So I got invited to a party. It goes for 13 weeks. The party
is exclusively for accounting students and companies that, for the most part,
we’ve never heard of or met before. The idea is that we get awkwardly
introduced, ask dumb questions, profound questions, make rubbish observations
and maybe, just maybe, we start to understand them on a deeper level. Let’s set
the scene: I’m suddenly 18 and awkward, kind of standing near the wall but not
leaning on it and Martin comes over, grabs me by the shoulder; whisking me away
from the relative safety of my wallflower position. “I have someone I’d like
you to meet.” he says, as he shuffles me across the room past other students
fumbling through conversations about cash flow statements. All of a sudden we
come to a halt and I’m standing in front of my company. Martin shoves a 188
page financial statement in my hand, smiles and says “Zac, meet Experian plc.
Experian plc, this is Zac. Have fun!” He immediately walks off and I hear him
shouting “Elizabeth! I have someone I’d like you to meet.” as he briskly slips
through the crowd.
All of a sudden he’s gone and I’m alone. Well, not alone.
Experian plc looks at me expectantly and I stand there frozen, dumbly holding
the thick wad of corporate spin, jargon and accounting wizardry. We stare at
each other for a moment as I struggle to think of something to say. Experian
sighs and its’ eyes glance down at the Financial Statement I have in my left
hand. “Oh. Right” I say, “Um… let me see. You, uh. Hmm.” I desperately try to
flick through the pages but I’m also holding my drink in my right hand so I
almost drop everything and end up spilling some of the contents of my red solo
cup on Experian’s shoes. To stall (and change the subject from ruining shoes),
I ask what Experian does.
“We’re an IT company. At a high level, we provide products
for online security for credit information, personal details, marketing
products and data analysis.” It replies.
“Wow, great” I say, trying to find that damn Statement of
Changes in Equity. I ask how old Experian is as I take a big swig of my drink.
“214” it replies and I spurt that mouthful of drink I’d
attempted to sip.
“You’re what?” I ask incredulously, “But there were no
computers back then.”
“It’s complicated.”
And that’s how we met. So the story above may be a little
silly but those feelings of awkwardness, confusion and surprise were all felt
by real Zac when he first looked at his company. That feeling of trying to
juggle flipping through something and multi-tasking a conversation is exactly
the sort of cumbersome incoordination that I experienced reading the financial
statement and attempting to fill out my company’s spread sheet. It’s so much
information, and the scale is overwhelming, spanning numerous countries,
business segments and hundreds of millions of dollars. As above, I tried to
just stick to the basics. I got to know the company at a high level and stuck
to the information required for the spread sheet. It helped to get a base level
understanding of what is important in the firm.
Initially, I had read the week 3 study guide prior to
transcribing the details of my firm’s financial statements to the spread sheet.
I thought that this made sense and felt buoyed as I jumped into the statement
and to my dismay, immediately drowned. There was just so much information and
so many references to the sections I was looking for and it wasn’t like there
were neon signs saying ‘this stuff her is important!’ So I took a deep breath
and used my search function. I found an
example that another student[i]
had already completed and started looking for the similar line items to confirm
that I was looking at the right thing and all of a sudden it started to make
sense. It was interesting to note that Experian’s total equity had been
declining over the last four years. This last financial year, they have
purchased and cancelled $190m of their own shares. I wasn’t sure why they might
do this but I did some research on Investopedia and there could be a number of
reasons: buying outstanding shares can pay off investors and reduce the overall
cost of capital or; stocks are undervalued and the company buys back some of
those stocks to reissue when it regains its’ popularity. So the question is:
why did Experian plc do it?
I looked into why Experian plc might have done this and
found that there was a significant downturn in share price in November 2016. I
remembered seeing an article regarding privacy breaches when I originally
started researching the company so I searched for news for Experian in October
2016. I found an article from the Huffington
Post regarding hackers breaching a server that withheld the private
information of T-Mobile customers. The article was written on the 6th
October 2016 and claims the privacy breach occurred in September 2016 and
September 2013. It could be safe to assume that the fallout from this hacking
incident affected share pricing as it dropped significantly (about $200 per
share) from October to a low at 11th November 2016. Since that point
Experian’s share price has risen steadily to an all-time high in March 2017. It
was great to use this information from the study guide practically on my own
company and it really illustrates (ironically) the trust relationship in
business. I found this exercise really exciting because I feel like I finally
connected with the firm’s business realities.
[i]
I’ve lost the student’s name but it was whom ever had Objective Corporation as
their company. I couldn’t seem to reference them on the Find Your Company
spreadsheet.
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