Half Yearly Report - part 1

RNS Number : 6689C

Experian plc

18 November 2009

 



news release

Half-yearly financial report 

18 November 2009 ─ Experian, the global information services company, today issues its half-yearly financial report for the six months ended 30 September 2009. 

Highlights 

• Another strong half of delivery, with organic revenue growth and good profit and cash flow performances.

• Revenue from continuing activities up 1% at constant exchange rates. Organic revenue growth of 1%. Total Group revenue was US$1.9bn (2008: US$2.0bn), after an adverse currency impact in the period.

• Strong margin progression. EBIT margin from continuing activities up 80 basis points to 24.0%, excluding FARES contribution.

• Continuing EBIT up 7% at constant exchange rates. Total EBIT of US$478m, in line with prior year at actual exchange rates. 

• Profit before tax from continuing operations of US$351m (2008: US$318m). Benchmark profit before tax of US$437m, up 5%.

• Basic EPS of 24.5 US cents (2008: 25.5 US cents). Benchmark EPS of 31.6 US cents, up 3%. Expressed in £ sterling, Benchmark EPS was 20.1p, up 26%.

• Strong cash conversion in the half of 88% (2008: 83%). 

• Net debt reduced by US$62m in the half to US$2,048m.

• First interim dividend of 7.00 US cents per ordinary share, an increase of 4%.

John Peace, Chairman of Experian, said:

"Experian has yet again delivered a good performance against a backdrop of tough market conditions. Having invested throughout the downturn, Experian is advantageously positioned to further develop and grow, building on its global scale and market leading position." 

Don Robert, Chief Executive Officer of Experian, said:

"Experian's progress in the first half demonstrates the Group's ability to perform through the cycle. Although the global economic recovery is still at an early stage and will take time, we have a clear strategy and are investing in a series of targeted initiatives to drive growth. In the second half, we continue to expect modest organic revenue growth and, for the year as a whole, remain on track to grow profits at constant currency and deliver strong free cash flow."

Contact

Experian

Don Robert                        Chief Executive Officer           [phone]    

Paul Brooks                       Chief Financial Officer           

Nadia Ridout-Jamieson     Director of Investor Relations

Alex Brog                           Head of Media Relations

Finsbury

Rollo Head                                                                        [phone]

Don Hunter

There will be a presentation today at 9.30am (UK time) to analysts and investors at the King Edward Hall, 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 [phone]. The supporting slides and an indexed replay will be available on the website later in the day.

There will be a conference call to discuss the results at 3.00pm today (UK time), which will be broadcast live on the website with a recording available later. All relevant Experian announcements are available on www.experianplc.com.  

Experian will update on third quarter trading on 15 January 2010, when it will issue an Interim Management Statement. 

See Appendix 2 for definition of non-GAAP measures used throughout this announcement and Appendix 3 for reconciliation of revenue and EBIT by geography.

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.

About Experian 
Experian is the leading global information services company, providing data and analytical tools to clients in more than 65 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 2009 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 São Paulo, Brazil.  

For more information, visit http://www.experianplc.com.

Chief Executive Officer's review 

Experian performed well in the first half of the year, in a difficult global economic environment. We delivered revenue growth from continuing activities of 1% at constant exchange rates and organic revenue growth of 1%. We expanded the EBIT margin by 80 basis points to 24.0% and delivered strong free cash flow of US$344m, up 27%. Benchmark EPS grew 3% to 31.6 US cents per ordinary share and we have raised our first interim dividend by 4% to 7.00 US cents per ordinary share.

The revenue performance at constant exchange rates was driven by strength in Latin America and resilient performances elsewhere, notwithstanding the challenges caused by the weak economic environment. By business segment, Interactive performed strongly and there was growth at Credit Services, offsetting revenue declines across Decision Analytics and Marketing Services. 

The strong profit and margin performance was driven by excellent cost efficiency progress, as well as positive operating leverage in Latin America. There was a good performance from FARES in the period, helped by an increase in US mortgage refinancing activity.  

Strategy for growth

Experian has significant expansion potential and, as we emerge from the global downturn, our strategy is directed towards growth. Our aim is to focus on and prioritise those opportunities with the most promise and to execute effectively against them. 

We are investing in a number of well-defined, high impact initiatives, which we expect to be meaningful to our progress. Each of these is consistent with our strategy to focus on data and analytics, drive profitable growth and optimise capital efficiency.

Vertical markets

We see significant opportunities in new verticals, where our data and analytics can be adapted at relatively low cost, and where we have a good track record of creating new markets. We are pursuing opportunities in:

• Telecommunications, where there is increasing emphasis on customer management, with rising demand for predictive churn modelling and customer risk profiling.

• Healthcare payments, an emerging sector in the US, where many industry challenges are similar to those faced by credit markets historically.

• Capital markets, where buyers and sellers of asset-backed securities can benefit from the predictive power of using dynamic credit data.

Product innovation

We are investing in new products and new data sources to further differentiate Experian in the marketplace. Our aim is to deliver value-added products which can be readily adapted to clients' needs and which have global deployment potential. While we continuously refresh and update our product portfolio, two new initiatives for Experian include:

• ProtectMyID, the new consumer identity protection product launched recently in North America, which has multi-country potential.

• Automotive data, where there is opportunity for Experian to increase market penetration for vehicle history products.

Geographic expansion

We continue to grow our presence geographically. Our aim is to expand our credit bureaux footprint globally, establish our analytics capabilities in new markets and grow our targeted marketing activities. For example, we plan further product introductions in Latin America and in EMEA/Asia Pacific to build our capabilities and to capitalise on our growing scale.

Capital strategy

Net debt at 30 September 2009 was reduced by US$62m in the half year to US$2,048m, after funding capital expenditure of US$135m, and net share purchases of US$59m in respect of employee share incentive plans. 

We remain committed to a prudent but efficient balance sheet, with a target gearing ratio of 1.75-2.0x EBITDA, consistent with our desire to retain a strong investment grade credit rating. 

There are put and call options over the 30% minority stake in Serasa, which are exercisable from June 2012. As we get closer to the first exercise date it is appropriate to adjust the net debt gearing ratio to include the current value of the put option, valued at US$556m at 30 September 2009. This mirrors the approach taken by the ratings agencies. Accordingly, the adjusted net debt/EBITDA ratio was 2.1x at 30 September 2009. Subject to trading performance and acquisition activity, we expect to move back into our target range by the end of financial year 2010.

Our dividend policy remains unchanged: to have cover based on Benchmark EPS of at least three times on an annual basis. We have announced a first interim dividend of 7.00 US cents per share, representing an increase of 4% year-on-year. The first interim dividend will be paid on 29 January 2010 to shareholders on the register at the close of business on 4 January 2010.

Debt funding

Our existing bank facilities run to July 2012 and the £334m bond matures in December 2013. We plan to refinance our bank facilities over the next 18 months. It is our aim to spread the maturities of our debt instruments to avoid any undue concentration of repayment obligations. 

Group financial highlights 

Revenue and EBIT by geography

Six months ended 30 September	Revenue			EBIT
	2009  US$m	2008  US$m	Growth1 %	2009  US$m	2008  US$m	Growth1 %
North America	1,010	1,025	(1)	307	300	2
Latin America	255	263	14	75	68	30
UK and Ireland	387	473	-	106	122	5
EMEA/Asia Pacific	205	212	5	19	17	27
Sub total	1,857	1,973	1	507	507	7
Central Activities2	-	-	-	(25)	(27)	n/a
Continuing activities	1,857	1,973	1	482	480	7
Discontinuing activities3	17	44	n/a	(4)	(4)	n/a
Total	1,874	2,017	-	478	476	7
EBIT margin4				24.0%	23.2%

1 Total growth at constant exchange rates

2 Central Activities comprise costs of central corporate functions

3 Discontinuing activities include UK account processing and other smaller discontinuing activities

   4 EBIT margin is for continuing business only, excluding FARES. Further analysis can be found in

      Appendix 1

Reconciliation of EBIT - continuing operations

Six months ended 30 September			EBIT
			2009  US$m	2008  US$m
EBIT from continuing operations			478	476
Net interest			(41)	(60)
Benchmark PBT			437	416
Exceptional items			(46)	(33)
Amortisation of acquisition intangibles			(64)	(70)
Charges for demerger-related equity incentive plans			(15)	(21)
Financing fair value remeasurements			40	27
Tax expense on share of profits of associates			(1)	(1)
Profit before tax			351	318
Group tax expense			(78)	(42)
Profit after tax for continuing operations			273	276
Benchmark EPS (US cents)			31.6	30.7
Basic EPS for continuing operations (US cents)			25.3	25.9
Weighted average number of ordinary shares (million)			1,015	1,011

See Appendix 1 for analysis of revenue and EBIT by business segment and Appendix 3 for reconciliation of revenue and EBIT by geography

See Appendix 2 for definition of non-GAAP measures

North America

There was a modest organic revenue decline within North America where strength in Interactive partially offset weak market conditions within the financial services and retail sectors. Cost efficiencies delivered enabled margins to be broadly maintained.

Six months ended 30 September	2009  US$m	2008  US$m	Total growth1  %	Organic growth1  %
Revenue
Credit Services	348	368	(5)	(7)
Decision Analytics	55	59	(5)	(5)
Marketing Services	156	181	(14)	(14)
Interactive	451	417	8	8
Total - continuing activities	1,010	1,025	(1)	(2)
Discontinuing activities2	7	12	n/a
Total North America	1,017	1,037	(2)
EBIT
Direct business	271	277	(2)
FARES	36	23	57
Total - continuing activities	307	300	2
Discontinuing activities2	(4)	(5)	n/a
Total North America	303	295	2
EBIT margin3	26.8%	27.0%

1 Growth at constant exchange rates

2 Discontinuing activities include an online data survey business and National Business database

3 EBIT margin is for continuing business only, excluding FARES

Credit Services

Total revenue at Credit Services declined by 5%, with organic revenue down 7%. Within consumer information, prospecting and other lending categories remained depressed, reflecting the weak market for credit origination. Account management remained strong. Business information grew, helped by a number of wins within account management for portfolio scoring. Automotive declined, consistent with the US automotive market. 

Strategically, the focus has been on investment to protect the core and to diversify into new growth segments. SearchAmerica (healthcare payments) is growing strongly and is delivering on the acquisition buy-plan. There has also been good progress on organic initiatives, including: business information, following investment in new data sources; the newly-formed government vertical, where a pipeline is building from a small base; and automotive, where the addition of accident data is providing competitive differentiation.

Decision Analytics

Total and organic revenue declined by 5% at Decision Analytics, reflecting reduced client spend on large software installations in the period. Client focus continues to be on improved risk and fraud analytics, loss forecasting and stress testing, as well as on solutions that deliver a quick payback. The business development initiative in capital markets is progressing well and is gaining momentum.

Marketing Services

Total and organic revenue at Marketing Services declined by 14%. While traditional media declined, there was some moderation in retailer bankruptcies and store closures in the period. Meanwhile, new media activities grew, as marketers turn to digital media for more cost effective, better targeted and more measurable campaigns. 

Interactive

Total and organic revenue growth was 8% at Interactive. Consumer Direct performed well, driven by growth in transaction revenue and in the affinity channel. During the period, Experian undertook a number of initiatives to enhance the online consumer experience for its credit reference products, as well as launching a major new product called ProtectMyID, which is an identity monitoring service. 

Performance at Interactive Media improved in the half, helped by strength in the education vertical. PriceGrabber, the comparison shopping service, also delivered growth, benefiting from a strong performance from new co-branded partners. 

Financial review

Revenue from continuing activities was US$1,010m, down 1%, with organic revenue down 2%.

EBIT from direct businesses was US$271m (2008: US$277m), a decrease of 2% in the half, giving an EBIT margin of 26.8% (2008: 27.0%). The margin performance reflected strong delivery on cost reductions, including some one-off benefits, which largely offset negative operating leverage in Credit Services and Marketing Services. 

EBIT from FARES, the 20%-owned real estate information associate, increased significantly to US$36m (2008: US$23m), driven by higher mortgage refinancing activity. 

Latin America

Latin America performed strongly, driven by double-digit growth in Credit Services. There was significant margin progression, up 350 basis points. 

Six months ended 30 September	2009  US$m	2008  US$m	Total growth1  %	Organic growth1  %
Revenue
Credit Services	245	251	15	15
Decision Analytics	4	4	(8)	(8)
Marketing Services	6	8	(9)	(9)
Total Latin America	255	263	14	14
EBIT
Total Latin America	75	68	30
EBIT margin	29.4%	25.9%

1 Growth at constant exchange rates

Credit Services

Credit Services grew strongly in the half, with total revenue growth at constant currency of 15% and organic revenue growth also of 15%. There was growth across consumer information and business information, driven by clients trading up to higher value-added products, strength in countercyclical activities such as collections and from further penetration of the SME channel, where volume growth was strong. 

Decision Analytics and Marketing Services

While organic revenue declined in Decision Analytics and Marketing Services, this was off a small base in each case. Key business development initiatives during the period included new product launches, adapted from Experian's set of global products. This included software for account management (PMP) and online competitive intelligence (Hitwise). Further new product launches are planned over the remainder of the year.

Financial review

Revenue was US$255m for Latin America, up 14% at constant exchange rates. Organic revenue growth was also 14%.

EBIT in the half was US$75m, up 30% at constant exchange rates. The EBIT margin expanded by 350 basis points to 29.4%. The margin improvement principally reflects strong positive operating leverage arising from volume growth and the migration towards higher value-added services, as well as a reduction in integration charges.

UK and Ireland

At constant exchange rates, UK and Ireland revenue performance was flat, notwithstanding significant market challenges within the financial services and retail sectors. Interactive performed strongly. Good execution on cost efficiency measures helped to deliver an uplift in margins of 160 basis points.

Six months ended 30 September	2009  US$m	2008  US$m	Total growth1  %	Organic growth1  %
Revenue
Credit Services	116	149	(5)	(5)
Decision Analytics	99	130	(8)	(8)
Marketing Services	120	152	(4)	(3)
Interactive	52	42	51	51
Total - continuing activities	387	473	-	-
Discontinuing activities2	10	32	n/a
Total UK and Ireland	397	505	(4)
EBIT
Continuing activities	106	122	5
Discontinuing activities2	-	1	n/a
Total UK and Ireland	106	123	5
EBIT margin3	27.4%	25.8%

1 Growth at constant exchange rates

2 Discontinuing activities include UK account processing and other smaller activities. We anticipate that the

   closure of UK account processing will be completed in the current financial year

3 EBIT margin is for continuing activities only

Credit Services

Total revenue at constant exchange rates and organic revenue at Credit Services declined by 5%. This was due to low levels of origination activity, the impact of financial services consolidation and market exits, partially offset by growth in non-financial verticals and growth in countercyclical revenue. Strategically, Experian continues to invest in its account management and collections capabilities to meet clients' needs to better manage risk and focus on existing customers. There was ongoing investment in the utilities and the public sector verticals, where demand is high for services that enhance efficiency and provide revenue assurance. 

Decision Analytics

Total revenue at constant exchange rates and organic revenue declined by 8%. Market conditions remained challenging during the period. Performance was impacted by lower origination volumes, reduced financial services spending on major software installations and by the switch of collections software to an annual licence model (consistent with other Experian software products). Client needs continue to be focused on risk management, including collections and fraud prevention.

Marketing Services

Total revenue in Marketing Services decreased by 4% at constant exchange rates. Organic revenue declined by 3%. The variance is due to transactional foreign exchange differences. New media marketing performed well, largely offsetting declines in more traditional marketing activities. New media channels, such as email, benefited from market growth as clients place greater emphasis on strategic, analytical and data integration products, as well as from new business wins. More traditional activities continued to be affected by the challenging external environment.

Interactive

Interactive delivered very strong growth, with total revenue growth at constant exchange rates and organic revenue growth of 51%. This reflected strength in membership subscriptions.

Financial review

Revenue from continuing activities was US$387m, in line with prior year at constant exchange rates. Organic revenue was flat. 

EBIT from continuing activities was US$106m, up 5% at constant exchange rates. The EBIT margin expanded by 160 basis points to 27.4%, principally reflecting strong execution on cost efficiency initiatives.

EMEA/Asia Pacific

There were good performances across Credit Services and Marketing Services in EMEA/Asia Pacific. There was a 130 basis point improvement in margins.

Six months ended 30 September	2009  US$m	2008  US$m	Total growth1 %	Organic growth1  %
Revenue
Credit Services	93	86	17	5
Decision Analytics	53	67	(12)	(12)
Marketing Services	59	59	7	7
Total EMEA/Asia Pacific	205	212	5	-
EBIT
Total EMEA/Asia Pacific	19	17	27
EBIT margin	9.3%	8.0%

1 Growth at constant exchange rates

Credit Services

Total revenue for Credit Services grew 17% at constant exchange rates, with organic revenue growth of 5%. The acquisition contribution relates to KreditInform in South Africa, which is performing in line with the acquisition buy-plan. There was good growth across both new and established markets, notwithstanding some challenging conditions. This was driven by market expansion in emerging regions, increased sales effectiveness and new product launches.

Decision Analytics

Total revenue at constant exchange rates and organic revenue declined by 12%. The decline largely related to a strong prior-year comparable as well as some hesitancy in bank spending on software installations. The pipeline is strong with good demand generally across emerging markets and good demand for risk management software in established markets. 

Marketing Services

Total revenue growth at constant exchange rates and organic revenue growth at Marketing Services was 7%. Growth was driven by deeper market penetration, particularly in email marketing and contact data management. There were several new media product launches in new geographies, including Australia, Hong Kong, China and Singapore, with further launches planned over the balance of the year.

Financial review

Revenue from continuing activities was US$205m, up 5% at constant exchange rates. Organic revenue was flat. The acquisition contribution relates to KreditInform.

EBIT from continuing activities was US$19m, up 27% at constant exchange rates. The EBIT margin was up 130 basis points at 9.3%. Margin expansion principally reflects good execution on cost efficiencies and business mix.

Other items

Balance sheet

Net assets amounted to US$2,225m (2008: US$2,103m), which is equivalent to US$2.20 per share (2008: US$2.08), excluding own shares held by employee trusts. 

Cash flow and net debt 

Experian has continued to be strongly cash generative in the half with operating cash flow of US$421m (2008: US$396m) and a cash flow conversion of 88%. Free cash flow in the half was US$344m (2008: US$270m). Acquisition spend of US$9m (2008: US$52m) and equity dividends of US$135m (2008: US$121m) were funded from free cash flow.

At 30 September 2009, net debt was US$2,048m (31 March 2009: US$2,110m) with undrawn committed borrowing facilities of US$865m (31 March 2009: US$1,050m). In the six months ended 30 September 2009, the related net interest expense, before financing fair value remeasurements, was US$41m (2008: US$60m). This expense included a charge of US$2m (2008: credit of US$10m) in respect of the interest expense on pension liabilities less the expected return on pension assets (see note 11).

During the six months ended 30 September 2009, 6.375% Eurobonds 2009 with a par value of £203m were redeemed at their date of maturity, resulting in an increase in drawings from existing committed borrowing facilities. No other borrowings are due for repayment until July 2012.

Exceptional items (continuing operations)

Six months ended 30 September	2009  US$m	2008  US$m
Restructuring costs	21	30
Cessation of bureau activities	3	-
Loss on disposal of businesses	22	3
Total exceptional items	46	33

Expenditure of US$21m (2008: US$30m) arose in the period in connection with the Group's strategic programme of cost efficiency measures. Of this, US$9m (2008: US$13m) related to redundancy and US$12m (2008: US$15m) related to offshoring activities, infrastructure consolidations and other restructuring activities. 

During the period, and as previously announced, Experian completed the closure of its Canadian credit bureau and terminated its joint venture bureau in Japan. 

The loss on disposal of businesses in the period primarily arose as a result of the disposal of the National Business Database in North America.

Other non-GAAP measures (continuing operations)

Six months ended 30 September	2009  US$m	2008  US$m
Amortisation of acquisition intangibles	64	70
Charge in respect of the demerger-related equity incentive plans	15	21
Financing fair value remeasurements	(40)	(27)
Total other non-GAAP measures	39	64

See Appendix 2 for definition of non-GAAP measures

Tax 

The Group's effective rate of tax for the six months ended 30 September 2009 based on Benchmark PBT was 22.0% (2008: 20.9%). This rate is defined as the total tax expense, adjusted for the tax impact of non-Benchmark items and further excluding the benefit of a one-off corporation tax credit of US$20m in the six months ended 30 September 2008, divided by Benchmark PBT. The Group's cash tax rate for continuing operations (based on tax paid in the period and Benchmark PBT for continuing operations) was 3.7% (2008: 9.6%).

Earnings per share

At 30 September 2009, Experian had approximately 1,026m ordinary shares in issue, of which 14m shares were held by employee trusts. Accordingly, the number of shares to be used for the purposes of calculating basic earnings per share from 30 September 2009 is 1,012m.

In the six months ended 30 September 2009, basic earnings per share were 24.5 US cents (2008: 25.5 US cents), after a loss of 0.8 US cents (2008: 0.4 US cents) in respect of discontinued operations. Benchmark earnings were 31.6 US cents (2008: 30.7 US cents), an increase of 2.9%.

Foreign exchange

The principal exchange rates used to translate revenue and EBIT in the period are:

	2009	2008	Depreciation against the US$
Sterling : US$	1.57	1.93	18.7%
US$ : Brazilian real	1.99	1.68	18.5%
Euro : US$	1.40	1.53	8.5%

The effect of these exchange rate changes on the results for the period is to decrease reported revenue by US$154m and EBIT by US$34m. 

The principal exchange rates used to translate assets and liabilities at the period end are as follows:

	2009	2008
Sterling : US$	1.60	1.79
US$ : Brazilian real	1.78	1.92
Euro : US$	1.46	1.41

FARES 

On 29 October 2009, Experian announced certain arrangements in respect of FARES, which is owned 20% by Experian and 80% by The First American Corporation. Further details are given in note 24 to the unaudited condensed Group half-yearly financial statements.

Retirement benefit obligations and assets

There is a net retirement benefit obligation at 30 September 2009 of US$129m (2008: asset US$62m). This consists of a deficit in the defined benefit plans of US$72m (2008: surplus US$109m) and other pension obligations of US$57m (2008: US$47m). Further details of the movement during the period and the assumptions used in determining retirement benefit obligations and assets are included in note 17 to the unaudited condensed Group half-yearly financial statements.

Seasonality

Some activities at Experian exhibit seasonality. Credit Services activities in Latin America are weighted towards the first half of the year, reflecting the timing of the holiday season in Brazil. Marketing Services activities in North America and in the UK and Ireland are seasonally weighted towards the second half of the year, reflecting some exposure to the retail sector. PriceGrabber, which is mainly reported within North America Interactive, is seasonally weighted towards the third quarter as online shopping volumes traditionally increase towards the Christmas period.

Risks and uncertainties

The principal risks and uncertainties affecting Experian are those described below and are unchanged from those for the year ended 31 March 2009. Additional explanations are set out on page 28 and 29 of the annual report and financial statements for the year ended 31 March 2009.

Data

• Risk that data Experian holds may be inappropriately used.

• Risk that legislative or government regulatory reforms may alter what data Experian can collect and how it is collected.

Technology

• Risk of system or facilities security breaches.

• Risk of business process or system failure interruptions.

People

• Risk of highly skilled personnel loss.

General economy

• Risk of macroeconomic factors impacting the demand for our products or services. 

• Risk of client consolidations impacting revenue and profits.

• Financial and capital risks and uncertainties which are further discussed in the financial review on pages 30 to 38 of the annual report and financial statements for the year ended 31 March 2009.

• Risk of counterparty non-performance or failure.

Other risks

• Risks of increased competition.

• Risk of acquisitions not meeting expectations.

• Risk of material adverse litigation outcomes.

• Risk of intellectual property rights loss or infringement.

Appendices

1. Revenue and EBIT by business segment

Six months ended 30 September	2009  US$m	2008  US$m	Total growth1 %	Organic growth1  %
Revenue
Credit Services	802	854	3	1
Decision Analytics	211	260	(8)	(8)
Marketing Services	341	400	(7)	(7)
Interactive	503	459	12	12
Total - continuing activities	1,857	1,973	1	1
Discontinuing activities2	17	44	n/a
Total	1,874	2,017	-
EBIT
Credit Services - direct business	271	267	9
FARES	36	23	57
Total Credit Services	307	290	13
Decision Analytics	57	81	(18)
Marketing Services	32	35	-
Interactive	111	101	11
Central Activities	(25)	(27)	n/a
Total - continuing activities	482	480	7
Discontinuing activities2	(4)	(4)	n/a
Total	478	476	7
EBIT margin3
Credit Services - direct business	33.8%	31.3%
Decision Analytics	27.0%	31.2%
Marketing Services	9.4%	8.8%
Interactive	22.1%	22.0%
Total EBIT margin	24.0%	23.2%

1 Growth at constant exchange rates

2 Discontinuing activities include UK account processing and other smaller discontinuing activities

3 EBIT margin is for continuing direct business only, excluding FARES

2. Use of non-GAAP financial information 

Experian has identified certain measures that it believes will assist understanding of the performance of the business. As the measures are not defined under IFRS they may not be directly comparable with other companies' adjusted measures. The non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance but management has included them as these are considered to be important comparables and key measures used within the business for assessing performance. The following are the key non-GAAP measures identified by Experian:

Benchmark profit before tax ('Benchmark PBT'): Benchmark PBT is defined as profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of the demerger-related equity incentive plans, exceptional items, financing fair value remeasurements, tax and discontinued operations. It includes the Group's share of associates' pre-tax profit.

Earnings before interest and tax ('EBIT'): EBIT is defined as profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of the demerger-related equity incentive plans, exceptional items, net financing costs, tax and discontinued operations. It includes the Group's share of associates' pre-tax profit.

Earnings before interest, tax, depreciation and amortisation ('EBITDA'): EBITDA is defined as profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of the demerger-related equity incentive plans, exceptional items, net financing costs, tax, depreciation and other amortisation, and discontinued operations. It includes the Group's share of associates' pre-tax profit.

Benchmark earnings per share ('Benchmark EPS'): Benchmark EPS represents Benchmark PBT less attributable tax and minority interests divided by the weighted average number of shares in issue, and is disclosed to indicate the underlying profitability of the Group.

Exceptional items: The separate reporting of non-recurring exceptional items gives an indication of Experian's underlying performance. Exceptional items are those arising from the profit or loss on disposal of businesses, closure costs of material business units or costs of significant restructuring programmes. All other restructuring costs have been charged against EBIT in the segments in which they are incurred.

Discontinuing activities: Experian defines discontinuing activities as businesses sold, closed or identified for closure during a financial year. These are treated as discontinuing activities for both revenue and EBIT purposes. Prior periods, where shown, are restated to disclose separately the results of discontinuing activities. This financial measure differs from the definition of discontinued operations set out in IFRS 5 (Non-current assets held for sale and discontinued operations). Under IFRS 5, a discontinued operation is a component of an entity that has either been disposed of, or is classified as held for sale, and is: (i) a separate major line of business or geographical area of operations; (ii) part of a single plan to dispose of a major line of business or geographical area of operations; or (iii) a subsidiary acquired exclusively with a view to resale.

Continuing activities: Businesses trading at 30 September 2009 that have not been disclosed as discontinuing activities are treated as continuing activities.

Total growth: This is the year-on-year change in the performance of Experian's activities. Total growth at constant exchange rates removes the translational foreign exchange effects arising on consolidation of Experian's activities. 

Organic growth: This is the year-on-year change in continuing activities revenue, at constant transactional and translation exchange rates, excluding acquisitions (other than affiliate credit bureaux) until the first anniversary date of consolidation.

Direct business: Direct business refers to Experian's business exclusive of the financial results of associates (including FARES).

Constant exchange rates: In order to illustrate its organic performance, Experian discusses its results in terms of constant exchange rate growth, unless otherwise stated. This represents growth calculated as if the exchange rates used to determine the results had remained unchanged from those used in the previous year.

Operating cash flow and free cash flow: Operating cash flow is calculated as cash generated from operations adjusted for outflows in respect of the purchase of property, plant and equipment and other intangible assets and adding dividends from associates but excluding any cash inflows and outflows in respect of exceptional items. It is defined as EBIT less changes in working capital, add depreciation/amortisation, less capital expenditure, less profit retained in associates. Free cash flow is derived after further excluding net interest and tax paid together with dividends paid to minority shareholders.

Net debt: Net debt is calculated as total debt less cash and cash equivalents and other highly liquid bank deposits with maturities greater than three months. Total debt includes loans and borrowings (and the fair value of derivatives hedging loans and borrowings), overdrafts and obligations under finance leases. Accrued interest is excluded from net debt.

3. Reconciliation of revenue and EBIT by geography

Six months ended 30 September	2009			2008
	Continuing activities	Dis-continuing activities1	Total	Continuing activities	Dis-   continuing activities1	Total
	US$m	US$m	US$m	US$m	US$m	US$m
Revenue
North America	1,010	7	1,017	1,025	12	1,037
Latin America	255	-	255	263	-	263
UK and Ireland	387	10	397	473	32	505
EMEA/Asia Pacific	205	-	205	212	-	212
Total revenue	1,857	17	1,874	1,973	44	2,017
EBIT
North America - direct business	271	(4)	267	277	(5)	272
FARES	36	-	36	23	-	23
Total North America	307	(4)	303	300	(5)	295
Latin America	75	-	75	68	-	68
UK and Ireland	106	-	106	122	1	123
EMEA/Asia Pacific	19	-	19	17	-	17
Central Activities	(25)	-	(25)	(27)	-	(27)
Total EBIT	482	(4)	478	480	(4)	476

1 Discontinuing activities include UK account processing and other smaller discontinuing activities

4. Reconciliation of EBIT to Operating profit for continuing operations

Six months ended 30 September	2009	2008
	US$m	US$m
EBIT from continuing operations	478	476
Net interest	(41)	(60)
Benchmark PBT	437	416
Exceptional items	(46)	(33)
Amortisation of acquisition intangibles	(64)	(70)
Charges for demerger-related equity incentive plans	(15)	(21)
Financing fair value remeasurements	40	27
Tax expense on share of profit of associates	(1)	(1)
Profit before tax	351	318
Share of post-tax profits of associates	(36)	(20)
Net financing costs	1	33
Operating profit	316	331

5. Group cash flow summary

Six months ended 30 September	2009	2008
	US$m	US$m
EBIT from continuing operations	478	476
Depreciation and amortisation	131	141
Capital expenditure	(135)	(146)
Sale of property, plant and equipment	25	4
Change in working capital	(84)	(93)
Profit retained in associate	(10)	(1)
Charge in respect of equity incentive plans within Benchmark PBT	16	15
Operating cash flow1	421	396
Net interest paid	(35)	(76)
Tax paid	(16)	(40)
Dividends paid to minority shareholders	(26)	(10)
Free cash flow	344	270
Net cash outflow from exceptional items	(32)	(46)
Acquisitions and disposals	(26)	(52)
Purchase of investments	(1)	(28)
Equity dividends paid	(135)	(121)
Net cash flow	150	23
Foreign exchange movements	19	(22)
Other financing related cash flows	(161)	43
Movement in cash and cash equivalents - continuing operations	8	44
Movement in cash and cash equivalents - discontinued operations	-	(23)
Movement in cash and cash equivalents	8	21

1 A reconciliation of cash generated from operations as reported in the Group cash flow statement on page

  26 to operating cash flow as reported above is given in note 19 to the unaudited condensed Group half-

  yearly financial statements

Cash conversion is defined as operating cash flow expressed as a percentage of EBIT from continuing operations

 6. Reconciliation of depreciation and amortisation

Six months ended 30 September	2009	2008
	US$m	US$m
As reported in the notes to the Group cash flow statement	195	213
Less: amortisation of acquisition intangibles	(64)	(70)
Less: exceptional asset write-off	-	(2)
As reported above	131	141

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