GAM are to provide guidance on accounting issues; allow for consistent and well defined information for IFRS reporting requirements; provide uniform measures for quantitative and qualitative measures of Group performance; and to increase the efficiency of the Group’s reporting process.

Back to top

Engagement with shareholders and others

The Company places considerable importance on communication and maintaining good relationships with shareholders and makes every effort to ensure that shareholders are kept informed of significant Group developments.

To assist members of the Board to gain an understanding of the views of institutional shareholders, at each of its meetings the Board receives an investor relations and media report, which covers a wide range of matters including a commentary on the perception of the Company and views expressed by the investment community, media reports, share price performance and analysis. The views of shareholders are also assessed in detail via an investor survey, which is normally conducted every second year using a third party supplier. The Investor Audit surveys twenty leading global investors including both holders and non-holders of Experian shares. The most recent survey was presented to the Board in September 2010. In addition, the Board consults with shareholders in connection with specific issues where it considers appropriate. In 2010, the Chairman of the Remuneration Committee again consulted with major institutional shareholders and others regarding the proposed performance measures, targets and operation of the Company’s executive long term incentive arrangements.

There is also an ongoing programme of dialogue and meetings between the CEO, the CFO and institutional investors and analysts. At these meetings a wide range of relevant issues including strategy, performance, management and governance are discussed within the constraints of information already made public. The announcement of the annual and half-year results and interim management statements provide opportunities for the Company to answer questions from analysts covering a wide range of topics. During the year, investor seminars were held in London and New York. The agenda for both seminars included a strategic overview from the CEO, and presentations on Global Credit Services and Decision Analytics, Consumer Direct strategy, Business Information in North America, growth initiatives for small business in Brazil and the building of Experian’s business in India.

The Company’s website www.experianplc.com is a very important method of communication with shareholders and all material information reported to the regulatory news services, together with copies of annual and half-year results and interim management statements, is published on the Company’s website so that all shareholders can have full access promptly to Company announcements.

The Board is also committed to ensuring that any concerns of private shareholders are dealt with and, on its behalf, the Company Secretary oversees communication with these shareholders. A ‘Shareholder Questions’ card is issued with the shareholder documentation for the annual general meeting and the Company receives numerous questions from private shareholders using the card. The Company Secretary ensures that the Company responds to shareholders directly, as appropriate, at or following the annual general meeting.

The annual general meeting is an important event in Experian’s corporate calendar and provides a valuable opportunity for the Board to communicate with shareholders and meet with them on an informal basis before the main business of the meeting. All directors attend the annual general meeting.

Experian’s 2011 annual general meeting will take place on Wednesday 20 July 2011 and shareholders are encouraged to attend the meeting and use the opportunity to ask questions. However, given the size and geographical diversity of the Company’s shareholder base, attendance may not always be practical and shareholders are encouraged to use proxy voting on the resolutions put forward. Every vote cast, whether in person or by proxy, is counted, because votes on all matters except procedural issues are taken by a poll.

In accordance with the UK Corporate Governance Code, details of proxy voting by shareholders, including votes withheld, are made available on request and placed on the Company’s website following the meeting. In 2010, voting levels at the annual general meeting showed an increase to 66% of the issued share capital of the Company, compared with 63% in 2009.

	Experian website
	Additional information relevant to corporate governance at Experian can be found on the Experian website at www.experianplc.com. There you will find:
	• Terms of reference of the principal Board committees • The schedule of matters reserved to the Board • The memorandum and articles of association of the Company • Details of annual general meeting proxy voting by shareholders, including votes withheld • Contact details for any questions

Back to top