Business review
Experian International: progress in 2006
Operational review
Sales grew by 16% at constant exchange rates, of which 9% came from acquisitions and 7% was organic. The full year impact of acquisitions made to date is expected to increase sales growth by mid-single digits in 2007. Despite a slowdown in the growth of UK consumer lending, Experian’s sales in the UK, which account for about 60% of its International revenues, still grew by 6% excluding acquisitions. This reflects the breadth of its portfolio by product and vertical market. Organic growth outside the UK was 8%.
Credit Information and Solutions increased sales by 8% excluding acquisitions. Although there was a decline in demand for products supporting new consumer credit applications in the UK, this was countered by strong sales growth in business-tobusiness sales, as well as significant growth from a small base in the government, telecomms and direct-to-consumer markets. Outside the UK, Italy, Asia Pacific, South Africa and Eastern Europe demonstrated double-digit growth in credit, especially in value-added decision solutions.
As already announced, with the market in decline, Experian will have withdrawn from large scale credit card and loan account processing in the UK by Autumn 2009. In the year to 31 March 2006, sales in UK account processing fell to about £44m generating EBIT of £20m. With the planned contraction of the business, profit will decline further over the next few years, with EBIT in the year to 31 March 2007 expected to be no more than half the 2006 level. The costs of withdrawal, all of which are cash, will be about £15m. These will be charged against EBIT in the year to 31 March 2007.
Marketing Information and Solutions grew sales by 9% excluding acquisitions.
As expected, given the UK market background, there was some slowdown in marketing spend by financial services clients. This was compensated for by strong growth in CheetahMail, by public sector wins in QAS and by double-digit growth in Business Strategies in the UK and elsewhere.
Outsourcing sales grew by 4% in euros excluding acquisitions. Experian continued to win new contracts in both the more mature cheque processing area (now serving all five major French banks) as well as other back office functions, including a four year, multi-million euro contract with Prud’homales, building and running the electoral roll for French work council elections.
Financial review
Sales for continuing activities at Experian International increased by 16% at constant exchange rates. EBIT from continuing activities at £151.3m increased by 19% at constant rates, resulting in a 60 basis point improvement in the margin. This reflects operational leverage throughout the business, despite re-investment in new products and regions. In particular in the second half, Experian increased its revenue investment in Asia Pacific.
Experian International |
|||
| 12 months to 31 March | 2006 £m |
2005 £m |
Growth at constant FX |
| Sales | |||
| - Continuing activities | 722 | 620 | 16% |
| - Discontinued activities | 1 | 18 | na |
| - Total reported | 723 | 638 | 13% |
| EBIT | |||
| - Continuing activities | 151.3 | 126.6 | 19% |
| - Discontinued activities | 0.1 | 1.5 | na |
| - Total reported | 151.4 | 128.1 | 18% |
| EBIT margin | 21.0% | 20.4% | |
