Data Decisions Distribution. July Informed Decisions; Smart Solutions

Transcription

1 Data Decisions Distribution July 2007 Informed Decisions; Smart Solutions

2 Contents 1. Introduction to Experian 2. Q Trading Update 3. Preliminary results presentation FY07 2

3 Introduction to Experian Data Decisions Distribution 3

4 What we do We use information to: Help businesses find and keep the right customers Help businesses measure risk and reward Help businesses to predict the future Help consumers make important financial and purchasing decisions 4

5 How do we do it? Data Consumer credit 450m plus consumers globally Business credit c. 35m businesses globally Vehicle histories c. 600m vehicles in US and UK Insurance databases c. 30m policies in the UK Catalogue purchasing habits c. 110m households in the US Consumer marketing c. 130m households globally Internet traffic data Daily analysis of how over 25m consumers use the Internet Should we extend credit to this business? Should we loan money to this consumer? Decisions Should I buy this new car? Should I pay on this claim? Should I offer my products to this consumer? Should I send this consumer an offer? How well is my Website performing vs. my competition? 5

6 For example Is this person who they say they are? What does my credit report say about me? Who s a good credit risk and who s a bad credit risk? Has new information been added to my credit report? I want to find new customers? I need a new digital camera, but which one? Who is my most profitable customer? 6

7 A diverse model By client FY07 revenue Remainder 64% 17% Top 10 19% Next 40 By sector FY07 revenue Consumers Automotive Telecom/Utility /Insurance Publishing/ Media Government Other 2% 7% 3% 5% 5% 14% 11% 53% Financial services Retail/ Home shopping By principal activity FY07 proforma revenue 1 Interactive Marketing Services Decision Analytics 21% 49% 20% 10% Credit Services By geography FY07 proforma revenue 1 Latin America 8% 53% EMEA / Asia Pacific 16% UK & Ireland 23% Americas * Proforma 2007 revenue including Serasa. Serasa under Brazilian GAAP at historical average rates (FX R$:$2.15) 7

8 Our principal activities Credit Services Help clients lend profitably to businesses and consumers, maximising revenue and minimising risk Organic sales growth % FY07 3% Decision Analytics Help clients with specialist software and analytics to make business critical decisions in credit area 15% Marketing Solutions Help clients to acquire new customers and develop and manage relationships with existing customers 0% Interactive Help consumers connect with companies over the Internet to sell products from our clients or from Experian 23% 8

9 Our strategic objectives Driving organic growth Deeper client relationships Geographic expansion Product innovation Vertical expansion Generating synergies Growth accelerated via complementary acquisitions Delivering operating leverage to maintain or improve margins 9

10 Unparalleled global reach Global revenue $ million 4,000 3,785 1, 4 3,500 3,000 ¹ 2,500 39% 2,000 1,500 1, ,803 9% 2, 5 1,531 24% 2 1,333 14% 1,185 5% 1,055 4% 61% * 91% * 76% ** 86% ** 95% ** 96% ** 72% ** Experian Equifax D&B Acxiom Harte-Hanks ChoicePoint Fair Isaac Notes: * Americas America International ** US only TransUnion is excluded from this analysis due to limited available information 1. March December September Includes revenues for Serasa, proforma to March 2007, under Brazilian GAAP at historical average rates (FX R$:$2.15) Source: Latest full year revenue, company 10K 5. EFX reported TALX proforma revenues of $257m in 2006 in the Equifax S-4 filing % 10

11 Strong long-term performance Sales $m 2,014 2,461 2,930 3,424 Total growth +18% +30% +14% EBIT $m and margin % +28% +16% Organic growth +9% +12% +8% 21.8% 21.0% 19.6% 20.0% FY04 FY05 FY06 FY07 FY04 FY05 FY06 FY07 FY05 onwards under IFRS Global continuing sales and EBIT only Growth at constant currency and for continuing activities EBIT margin excluding FARES FY06 and FY07 adjusted to exclude MetaReward and UK account processing 11

12 Highly cash generative US$m 1, Operating cash flow as a percentage of EBIT 108% 94% 99% 97% Goal is to convert at least 85% of EBIT to cash Estimated effective tax rate of 23% on benchmark PBT Net debt at 31 March 2007 of $1.4bn FY04 FY05 FY06 Operating cash flow* FY07 EBIT Giving flexibility to fund future acquisitions Supporting BBB+/Baa1 credit rating * Operating cash flow = EBIT less trading working capital, add depreciation/amortisation, less capital expenditure and less retained in associate 12

13 Acquisition investment Acquisition spend $m Baker Hill ClarityBlue ClassesUSA FootFall LowerMyBills.com PriceGrabber.com $1.6bn Hitwise Tallyman Serasa* $1.5bn ConsumerInfo.com NIG Scorex $0.5bn CheetahMail DMS Atos (part) MarketSwitch $0.3bn Motorfile QAS Simmons $0.3bn Northern Credit Bureau Eiger Systems $0.1bn FY03 FY04 FY05 FY06 FY07 FY08 (YTD) *Initial 65% stake in Serasa Acquisitions in four years to March 2006 delivered double-digit post-tax returns in FY07 13

14 Q1 Trading Update Three months to 30 June $ million Continuing activities only 1 Total growth % At actual exchange rates 2 Total growth % At constant exchange rates Organic growth % At constant exchange rates Americas 3 8% 8% 7% UK and Ireland 17% 9% 6% EMEA/Asia Pacific 17% 11% 7% Total Experian 11% 8% 7% 1 As previously disclosed, two businesses have been treated as discontinuing from 1 April These are MetaReward s incentive marketing websites, which have been closed, and large scale UK account processing, where Experian has announced its phased withdrawal by Autumn Experian is reporting in US dollars 3 Figures exclude the performance of Serasa (see announcement of 26 June 2007), 65% of which was acquired on 28 June For future trading updates Experian will split the Americas region into North America and Latin America 14

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16 Preliminary results presentation FY07 Data Decisions Distribution 16

17 Financial objectives Continuing to increase shareholder value Drive organic sales and profit growth Manage costs to maintain or improve margins Maximise EBIT conversion to cash Supplement organic growth with targeted, value-enhancing acquisitions 17

18 Sales by geography Twelve months to 31 March $ million Sales Total growth Organic growth Americas 1,990 1,731 15% 8% UK and Ireland % 7% EMEA/Asia Pacific % 7% Total sales 3,424 2,930 14% 8% Strong organic sales growth across all three geographies Acquisitions contributed 6% to total sales growth All figures above on continuing basis Growth at constant currency 18

19 EBIT by geography Twelve months to 31 March $ million Americas direct business UK and Ireland EMEA/Asia Pacific Central activities Sub-total - direct FARES Total EBIT All figures above on continuing basis Growth at constant currency EBIT margin excluding FARES (47) (31) Total growth 26% 16% 11% UK restructuring charge (8) - na EBIT margin Americas UK and Ireland EMEA/Asia Pacific Total EBIT margin 25.5% 26.2% 12.5% 21.8% 23.3% 26.4% 12.3% 21.0% na 19% (11%) 16% Strong margin progression in Americas UK and Ireland reflects first time inclusion of lower margin ClarityBlue Growth in EMEA/Asia Pacific despite continued investment $8m restructuring charge reflects UK Marketing Solutions reorganisation 19

20 Credit Services Twelve months to 31 March $ million Sales Americas UK and Ireland EMEA/Asia Pacific Total sales , ,420 Total growth 5% 3% 5% 4% Organic growth 3% 3% 4% 3% EBIT direct business % FARES (11%) Total EBIT % EBIT margin 27.6% 26.1% Good performance in US against tough comparatives UK consumer market challenging; good growth in business information Margin uplift reflects operating leverage and affiliate contribution All figures above on continuing basis Growth at constant currency EBIT margin excluding FARES 20

21 Decision Analytics Twelve months to 31 March $ million Sales Americas UK and Ireland EMEA/Asia Pacific Total sales Total growth 29% 9% 21% 16% Organic growth 29% 8% 18% 15% EBIT % EBIT margin 34.7% 31.5% Further excellent growth driven by: Increased market penetration in Americas Strong performance across the board in UK and Ireland Strength in emerging markets, with major new client wins Exceptional margin improvement Growth at constant currency 21

22 Marketing Solutions Twelve months to 31 March $ million Sales Americas UK and Ireland EMEA/Asia Pacific Total sales Total growth nc 31% 23% 13% Organic growth (2%) 1% 9% nc EBIT % UK restructuring charge (8) - EBIT % EBIT margin 10.0% 9.1% Business still in transition Strong performance in US research and digital services Decline in traditional marketing services in US Restructuring in US and UK Margin reflects cost actions in traditional businesses and mix effect Growth at constant currency EBIT margin excluding restructuring charge 22

23 Interactive Twelve months to 31 March $ million Sales Americas UK and Ireland Total sales Total growth 37% 176% 40% Organic growth 20% 176% 23% EBIT % EBIT margin 22.1% 21.0% Excellent growth in Consumer Direct, PriceGrabber and education vertical Good profit performance from LowerMyBills despite significant downturn in US sub-prime lending market All figures above on continuing basis Growth at constant currency 23

24 Strategic and operational review 24

25 Clear strategic progress Driving organic growth Deeper client relationships New mandates from existing clients Geographic expansion Significant wins in many countries Product innovation Major new products during the year Vertical expansion Strengthened position in new market sectors 25

26 Evolution of leadership to drive future success Tiku Patel MD, UK/Ireland Chris Callero CEO, Americas Ken Sansom MD, Asia Pacific Nigel Fine MD, EMEA Richard Fiddis MD, Emerging Markets Development 26

27 Credit Services - a strong portfolio FY07 revenue: $1,520m, EBIT: $482m, 44% of global sales Countercyclicality Shift in client spend from customer acquisition to customer management Geographic expansion Excellent prospects for bureaux growth in emerging markets Growing demand in these regions for value-added products Vertical expansion Investment in US automotive Further focus on new verticals, specifically UK public sector 27

28 Decision Analytics - global deployment FY07 revenue: $392m, EBIT: $136m, 12% of global sales Deeper client relationships Gaining share at enterprise level, e.g. Bank of America Expanding with HSBC and GE New products PreciseID fraud wins in US Hunter wins in UK Geographic expansion New wins in India and China Significant progress in fraud prevention in Spain 28

29 Marketing Solutions - transforming our prospects FY07 revenue: $728m, EBIT: $65m, 21% of global sales Evolving the portfolio Highly encouraging progress in newer areas Offsetting declines in traditional areas UK restructuring Creating a new clientfacing organisation Complementary acquisitions Hitwise: leader in online marketing intelligence Data rich, global potential High growth, attractive model 29

30 Interactive - creating competitive distinction FY07 revenue: $784m, EBIT: $173m, 23% of global sales Market leader in Consumer Direct Membership growth Improving retention rates Driving organic growth in lead generation PriceGrabber added more channels and products ClassesUSA benefits from cross-sell LowerMyBills: rapid response to market downturn More profitable leads Enhanced leads Diversifying product offering 30

31 Summary Another strong year Met or exceeded our financial objectives Continue to invest for future growth Well-positioned to continue to deliver shareholder value 31

32 Appendix 32

33 Deepening client relationships Leading global financial institution and strategic Experian client Expanding and increasingly diverse relationship Partnership on a global scale Core Credit Services (online reports, account monitoring) Growth of CRM solutions (Truvue, data hygiene), Fraud Solutions, marketing and Business Information Size of wallet project involving Experian credit data and Scorex consultancy Start of relationship with Consumer Direct FY02 FY03 FY04 FY05 FY06 FY07 33

34 Group EBIT Twelve months to 31 March $ million EBIT before central activities Central activities EBIT continuing activities Discontinuing activities EBIT (47) (31) Central costs partially reflect historic GUS allocations Discontinuing activities are UK account processing and US incentive marketing business 34

35 Pro forma income statement Twelve months to 31 March $ million EBIT Net interest Benchmark PBT Benchmark taxation Benchmark profit after tax Benchmark EPS Benchmark tax rate Weighted average number of ordinary shares (million) As reported 825 (111) 714 (160) (24) % 927 Pro forma adjustment (15) Pro forma results 825 (65) 760 (175) % 1,003 Pro forma net interest charge of $65m (H1 $30m; H2 $35m) Pro forma benchmark EPS of 58.3 cents Benchmark tax rate of 23.0% Benchmark PBT: profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of demerger-related equity incentive plans, exceptional items, financing fair value remeasurements and taxation. It includes Experian s share of pre-tax profits of associates. 35

36 Operating cash flow Twelve months to 31 March $ million EBIT Depreciation and amortisation Capital expenditure (275) Change in working capital 39 Retained in associate Operating cash flow Operating cash flow % (24) (22) % (212) 18 (20) % Net debt at 31 March 2007 (1,408) Continued strong cash conversion Capital expenditure includes $20m relating to accelerated technology spend on data centre consolidation in the US Acquisition spend of $118m 36

37 Income statement Twelve months to 31 March $ million Benchmark PBT Amortisation of acquisition intangibles 714 (76) 627 (66) Exceptional items of $162m (pre-tax) are: Goodwill expense Exceptional items Charges in relation to demerger related equity incentive plans Fair value remeasurements (14) (162) (24) - (7) - Tax expense of associates (35) (9) (2) (2) Profit before taxation Taxation 394 (68) 550 (92) Profit attributable to equity shareholders Demerger costs of $149m UK account processing closure costs of $26m Gain on disposal of business of $13m Demerger-related equity incentive costs of $24m in H2 Benchmark PBT: profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of demerger-related equity incentive plans, exceptional items, financing fair value remeasurements and taxation. It includes Experian s share of pre-tax profits of associates. 37

38 Cost profile % of sales FY07 cost profile EBIT 22% 42% Labour Corporate costs 1% Other 11% Customer acquisition/ Marketing 12% 5% Data 7% IT 38

39 Return on Capital Employed Return on capital employed 8.8% 10.5% 11.0% 11.2% 3,895 4,093 4,093 2,138 2,193 3,210 3,210 3,210 3,210 3,210 FY04 FY05 FY06 FY07 Goodwill written off in 1998 Capital Employed Actual exchange rates Return on average capital employed (pre tax), continuing activities 39

40 Contacts Experian Cardinal Place 80 Victoria Street London SW1E 5JL Tel: +44 (0) Website: Paul Brooks Chief Financial Officer Nadia Ridout-Jamieson Director of Investor Relations Peg Smith Executive Vice-President Leigh Godfrey Investor Relations Manager 40

41 Financial calendar 18 July 2007 AGM 10 October 2007 First half trading update 15 November 2007 Interim results 41

42 Disclaimer The following presentation is being made only to, and is only directed at, persons to whom this presentation may lawfully be communicated ( relevant persons ). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in these presentations relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. These presentations do not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Experian group (the Group ). 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. The presentations also contain certain non-gaap financial information. The Group s management believe these measures provide valuable additional information in understanding the performance of the Group or the Group s businesses because they provide measures used by the Group to assess performance. Although these measures are important in the management of the business, they should not be viewed as replacements for, but rather as complementary to, the GAAP measures. 42

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