news release
Half-yearly financial report
17 November 2010 - Experian, the global information services company,
today issues its half-yearly financial report for the six months ended
30 September 2010.
Highlights
. A strong performance, with improving trends across all regions.
. Revenue from continuing activities up 8% at constant exchange
rates. Organic revenue growth of 7%. Total Group revenue of US$2.0bn
(2009: US$1.9bn).
. Further margin progression. EBIT margin from continuing activities
up 10 basis points to 24.3%.
. Continuing EBIT up 8% at constant exchange rates. Total EBIT of
US$484m, up 10% at actual exchange rates.
. Profit before tax from continuing operations of US$283m (2009:
US$316m). Benchmark profit before tax of US$450m, up 12%.
. Basic EPS of 25.9 US cents (2009: 24.5 US cents). Benchmark EPS
of 32.4 US cents, up 10%.
. Net debt of US$1,889m in the half. S&P affirmed BBB+ rating and
revised outlook to positive in October.
. 79% conversion of EBIT into operating cash flow in the seasonally
weaker half year.
. First interim dividend of 9.0 US cents per ordinary share, up
29%.
John Peace, Chairman, commented:"Experian has made excellent progress
in the half, creating significant shareholder value through strong
financial performance, net share repurchases of US$147m and a 29%
dividend increase to 9.0 US cents."
Don Robert, Chief Executive Officer, commented:"We performed strongly
in the first half, delivering our best organic revenue growth outcome
in four years. Trends have improved modestly, with generally
more favourable conditions across the majority of our markets.
Our strategic priority is to maximise the opportunities we
have identified globally. We are executing successfully against our
growth programme, as is increasingly visible in our performance. For
the year as a whole, we expect to deliver similar rates of organic
revenue growth to the first half, and we are targeting modest
improvement in our EBIT margin."
Contact
Experian
Don Robert Chief Executive Officer +44 (0)20 3042 4215
Paul Brooks Chief Financial Officer
Nadia Ridout-Jamieson Director of Investor Relations
James Russell Public Relations Director
Finsbury
Rollo Head +44 (0)20 7251 3801
Don Hunter
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 on
the Experian website at www.experianplc.com and can also be accessed
live via a dial-in facility on +44 (0)20 3037 9164. The supporting
slides and an indexed replay will be available on the website later in
the day.
There will be a conference call today for bond analysts and investors
at 3.00pm (UK time). This will be broadcast live on the Experian
website at www.experianplc.com, with supporting slides. A replay will
be available on the website later in the day.
Experian will update on third quarter trading on 18 January 2011, when
it will issuean Interim Management Statement.
See Appendix 2 for definition of non-GAAP measures used throughout this
announcement.
Roundings
Certain financial data have 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.
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. 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 leading global information services company, providing
data and analytical tools to clients in more than 90 countries. The
company helps businesses to manage credit risk, prevent fraud, target
marketing offers and automate decision making. Experian also helps
individuals to check their credit report and credit score, and protect
against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a
constituent of the FTSE 100 index. Total revenue for the year ended 31
March 2010 was US$3.9 billion. Experian employs approximately 15,000
people in 40 countries and has its corporate headquarters in Dublin,
Ireland, with operational headquarters in Nottingham, UK; Costa Mesa,
California; and Sao Paulo, Brazil.
For more information, visit http://www.experianplc.com.
Chief Executive Officer's Review
Experian performed strongly in the first half. Some of our core markets
started to recover and, equally importantly, we are benefiting as we
extend our position in emerging markets and deliver against our global
growth programme. Total revenue growth from continuing activities was
8% and organic revenue growth was 7% (Q1 6%, Q2 8%). EBIT from
continuing activities rose 8%. There was further progression in EBIT
margin, up 10 basis points to 24.3%, even though we faced some
headwinds in the half. Benchmark EPS grew 10% to 32.4 US cents per
ordinary share and we have raised the dividend by 29% to 9.0 US cents
per share, in line with our increased dividend payout ratio.
. All regions showed improving trends. Organic revenue growth was
6% in North America, 22% in Latin America, flat in the UK and Ireland
and 4% in EMEA/Asia Pacific.
. By principal activity, organic revenue growth was 6% at Credit
Services, 10% at Marketing Services and 9% at Interactive. Organic
revenue declined 1% at Decision Analytics.
First half highlights
In North America, Credit Services returned to growth during the half,
ahead of our previous expectations. This reflects some resumption of
prospecting and origination activity as lenders slowly extend
underwriting programmes, as well as Experian's growing success in
penetrating new market segments. We're also benefiting from our actions
to reposition Marketing Services, which grew strongly in the half.
Meanwhile at Interactive, we delivered further growth, even as we
continue to transition to new brands at Consumer Direct, a process that
will be assisted by the recent acquisition of Mighty Net. Organic
revenue at Consumer Direct was broadly flat, in line with our previous
guidance.
We continue to see strong momentum in Latin America, with organic
revenue growth of 22%. While this was boosted by some exceptional
growth in authentication revenue, underlying conditions in Brazil are
highly favourable. Unemployment rates are low, the middle class
continues to expand and real income is increasing. Expansion in our
business has been driven by increased demand for value-added services,
further penetration of the small and medium enterprise (SME) channel
and we are seeing the first benefits of new product introductions as we
build a comprehensive product suite in the region.
Our business in the UK and Ireland stabilised in the half. Across
Credit Services and Decision Analytics, our diversification strategy is
successfully driving growth across the public sector,
telecommunications and utilities verticals. This is helping to offset
declines in financial services caused by the subdued UK lending
environment. We continue to see improvement across Marketing Services,
where we have successfully repositioned into digital services. At
Interactive, while there has been some moderation in growth rates, as
previously flagged, we continue to improve operating metrics and
retention rates.
Within EMEA/Asia Pacific, we have seen strong growth across Asia
Pacific, which is on course to deliver revenue in the region of US$150m
by the year end. Conditions in most Asian markets have strengthened and
we are benefiting from our strategy to roll-out global products, which
is driving new business wins across the region. Performance across more
developed markets in Europe has been sluggish, reflecting ongoing
economic weakness in some markets. Meanwhile, operations in emerging
EMEA performed well, and there was good progress in markets such as
South Africa, Russia and Turkey.
Strategic progress
As our end-markets recover, our primary strategic goal is to deliver on
our global growth programme. We are focused on a discrete set of
initiatives which we expect to drive sustained growth in our business,
extend our market position and capitalise on our global scale. The
programme is being executed within our strategic framework to focus on
data and analytics, drive profitable growth and optimise capital
efficiency.
We have made good progress against our key initiatives in the first
half. We now expect to deliver a contribution to organic revenue growth
of over 2% from the global growth programme in the year ending 31 March
2011.
Our global growth programme is centred on innovation, expanding
geographically and on penetrating new customer segments.
Innovation
. Innovation is at the heart of our strategy and is a driving force
for growth. In the half, we benefited from new products in business
information, automotive and identity protection.
. We also continue to invest in our core data and analytics. For
clients, the external environment is evolving, driving demand for new
risk management services, enhanced fraud detection and greater
precision in their marketing strategies. For example, we are investing
in current account, mortgage and property valuation data, enhanced
income estimates and more predictive scores, as well as in powerful
new software platforms within Marketing Services and Decision
Analytics.
Expanding geographically
. Our global scale sets us apart competitively and provides growth
opportunities unique to Experian. We are rolling out existing Experian
products into both existing and new geographies. For example, we have
launched ten global marketing products into eight countries over the
past 18 months, including France, Germany, South Africa, Hong Kong and
Singapore. As a result, Marketing Services now accounts for over one
third of EMEA/Asia Pacific revenue.
. We also continue to expand our credit bureau footprint, most
recently with the launch of our India bureau.
New customer segments
. The addressable market for our data and analytics is expanding as
new customer segments adopt sophisticated data and analytics tools. We
have a strong track record for growing new channels and, in the half,
delivered double-digit organic revenue growth across public sector,
telecommunications, utilities, automotive and healthcare payments.
. We are tailoring products and expanding our presence in the SME
sector and extending our direct-to-consumer offerings. New consumer
protection products, for example, are performing strongly.
Cash flow and capital strategy
Our capital strategy is aimed at meeting the investment needs of the
business, while maintaining a strong investment grade credit rating. As
these objectives are met, we will continue to evaluate options for
returning surplus cash to shareholders. Net debt in the half increased
by US$262m to US$1,889m at 30 September 2010, in the seasonally weaker
half for cash flow. The increase is after funding capital expenditure
of US$144m, net acquisition expenditure of US$226m, equity dividend
payments of US$161m and net share repurchases of US$147m. At 30
September 2010, the net debt to EBITDA gearing ratio was 2.0x,
including the current value of the Serasa put option of US$733m. This
compares to our target debt range of 1.75-2.0x.
In October, S&P affirmed its BBB+ rating on Experian and revised the
outlook to positive. We are on target to complete the previously
announced US$350m share buyback programme (of which approximately
US$50m relates to employee share incentive plans) in the year ending 31
March 2011. Our debt refinancing plan is on track to complete in the
next six months, with a new five-year bank facility being finalised and
a further bond issue planned.
Dividend
We have announced a first interim dividend of 9.0 US cents per share,
up 29% year-on-year. This is consistent with our plans to have dividend
cover based on Benchmark EPS of around 2.5 times on an annual basis.
The first interim dividend will be paid on 28 January 2011 to
shareholders on the register at the close of business on 31 December
2010.
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