Data Decisions Distribution. 10 September 2007 Bear Stearns Investor Luncheon

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Transcription:

Data Decisions Distribution 10 September 2007 Bear Stearns Investor Luncheon

Introduction to Experian Paul Brooks, CFO 2

Understanding our business Data Decisions Distribution Proprietary ownership of and access to vast consumer and commercial databases all over the world Turning data into critical decisions for clients and consumers A broad range of products and services delivered to consumers and businesses across many vertical sectors and geographies 3

Data The core of our business 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 High quality databases derived from public and private data Ownership of many years of historical data creates barriers to entry 4

Decisions Turning data into critical decisions 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? 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

Distribution Global and diversified offer By sector FY07 sales Automotive Telecom/Utility /Insurance Consumers 7% 2% 14% 53% Financial services By geography FY07 pro forma sales 1 EMEA / Asia Pacific Latin America 16% 8% 53% North America Publishing/ Media Government Other 3% 5% 5% 11% UK & Ireland 23% Retail/ Home shopping 1 Proforma 2007 sales including Serasa. Serasa under Brazilian GAAP at historical average rates (FX R$:$2.15) 6

Unparalleled global reach Global revenue $ million 4,000 3,785 1, 4 3,500 3,000 2,500 2,000 1,500 1,000 500 0 47% 1,803 18% 2, 5 1,531 24% 2 1,333 14% 1,185 5% 1,055 4% 53% * 82% * 76% ** 86% ** 95% ** 96% ** 72% ** Experian Equifax D&B Acxiom Harte-Hanks ChoicePoint Fair Isaac Notes: * North America only America International ** US only TransUnion is excluded from this analysis due to limited available information 1. March 2007 2. December 2006 3. September 2006 4. 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 1 2 2 3 825 28% 7

Our 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 8

Our principal activities Credit Services Help clients lend profitably to businesses and consumers, maximizing revenue and minimizing risk % of pro forma sales FY07 49% Decision Analytics Help clients with specialist software and analytics to make business critical decisions in credit area 10% Marketing Solutions Help clients to acquire new customers and develop and manage relationships with existing customers 20% Interactive Help consumers connect with companies over the Internet to sell products from our clients or from Experian 21% 9

Credit Services Global leadership FY07 revenue: $1,520m, EBIT: $482m, 3% organic sales growth Countercyclicality Geographic expansion Shift in client spend from customer acquisition to customer management Excellent prospects for growth in emerging markets June 2007 acquisition of Serasa establishes Experian as the global market leader Vertical expansion Strong growth in automotive information in US, UK and Italy Further focus on new verticals, as example UK public sector 10

Decision Analytics Global deployment FY07 revenue: $392m, EBIT: $136m, 15% organic sales growth 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 Normally first point of entry into new geographies New wins in Asia Pac Significant progress in fraud prevention in Spain 11

Marketing Solutions Transforming our prospects FY07 revenue: $728m, EBIT: $65m, flat organic sales growth 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 12

Interactive Creating competitive distinction FY07 revenue: $784m, EBIT: $173m, 23% organic sales growth Market leader in Consumer Direct Membership growth in US and UK Improving retention rates Driving organic growth in lead generation Providing online marketing leads across multiple verticals from a single platform LowerMyBills: rapid response to market downturn Optimizing advertising spend Enhanced leads Diversifying product offering 13

Strong long-term performance Sales $m 2,014 2,461 2,930 3,424 Total growth +18% +30% +14% EBIT $m and margin 468 565 685 808 +17% +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 14

Highly cash generative US$m 1,000 750 500 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 250 Net debt post Serasa transaction of c. $3.0bn 0 FY04 FY05 FY06 FY07 BBB+/Baa1 credit rating Operating cash flow* EBIT * Operating cash flow = EBIT less trading working capital, add depreciation/amortisation, less capital expenditure and less retained in associate 15

FY07 pro forma cash flow $ million 900 800 700 600 825 Capital Expenditure (275) 237 Change in working capital 39 (22) Retained in associate 804 97% Pro forma net interest (65) Tax (121) 500 400 Depreciation and amortisation 618 75% 300 200 100 0 EBIT Operating cash flow Free cash flow 16

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 17

Q1 Trading Update Three months to 30 June $ million Continuing activities only Americas UK and Ireland EMEA/Asia Pacific Total Experian Total growth % At actual exchange rates 8% 17% 17% 11% Organic growth % At constant exchange rates 7% 6% 7% 7% Performance highlights: US Credit Services delivered mid single-digit organic sales growth UK & Ireland Credit Services delivered low single-digit organic sales growth despite tough environment Decision Analytics continued to grow strongly in emerging markets Encouraging progress in Americas Marketing Solutions, with return to low single-digit growth UK & Ireland Marketing Solutions returned to growth as previously disclosed integration process nears completion Interactive sales in UK & Ireland nearly doubled year-on-year 18

Introduction to Experian Mark Zablan, Group President Marketing Solutions 19

Vision for Experian Marketing Services To help our clients sell more of their products to customers efficiently and effectively 20

The marketing value chain Our clients marketing process: Strategy Planning Execution Measurement Understand Communicate Measure Client challenges: Getting a deeper understanding of customers Figuring out how best to communicate with them And measuring the impact on their business 21

We help our clients understand their customers Strategy Planning Execution Measurement Understand Consumer demographic, lifestyle and transactional information Commercial demographic information Syndicated consumer behavior and attitude research Online behaviors and activities Segmentation and modeling Name and address quality software 22

We help our clients understand and communicate with their customers Strategy Planning Execution Measurement Understand Communicate Multi-channel marketing databases Contact strategy and optimization Email services Online consumer surveys Addressable advertising 23

We help our client understand and communicate with their customers and measure results Strategy Planning Execution Measurement Understand Communicate Measure Integrated marketing services Web analytics Online competitive intelligence In-store traffic measurement Campaign response analysis 24

The Experian Marketing Services difference Experian Marketing Services is uniquely positioned to meet the needs for our clients Only marketing services provider with this breadth of capabilities Ability to combine these capabilities to meet the unique needs of each client Highest quality information and data management capabilities in the industry 25

Experian Americas product mix comparison 2005 vs. 2008 2005 Mix 2008 Mix Integrated Marketing Digital Services Research Services QAS Hitwise 26

Q & A 27

Appendix 28

Sales by geography Twelve months to 31 March $ million Sales 2007 2006 Total growth Organic growth Americas 1,990 1,731 15% 8% UK and Ireland 843 677 17% 7% EMEA/Asia Pacific 591 522 8% 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 29

EBIT by geography Twelve months to 31 March $ million Americas direct business UK and Ireland EMEA/Asia Pacific All figures above on continuing basis Growth at constant currency EBIT margin excluding FARES 2007 2006 508 404 221 179 74 64 Total growth 26% 16% 11% UK restructuring charge (8) - na Central activities (47) (31) na Sub-total - direct FARES Total EBIT EBIT margin Americas UK and Ireland EMEA/Asia Pacific Total EBIT margin 747 61 808 25.5% 26.2% 12.5% 21.8% 616 69 685 23.3% 26.4% 12.3% 21.0% 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 30

Credit Services Twelve months to 31 March $ million Sales Americas UK and Ireland EMEA/Asia Pacific Total sales 2007 2006 804 766 266 245 450 410 1,520 1,420 Total growth 5% 3% 5% 4% Organic growth 3% 3% 4% 3% EBIT direct business 420 371 11% FARES 61 69 (11%) Total EBIT 482 440 8% 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 31

Decision Analytics Twelve months to 31 March $ million Sales Americas UK and Ireland EMEA/Asia Pacific Total sales 2007 2006 82 63 215 185 95 76 392 325 Total growth 29% 9% 21% 16% Organic growth 29% 8% 18% 15% EBIT 136 102 27% 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 32

Marketing Solutions Twelve months to 31 March $ million Sales Americas UK and Ireland EMEA/Asia Pacific Total sales 2007 2006 353 355 329 236 46 36 728 627 Total growth nc 31% 23% 13% Organic growth (2%) 1% 9% nc EBIT 73 57 24% UK restructuring charge (8) - EBIT 65 57 10% 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 33

Interactive Twelve months to 31 March $ million Sales Americas UK and Ireland Total sales 2007 2006 751 547 33 11 784 558 Total growth 37% 176% 40% Organic growth 20% 176% 23% EBIT 173 117 50% 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 34

Group EBIT Twelve months to 31 March $ million EBIT before central activities Central activities EBIT continuing activities Discontinuing activities EBIT 2007 2006 855 716 (47) (31) 808 685 17 42 825 727 Central costs partially reflect historic GUS allocations Discontinuing activities are UK account processing and US incentive marketing business 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) 554 59.7 22.4% 927 Pro forma adjustment 46 46 (15) Pro forma results 825 (65) 760 (175) 585 58.3 23.0% 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. 36

Operating cash flow Twelve months to 31 March $ million EBIT Depreciation and amortisation Capital expenditure 2007 825 237 (275) Change in working capital 39 Retained in associate Operating cash flow Operating cash flow % (24) (22) 804 97% 2006 727 204 (212) 18 (20) 717 99% 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 37

Income statement Twelve months to 31 March $ million 2007 2006 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 326 458 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. 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 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 40

Contacts Experian Cardinal Place 80 Victoria Street London SW1E 5JL Tel: +44 (0)203 042 4200 Website: www.experiangroup.com Paul Brooks Chief Financial Officer Email: paul.brooks@experian.com Nadia Ridout-Jamieson Director of Investor Relations Email: nadia.rjamieson@experiangroup.com Peg Smith Executive Vice-President Email: peg.smith@experian.com Leigh Godfrey Investor Relations Manager Email: leigh.godfrey@experiangroup.com 41

Financial calendar 10 October 2007 First half trading update 15 November 2007 Interim results 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. 43