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1
Analyst presentation
15 September 2006
2
Disclaimer
This presentation has been prepared and issued by Experian Group Limited (the “Company”) solely for your information and for use at the presentation to research analysts to be made on or about 15 September 2006 in connection with the proposed admission of the Company’s ordinary shares to the Official List of the Financial Services Authority and to trading on the London Stock Exchange plc's market for listed securities (together, the “Admission”) and the proposed issue and sale of the Company’s ordinary shares (the “Offer”). By attending the meeting where this presentation is made and/or by accepting this document, you agree to be bound by the following limitations.This presentation is an advertisement and not a prospectus and potential investors should not subscribe for or purchase any shares referred to in this presentation except on the basis of information in the prospectus to be published by the Company in due course in connection with the Admission and Offer. Copies of the prospectus are available from the Company’s registered office.This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any ordinary shares in the Company or any other securities, nor shall it or any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto. This presentation does not constitute a recommendation regarding the securities of the Company.This document and its contents are confidential and may not be further copied, distributed or passed on, directly or indirectly, to any other person or published or reproduced directly or indirectly, in whole or in part, by any medium or in any form for any purpose. The information contained in this document is being provided to you solely for the purpose of the preparation and publication of a research report in relation to the Offer and may not be used for any other purpose. If such research is not published or the Offer does not proceed, the information in this presentation and any draft research based upon such information must be kept confidential and not used for any other purpose.Neither this document nor any part or copy of it may be taken or transmitted into or distributed in or into, directly or indirectly, the United States, its territories or possessions , Australia, Canada or Japan. Any failure to comply with these restrictions may constitute a violation of US, Australian, Canadian or Japanese securities laws, respectively. The distribution of this document in other jurisdictions may also be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.This document is not an offer of securities for sale in the United States or elsewhere. The Company's ordinary shares have not been and will not be registered under the United States Securities Act of 1933 (the “Securities Act”) and may not be offered or sold in the United States unless they are registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. No offer of the securities referred to herein is being made in the United States except to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A, to a limited number of accredited investors (as defined in Rule 501 (a) under the Securities Act, or another exemption from, or transaction not subject to the registration requirements of the Securities Act. No public offer of the securities referred to herein is being made in the United States.The Company's ordinary shares have not been and will be not registered under the applicable laws of any state or jurisdiction of Australia, Canada or Japan and, subject to certain exceptions, may not be offered or sold within Australia, Canada or Japan or to or for the benefit of any national, resident or citizen of Australia, Canada or Japan. No public offer of the Securities referred to herein is being made in Australia, Canada or Japan.This document is intended for distribution in member states of the European Economic Area to persons who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (“Qualified Investors”). This document must not be acted or relied upon in any member state of the European Economic Area by persons who are not Qualified Investors. Any investment or investment activity to which this communication relates is available in any member state of the European Economic Area only to, and will be engaged in only with, Qualified Investors.This document is intended for distribution in the United Kingdom only to: (i) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (ii) persons falling within Article 49(2)(a) to (d) of the Order or to those persons to whom it can otherwise lawfully be distributed (all such persons together being referred to as "relevant persons"). This document must not be acted upon by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.The information in this presentation is given in confidence and the recipients of this presentation should not base any behaviour, in relation to qualifying investments or relevant products (as defined in the Financial Services and Markets Act 2000 (“FSMA”)) and the Code of Market Conduct (made pursuant to FSMA), which would amount to either market abuse for the purposes of FSMA, or insider dealing for the purposes of the Criminal Justice Act 1993 or insider dealing for the purposes of the Company Securities (Insider Dealing) (Jersey) Law 1988 on the information in this presentation until after the information has been made generally available. Nor should the recipient use the information in this presentation in any way which would constitute “market abuse” or “insider dealing”.UBS Limited and Merrill Lynch International (together the “Joint Global Coordinators”) and their respective affiliates are each acting exclusively for the Company and for no one else in connection with the Offer and will not be responsible to any other person for providing the protections afforded to their respective clients, or for providing advice in relation to the Offer or any other transaction or arrangement referred to in this presentation.This presentation has been prepared by, and is the sole responsibility of, the Company. The information in this presentation has not been legally verified by the Company, GUS, its advisers, the Joint Global Coordinators or any other person and may be subject to updating, completion, revision and amendment and such information may change materially. It will only be finalised at the time of Admission. This presentation speaks at the date hereof. No representation or warranty, express or implied, is or will be made by or on behalf of the Company, its advisers, the Joint Global Coordinators or any of their respective directors, officers or employees, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and any reliance you place on them will be at your sole risk. In particular the market data has been obtained by the Company from third party sources. Whilst the Company has compiled and extracted the market data, it can provide no assurances of the accuracy and completeness of such information and take no responsibility for such data. The Company is under no obligation to update or keep current the information contained in this presentation and any opinions expressed in it are subject to change without notice. None of the Company, its advisers, the Joint Global Coordinators or any of their respective members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.Statements beliefs and opinions contained in this presentation, including those related to Admission , particularly those regarding the possible or assumed future or other performance of the Company, industry growth or other trend projections, are or may be forward looking statements, beliefs or opinions and reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about future events and are subject to risks and uncertainties that may cause actual results to differ materially. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. These risks and uncertainties include, among other factors, changing business or other market conditions and the prospects for growth anticipated by the management of the Company. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. As a result, there can be no assurance that projected results or developments will be attained and you are cautioned not to place undue reliance on such forward-looking statements. The Company, its advisers, the Joint Global Coordinators and each of their respective directors, officers and employees disclaim any obligation to update the Company's view of such risks and uncertainties or to publicly announce the result of any revision to the forward-looking statements made herein, except where it would be required to do so under applicable law.By attending the presentation to which this document relates and/or by accepting this document and/or by signing the invitation to the Experian Presentation to Analysts you will be taken to have represented, warranted and undertaken that: (i) you have read and agree to comply with the contents of this notice, including, without limitation, the obligation to keep this presentation and its contents confidential, (ii) you will not at any time have any discussion, correspondence or contact concerning the information in this presentation or the Offer with any of the directors or employees of the Company or its subsidiaries nor with any of its suppliers, customers or sub-contractors without the prior written consent of the Company, iii) you will be deemed to have accepted the terms of the invitation to the Experian Presentation to Analysts.
3
Research guidelines
Research to be prepared, reviewed and distributed in accordance with research guidelines, copies of which have been distributed
No distribution of research into the United States, Canada, Japan or Australia at any time from now until 40 days after closing of the offering
All research reports must have appropriate legends, in accordance with the research guidelines
A copy of the research guidelines must be provided to your internal compliance department
Consult counsel for restrictions that may apply in other jurisdictions
4
Agenda
1. A unique investment proposition Don Robert
2. Principal activities
Credit Services John Saunders
Decision Analytics John Saunders
Marketing Solutions Chris Callero
Interactive Chris Callero
3. Financial performance Paul Brooks
4. Conclusion Don Robert
5
Section 1
A unique investment proposition
6
Expert management of complex databasesConsumer credit reportsTriggers / alertsRisk managementCutting edge fraud detectionPrecise targetingPredictive analyticsInsightful market researchMulti-channel insight and capability
I want to find new
customers
Who is my most
profitable customer?
Who’s a good creditrisk and who’s a bad
credit risk?
Is this personwho they say
they are?
I need a 360° view of all my relationships with my customers
I want to improvemy efficiency ofthe back office
Why do shoppers
pass by mystore without
buying?
How we help business clients
We help businesses find, keep and develop relationships with their customers
Problems Solutions
7
Problems Solutions
Online access to credit reports
Credit monitoring services
Access to hundreds of mortgage lenders
Access to thousands of online education programmes
Comparison shopping services
Whichschools
offer computer
courses online?
Who hasaccessedmy credit
report?
Can I completemy college degree
online?
Has newinformation
been added tomy credit
report?
What does my credit report say about me?
I need a new digitalcamera, but which one?
Where canI refinance
my mortgage?
How we help consumers
We help consumers make informed financial decisions and purchases
8
Our vision
Vision
For our people, data and technology to become a necessary part of every major consumer economy around the world
9
Experian – the global leader in information solutions
Four key pillars supporting Experian’s global market leadership
10
Unique business model
More comprehensive, high quality proprietary databases than any single competitor
Powerful and proprietary decision analytics
Global and diversified distribution
Ability to cross-sell between our core offerings
Global reach with unparalleled scale and capabilities
Uniquebusiness
model
11
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
Key to understanding our businessUnique
businessmodel
12
Data – the core of our business
300 million plus consumers globally
c. 30 million businesses globally
c. 600 million vehicles in US and UK
c. 30 million policies in the UK
c. 110 million households in the US
c. 130 million households globally
Consumercredit
Businesscredit
Vehiclehistories
Insurancedatabases
Cataloguepurchasing
habitsConsumermarketing
High quality databases derived from public and private data
Ownership of many years of historical data creates barriers to entry
A broad range of data assets providing the foundation of our business
Uniquebusiness
model
13
Decisions – turning data into critical decisions
Decisions
Proprietary software and analytics convert data into decisions
300 million plus consumers globally
c. 30 million businesses globally
c. 600 million vehicles in US and UK
c. 30 million policies in the UK
c. 110 million households in the US
c. 130 million households globally
Consumercredit
Businesscredit
Vehiclehistories
Insurancedatabases
Cataloguepurchasing
habitsConsumermarketing
Should weloan money
to this consumer?
Should weextend
credit to this business?
Should I send this consumer
an offer?
Should I buy this
new car?
Should I pay on this
claim?
Should I offer my products to this consumer?
Uniquebusiness
model
14
Distribution – the broadest presence in the industry
Ability to help many clients across many sectors and geographies
Over 100,000 B2B clients
Direct-to-consumer business now accounts for 12% of revenue globally
Well diversified customer base; top 10 customers account for 22% of revenue
Financial services remains a core market, generating 55% of revenue
Seizing significant growth opportunities in vertical markets such as public sector, telecommunications and automotive
Business andconsumer access By sector By geography By channels
Operates in 60 countries with offices in 29 countries
Able to serve domestic and multi-national clients
Includes system to system, Internet, direct mail, SMS, email marketing, interactive television, POS, kiosks
Channel of delivery based on client and consumer preference
Uniquebusiness
model
15
Significant cross-selling opportunities
Wide range of products and services in many sectors and geographies, each generating standalone revenues
Unique ability to “bundle” products to meet clients’ needs
Fourteen of top 20 US clients buy products from at least three of our four principal activities
80% of credit reports sold by Experian in the UK are delivered by Experian decision support software
Driven by global and regional strategic account management teams
Uniquebusiness
model
Providing a one-stop shop for clients
16
Distribution – unparalleled global reach
Global revenue US$ million
Experian has greater scale and international presence than its competitors
Notes:* Americas** US only
TransUnion is excluded from this analysis due to limited available information1. March 20062. December 20053. September 2005 Source: Latest full year revenue, company 10K
America International
58% 75% 90% 86% 94% 75%25%
6%14%10%25%
42%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Experian D&B Equifax Acxiom Harte-Hanks ChoicePoint Fair Isaac
,3 079 ¹
1,444 ² 1,443 ²1,333 ¹ 1,135 ²
799 ³1,058 ²
97%
3%
* ** ** ** ** ***
Uniquebusiness
model
17
Distribution – global and diversified
Not overly dependent on any one geography, sector or client
Consumers12%
Businesses88%
By
cust
omer FY06 revenue
By
geog
raph
y FY06 revenue
Americas58%
UK & Ireland25%
EMEA / Asia-Pacific17%
FY06 revenue
By
clie
nt
Top 1022%
Next 4021%
Remainder57%
Uniquebusiness
model
By
sect
or FY06 revenue
Financial services55%
Direct-to-consumer12%
Retail/home
shopping11%
Other6%Publishing/media
3%Telecom/utility/
insurance7%
Automotive3%
Government3%
18
Our principal activities
Balanced growth portfolio
Experian averageorganic growth
2004-06
Uniquebusiness
model
Help clients lend profitably to businesses and consumers, maximising revenue and minimising risk
Help clients with specialist software and analytics to make business critical decisions in credit area
Help clients to acquire new customers and develop and manage relationships with existing customers
Help consumers connect with companies over the Internet to sell products from our clients or from ExperianInteractive
MarketingSolutions
DecisionAnalytics
CreditServices
7%
12%
6%
31%
19
Our principal activities
Notes:1 Continuing activities only. 2 Divisional split calculated excluding central costs and FARES
Business portfolio provides a balanced growth profile
FY06 EBIT US$726m1
FY06 revenue US$3,079m1
Credit Services
49%
Decision Analytics11%
Interactive20%
MarketingSolutions
20%
Credit Services
59%Decision Analytics15%
Interactive18%Marketing
Solutions8%
Uniquebusiness
model
2
2
2
2
20
Operating in growth markets
Global growth in consumer credit
Increase in Internet use by consumers and businesses
Increase in multi-channel marketing
Increase in demand from new vertical markets
Increase in demand from new and emerging high growth geographies
Positionedfor growth
21
Market fundamentals are strong – consumer credit growth
Source: www.federalreserve.gov, October 2002 and April 2006
Growth in consumer credit driving demand for our productsacross the credit cycle
US consumer credit outstanding
0
500
1,000
1,500
2,000
2,500
1997 1998 1999 2000 2001 2002 2003 2004 2005
US$
bill
ion
Revolving Non-revolving
1997–2005 CAGR 7%
Positionedfor growth
Source: Bank of England, June 2006
UK consumer credit outstanding
1997–2005 CAGR 11%
Of which credit cards Consumer credit outstanding
0
50
100
150
200
1997 1998 1999 2000 2001 2002 2003 2004 2005
£bi
llion
22
More transactions moving to the Internet
US e-commerce spending European e-commerce spending
Market fundamentals are strong – Internet growth
Source: IDC, July 2005Source: IDC, July 2005Note: e-commerce defined as the process by which order is placed
or accepted via the Internet
2004–2009 CAGR 25%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2004 2005 2006E 2007E 2008E 2009E
US
$ b
illio
n
2004–2009 CAGR 30%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2004 2005 2006E 2007E 2008E 2009E
US
$ b
illio
n
Positionedfor growth
23
Market fundamentals are strong – multi-channel marketing
Diversification in how companies communicate with customers is creating opportunities for Experian
Positionedfor growth
Source: Zenith Optimedia Advertising expenditure forecasts Mar 2006Note:1 Advertising spend at current prices
Global growth of advertising spend by channel2005 marketsize (US$bn)
17.8 1.7 21.6 146.2 53.0 119.0 33.9
1
21
8 75 4 4 3
0
5
10
15
20
25
Internet Cinema Outdoor TV Magazines Newspaper Radio
Adv
ertis
ing
spen
d gr
owth
2004
-09
CA
GR
(%)
24
Increase in demand from new verticals
Public sector
Reducing fraudulent benefit claims
Enabling instant confirmation of valid vehicle insurance
Managing and operating French students’metro passes
Forecasting economic and demographic trends for local and national governments
Providing small business information to the IRS
Positionedfor growth
Using core skills in innovative ways
25
Increase in demand from new and emerging geographies Positionedfor growth
Asia-Pacific
Well-positioned to benefit from growth in emerging markets
EMEA
26
Executing on our growth plans
Deeper client relationships
Geographic expansion
Product innovation
Vertical expansion
Growth accelerated via complementary acquisitions
Driving organic growth
Successfulexecution
27
Deeper client relationships
Leading global financial institution and strategic Experian client
Expanding and increasingly diverse relationship
Partnership on a global scale
FY02 FY03 FY04 FY05 FY06 FY07
Core Credit Services –(online reports,account monitoring)
Growth of CRM solutions(Truvue, data hygiene),Fraud Solutions, email marketingand Business Information “Size of wallet” project
involving Experian creditdata and Scorex consultancy
Start of relationship with Consumer Direct
Cross-selling a key growth driver
Successfulexecution
28
Geographic expansion – key opportunities
Strong focus on high growth economies
Asia PacificBuilding on established Decision Analytics operationsCountry management and business line structure developing, including presence in China
Eastern EuropeContinue to use Decision Analytics to penetrate new marketsEstablishing credit bureaux where appropriate
Latin AmericaStrong Decision Analytics teams in Brazil and ArgentinaStrong pipeline for Decision Analytics
Successfulexecution
29
Disciplined acquisition strategy
Revenue growth1
Organic growth
Contribution from acquisitions
8% 9% 10%
6%9%
17%
0%
5%
10%
15%
20%
25%
30%
FY04 FY05 FY06
14%
18%
27%
Notes:Supplementary financial information in the Appendix1 Growth rates at constant currency and for continuing activities only
Good balance of organic and acquisition growth
Successfulexecution
30
Our acquisition strategy
Complementary / strategic acquisitions act as a catalyst to growth
Acquisitions are a key part of the growth strategy
Often small; always complementary; bringing
New data, technology, products, clients
Vertical expansion
Geographic expansion
Entry into adjacent growth markets
Must generate at least 10% post-tax returns over time
Examples of acquired companies
Interactive
MarketingSolutions
DecisionAnalytics
CreditServices
Successfulexecution
31
Acquisitions – accelerating growth
Combining research data with Experian marketing data to increase revenue
Using Decision Analytics to increase revenue
Benefiting from Experian’s scale and existing client relationships
Successfulexecution
32
Proven financial performance
Strong revenue growth
Strong profit growth
Highly cash generative
Provenfinancial
performance
33
Strong revenue and profit growth
Notes:FY05 onwards under IFRSGlobal continuing revenue and EBIT onlyGrowth rates at constant currency and for continuing activities only
Revenue US$m
2,014 2,461 3,079
+18% +27%Total growth
Organic growth
FY04 FY05 FY06
EBIT US$m and margin
468 565 726
+17%
+30%
21.3%
19.6%20.0%
FY04 FY05 FY06
+9% +10%+18%+7%
5m FY07
Provenfinancial
performance
34
Highly cash generative
* Operating cash flow = EBIT less trading working capital, add depreciation/amortisation, less capital expenditure and less retained in associate
Provenfinancial
performance
108%94%
99%Operating cash flow as a percentage of EBIT
US$m
0
250
500
750
1,000
FY04 FY05 FY06
Operating cash flow* EBIT
35
Experian – four key investment highlights
The global leader in information solutions
36
Section 2
Principal activities
37
Section 2.A
Principal activitiesCredit Services
38
Credit Services – providing high quality data to clients
FY06 revenue: US$1,499m, FY06 EBIT: US$476m1
Transaction processing
Automotive and insurance services
FARES joint venture
Helps companies make more informed decisions on businesses
Public and proprietary data on companies of all sizes, focusing on small and medium sized enterprises (SMEs)
Value-added products in business sector
Credit Services
Notes:1 Continuing activities, including direct and associate income
BusinessInformation
Services
Other
CreditServices
Helps lenders make more informed decisions
Public and proprietary databases on consumers’financial activity
ConsumerCredit Services
39
Consumer Credit Services – overviewCredit
Services
Businessoverview
Helps lenders make more informed decisions
Operating bureaux in 12 countries
Public and proprietary databases on about 300 million consumers’ financial activity
Huge technology infrastructure
Heavy regulatory environment
Key clients
HSBC, Citigroup, American Express, HBOS, Ford, Barclaycard, Capital One
Data sell
Volume-driven scale
Medium-term pricing contracts
Revenuemodel
40
Consumer Credit Services – building our databases
Our consumer credit bureaux contain a vast amount of data from multiple sources
Compiling comprehensive databases
Employment data Fraud dataTrade data
Balance histories
Public records
Identificationinformation
Address histories
Inquiry data
Information on how over
300 million consumers
handle their credit
obligations
Client suppliedPublic dataExperian generated
Credit Services
Accumulatedpayment histories
41
Riskmanagement
Customeracquisition
Applicationprocessing
Accountmanagement
Cross-sell /up-sell
Credit ServicesConsumer Credit Services – used throughout the credit cycle
Revenue not just related to new credit transactions
Credit products used to
- acquire new customers
- process credit applications
- manage existing accounts
- cross-sell new products
- respond to churn between card issuers
42
Consumer Credit Services – key opportunitiesCredit
Services
Newgeographies
Newverticals
Cross-selling
Deepening relationships with clients by selling services more throughout the credit cycle
Expanding sales outside financial services into vertical markets including governments, telecommunications and utilities
Establishing credit bureaux in emerging high growth markets such as Russia
43
Credit Services – providing high quality data to clients
FY06 revenue: US$1,499m, FY06 EBIT: US$476m1
Transaction processing
Automotive and insurance services
FARES joint venture
Credit Services
Notes:1 Continuing activities, including direct and associate income
Other
CreditServices
Helps lenders make more informed decisions
Public and proprietary databases on consumers’financial activity
ConsumerCredit Services
Helps companies make more informed decisions on businessesPublic and proprietary data on companies of all sizes, focusing on small and medium sized enterprises (SMEs)Value-added products in business sector
BusinessInformation
Services
44
Business Information Services – overviewCredit
Services
Businessoverview
Helps clients make more informed decisions about businessesOperating bureaux in six countriesPublic and proprietary databases in 30 million companies of all sizes, focusing on SME’sValue-added products in business sector
Key clients
Euler Hermes, Royal Mail, AIG, Federal Express, Dell and Bank of America
Data sellVolume-driven scaleMedium-term pricing contractsUp-sell of added valued products is key differentiator
Revenuemodel
45
Business Information Services – building our databases
Collection accounts Trade addresses Banking information
Trade payment data
Inquiry data
Financial reports
Ownership details
Registration andincorporation details
Public records
Information on financial
performance of about
30 million businesses
Credit Services
Client suppliedPublic dataExperian generated
Compiling comprehensive databases
Our business bureaux contain a vast amount of data from multiple sources
46
Transferringskills
Gainmarketshare
Marketgrowth
Apply skills and tools developed in consumer credit to business credit
Business Information Services – key opportunitiesCredit
Services
Benefit from growth of SME sector
Gain share from market leader as able to combine, where permissible, information on consumers and businesses
47
Credit Services – providing high quality data to clients
FY06 revenue: US$1,499m, FY06 EBIT: US$476m1
Credit Services
Notes:1 Continuing activities, including direct and associate income
CreditServices
Helps lenders make more informed decisions
Public and proprietary databases on consumers’financial activity
ConsumerCredit Services
Helps companies make more informed decisions on businesses
Public and proprietary data on companies of all sizes, focusing on small and medium sized enterprises (SMEs)
Value-added products in business sector
BusinessInformation
Services
Transaction processingAutomotive and insurance servicesFARES joint venture
Other
48
Other services – overviewCredit
Services
TransactionProcessing
A leading position in France in cheque and banking back office processing (merchant transaction acquisition, fraud control, clearing and settlement) and debit processing (payment and card processing, remittance processing for the telecoms and utilities sectors)
Marketing Solutions capabilities linked to loyalty scheme customers
Holds information on over 600 million motor vehicles in US and UK
Contains information including provenance, outstanding finance, market value and mileage readings
AutomotiveServices
Holds insurance information on over 30 million policies in the UK
Helps insurance companies make better decisions in areas such as claims handling and underwriting
InsuranceServices
49
Section 2.B
Principal activitiesDecision Analytics
50
FY06 revenue: US$325m, FY06 EBIT: US$102m
Decision Analytics
Fraud Solutions
Detection of fraud in the customer acquisition processMonitoring of account behaviour to detect fraudulent activityAnti-money laundering solutions
DecisionAnalyticsDecision Analytics –
providing strategic input to our clients’ business
Credit Analytics and
Decision Support Software
Analytics to predict customer behaviour informing clients’strategic decisionsBespoke and customised software and hosted solutions to enable clients to implement customer strategies
51
DecisionAnalyticsDecision Analytics – overview
Businessoverview
Strategic contribution to client’s businessHelping to predict customer behaviour and implement customer strategiesDetecting fraud at application stage and monitoring account usage for fraudSells to clients in over 60 countries
Key clients
HSBC, ABN AMRO, Bank of America, Orange, Vodafone, Barclaycard, Kookmin, JCB, GE, Dell, Lloyds, TSB, Citibank and Banco Santander
Solution sellValue-added pricingMedium to long-term contracts
Revenuemodel
Customisation feesAnnual license feesTransaction fees for hosted solutions
52
Decision Analytics – our products
Strategic consulting
Validate lending process
Strategic road map
Best practices assessment
Scorecard review and validation
Helping clients to make better customer decisions
Modelling services
Credit risk
Profitability
Attrition
Propensities
Fraud prevention
Fraud models
Authentication
Anti-money laundering tools
Decision support software
Implementing models
Application processing
Customer management
Strategy management
Optimisation
Products are designed for global markets:
Strategy Management: used by more than 600 clients in over 60 countries
Origination: Transact SM used by 200 clients in 43 countries
Customer Management: Probe SM used by 150 clients in 30 countries
53
New geographies
Growth inmarketshare
Innovation
Decision Analytics – key opportunitiesDecision
Analytics
Investing in product innovation to help clients in areas such as fraud prevention
Building scale in North America
Using Decision Analytics as the key entry point in new and emerging high growth geographies
54
Experian – four key investment highlights
Four key pillars supporting Experian’s global market leadership
55
Section 2.C
Principal activitiesMarketing Solutions
56
Marketing Solutions – helping our clients
Helping clients to make better marketing decisions
MarketingSolutions
Understanding the market
Research servicesBusiness strategies
Identifying customers
Data and analyticsList processing
Delivering the marketing message
Digital services and web analytics
Managing data
Database management
57
Marketing Solutions – overviewMarketingSolutions
FY06 revenue: US$627m, FY06 EBIT: US$57m
Businessoverview
Full range of marketing servicesOver 10,000 clients across multiple verticalsConsumer marketing information on 130 million households globallyEleven billion emails delivered in FY06
Key clients
WPP, Marks & Spencer, Lexus GB, Honda UK, American Express, Barclays, AOL, BSkyB, KLM, Hilton Hotels and Adidas
Varies from highly customised to more commoditisedMost are transaction-basedLicense fees for software solutionsDatabase services are contract-based
Revenuemodel
58
Marketing Solutions – evolving the portfolio
Traditionalclient needs
High volume direct mail
Names and addressesDirect mailIndividual campaignsLimited understanding of marketing ROIMany suppliers
Emergingclient needs
Greater understanding of target marketsComplete customer viewMulti-channel communicationsLifetime customer managementMeasurable results
One supplier, broader offering
Organisations are shifting from mass marketing through established media such as post and telephone…
To greater emphasis on more targeted marketing With increased spend on new channels including Internet, direct response television and mobile phone messaging
Experian is evolving its portfolio in response to these trends
MarketingSolutions
59
MarketingSolutionsScenario: Marketing Solutions
Leveraging our existing Credit Servicesrelationships to cross-sell additional products
Website
Branch
Customercall centre
Customercontact points
Direct mail
Email –CheetahMail
Branch customerservice desk
Data Data
ClarityBluecampaign management tools
Segment andselect customers for offer
Truvue
QAS name /address hygieneData
captureMessage delivery
Marketing channels
Consulting Analytics
Clientdatabase
Bank cross-selling to mortgage customers
60
Newgeographies
Evolving channels
One-to-one marketing
Marketing Solutions – key opportunitiesMarketing Solutions
Helping clients to target offers more effectively – one-to-one marketing
Helping clients to deliver their message through most responsive channel of communications
International expansion outside US and UK, especially in recentlyacquired businesses
61
Section 2.D
Principal activitiesInteractive
62
Interactive
Research products and shop onlineApply for mortgages
Interactive – connecting consumers to companies over the Internet
Check my creditEnrol in online
education programmes
22 million unique monthly visitors
A top US online advertiser
Relationships with leading portals and search engines
B2C B2B lead generation
A leading position as a trusted information source for consumers about key financial and purchasing decisions to lower the cost of daily living
62
63
Interactive business model – our competitive advantage
Connecting consumers with businesses, maximising client returns on marketing spend
63
Interactive
Experian data assets
Experian modelling
and analytics
Customer acquisition channels
BroadcastOrganictraffic
Search listings Partners Affiliates
Consumers
Businesses
Experian products
Customer monetisation
Lead generation
64
Interactive – Consumer Direct
Example: Triple Advantage US report
Leveraging core credit data to help consumers manage and monitor their credit profile
64
Interactive
Offers online access to credit reports, scores and monitoring services
Consumer pays either on transaction or subscription basis
Transaction model
$34.95 for three credit bureaux report and score in US
$5.00 for a credit score in US
£4.99 for a credit score in UK
Subscription model
Active credit monitoring members pay US$9.95–US$12.95 per month in US and £5.99 per month in UK
65
Interactive – financial services
Connecting financial services providers with consumers65
One-stop Internet destination to help consumers get better deals on their recurring monthly expenses, mainly mortgages
Free to consumer
Creates high quality leads for lenders
Experian paid on a pay-for-performance basis (per lead)
Interactive
Example: LowerMyBills.com website
66
Example: ClassesUSA website
Interactive – education
Connecting educational institutions with potential students66
Interactive
Enables professionals to find an online degree best suited to advancing their professional goals
Free to consumers
Creates high quality leads for online colleges and universities
Experian paid on a pay-for-performance basis (per lead)
67
Merchant Ratings
Bottom LinePrice
Product Details
User & ExpertReviews
Interactive – comparison shopping services
Helps consumers research products and shop on the Internet
Free to consumers
Emphasis on consumer experience, which drives higher rate of organic traffic
Serves merchants of all sizes
High return to advertisers from marketing to qualified and informed shoppers
Extensive marketing analysis tools and management reporting capabilities
Experian paid on a pay-for-performance basis (per click-through to client’s website)
67
Interactive
Example: PriceGrabber.com website
Connecting retailers with ready-to-buy shoppers
68
Interactive – a natural fit with Experian
68
Interactive
Builds on Experian’s decisionsLowerMyBills now enhances leads using Experian credit scores
Builds on Experian’s distributionLowerMyBills sells to financial servicesPriceGrabber sells to retail clients (retail vertical 11% of global revenue)
Builds on Experian’s dataInternational expansion of Consumer Direct
Other synergiesCombined buying power in online and broadcast advertisingSharing of Interactive marketing expertise and traffic
6969© 2006 Experian Information Solutions, Inc. All rights reserved.Confidential and proprietary.
Harvesting synergies from acquired businesses
Cross- sells on LowerMyBills.com Uses CheetahMail for email distributionUses Experian data, scores and authentication technologySells credit monitoring on Experian FACTA site
Sells enhanced leads using Experian scoresUses FARES automated valuation modelsCross-sells mortgages on Experian Consumer Direct Cross-sells retail leads for PriceGrabber
Uses Experian Marketing Solutions data to enhance leadsCross-sells Experian Consumer Direct credit products Provides direct access to online schools for Affiliate Fuel
ClassesUSA®
LowerMyBills.com®
ExperianConsumer Direct
PriceGrabber®
Provides Experian retail clients with reports on most searched products / modelsProvides ClassesUSA with school-related offers to feature at end of registration process
Interactive
70
Newgeographiesand markets
Synergies
Internetusage
Growth in Internet usage byconsumers and clients
Deliver significant synergieswithin Interactive and Experian
Highly portable business modelby vertical market and geography
Interactive – key opportunities
US$bn2004–2009E CAGR 23%
Source: eMarketer
0
20
40
60
80
2004 2005 2006E 2007E 2008E 2009E
Source: IDC
2004–2009E CAGR 19%
US online advertising spend
US broadband householdsmillions
0
5
10
15
20
25
2004 2005 2006E 2007E 2008E 2009E
71
Section 3
Financial performance
72
Financial performance
FY04 – FY06
Drive organic revenueand profit growth
Manage costs to maintainor improve margins
Maximise EBITconversion to cash
Supplement growth with targeted, value-enhancing acquisitions
19.6% margin 21.3% margin
Average revenue growth of 23% (10% organic)Average EBIT growth of 24%
94% - 99% (FY05 – FY06)
US$2.2bn spent giving above plan returns
73
Reporting in US $FY04/5/6, refers to financial years ending 31 March 2004/5/6 respectivelyFY04 prepared under UK GAAPFY05 and FY06 prepared under IFRS
All growth rate percentages calculated with constant FX rates, shown for the continuing business only
Organic growth excludes acquisitions except affiliates, until the date of their anniversary
EBIT is profit before amortisation of acquisition intangiblesgoodwill impairments charges in respect of demerger-related equity incentive plans exceptional items (i.e. gains and losses on disposal of businesses or closure costs of material business units) net interest income / (expense) financing fair value measurementstaxation
Benchmark PBT is EBIT less net interest income / (expense)
Assumptions used in financial sections
73
Reporting basis
Growth measures
Profit measures
74
Financial highlights
Note: Margin above excludes FARES.
Track record of double-digit revenue and EBIT growth
Strong organic revenue growth complemented by value-enhancing acquisitions
Steady margin improvement whilst investment profile maintained
5m FY07 revenue growth of 18% (7% organic) at constant exchange ratesFY05
20.0% margin
2,014
3,07927% (10%)
2,46118% (9%)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
FY0419.6% margin
FY0621.3% margin
Revenue US$m
0
200
400
600
800
1,000
EBIT US$m
726+30%
565+17%468
Global continuing revenue US$mContinuing (organic) revenue growth
Global continuing EBIT US$m
75Note: Margin above excludes FARES.
Americas – financial highlights
Average revenue growth of 28% (12% organic)
Strong revenue growth boosted by FACTA surcharge and acquisition activity
Excellent year for Credit Services in FY06 assisted by buoyant market conditions
Interactive a significant growth driver, partially offset by more modest Marketing Solutions growth
LowerMyBills is the main driver of non-organic growth in FY06
Improving EBIT margin reflecting mix and operating leverage
Unrecovered FACTA related costs impacted FY05
FARES performance in FY06 reflects the weakening mortgage market
356+13%
478+34%
316
244 281+16%
409+45%
7275
+3%
69-8%1,113
1,80137% (13%)
1,31918% (10%)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
FY0421.9% margin
FY0521.3% margin
FY0622.7% margin
Revenue US$m
0
100
200
300
400
500
600
700
EBIT US$m
Americas continuing revenue US$mContinuing (organic) revenue growth
Americas – direct business continuing EBIT US$m FARES – EBIT US$m
76
Joint venture between First American Corp (80%) and Experian (20%)“One stop shop” for property transaction informationStrong partnership with FARES managementSales not consolidated; contributed 9.5% of Experian’s Group EBIT in FY06Experian gains exposure to the US mortgage market without directly managing the impact of cyclicalityPerformance linked to mortgage cycle, mitigated by
Default and tax services which are less exposed to the mortgage cycleStrict cost controlBolt-on acquisitions and consolidation of similar competitors
FARES joint venture
76
Purchase originations Refinance originations
US mortgage originations
Source: Mortgage Bankers Association – August 2006
Experian EBIT from FARES
FARES – EBIT US$m
1990 1992 1994 1996 1998 2000 2002 2004 20062008E0
5001,0001,5002,0002,5003,0003,5004,0004,500US$bn
20
40
60
8075+3%72 69
(8%)
0
FY04 FY05 FY06
US$m
77
UK and Ireland – financial highlights
Average revenue growth of 17% (7% organic)
Robust organic growth in the face of a challenging UK consumer lending market reflecting
Credit Services penetration of new consumer credit sectors and share gains in Business Information Services
Decision Analytics growth from value-added products
Emerging Interactive business
Acquisition of QAS in October 2004 the driver of circa two-thirds of non-organic growth
Significant improvement in EBIT margin in period, although run-down of account processing activity will adversely affect reported margin in FY07
139180
+22%
215+24%
521
75618% (6%)
65916% (7%)
0
100
200
300
400
500
600
700
800
FY0426.5% margin
FY0527.3% margin
FY0628.4% margin
Revenue US$m
0
100
200
300
EBIT US$m
UK & Irelandcontinuing revenue US$mContinuing (organic) revenue growth
UK & Irelandcontinuing EBIT US$m
78
EMEA / Asia-Pacific – financial highlights
Average revenue growth of 15% (8% organic)
Good growth in established European markets, boosted by strong performance in emerging markets
EBIT margin broadly stable after significant investment in emerging markets of Eastern Europe and Asia-Pacific
4659
+18%64
+9%
380
52211% (8%)483
18% (8%)
0
100
200
300
400
500
600
FY0412.1% margin
FY0512.5% margin
FY0612.2% margin
Revenue US$m
0
25
50
75
100
EBIT US$m
EMEA/Asia-Pacific continuing revenue US$mContinuing (organic) revenue growth
EMEA/Asia-Pacific continuing EBIT US$m
79
Credit Services – financial highlights
Average revenue growth of 10% (7% organic)
Organic revenue performance driven by
Consumer and business credit demand in US and UK
FACTA cost recovery charges
New products
Increased penetration of less mature markets
Improving EBIT margin trend reflects operating leverage and affiliate acquisition programme
Note: * Growth and margins relate to continuing business excluding FARES
FY0425.8% margin*
FY0524.0% margin*
FY0627.2% margin*
1,217
387
1,3759% (5%)*
1,49911% (8%)*
405+2%*
476+25%*
0
300
600
900
1,200
1,500
US$m
Direct businesscontinuing EBIT US$mFARES EBIT US$m
Americas UK & Ireland EMEA / A-PContinuing revenue US$mContinuing (organic)revenue growth
80
Decision Analytics – financial highlights
Average revenue growth of 15% (12% organic)
Growth in both established and emerging markets reflecting a strong product portfolio which can be globally applied
Improving EBIT margin trend moderated by investment in infrastructure and emerging markets
FY0429.4% margin
FY0532.5% margin
FY0631.5% margin
US$m
237
29015% (11%)
32515% (13%)
69
0
50
100
150
200
250
300
350
94+28%
102+12%
Continuing EBIT US$mAmericas UK & Ireland EMEA / A-PContinuing revenue US$mContinuing (organic)revenue growth
81
Marketing Solutions – financial highlights
Average revenue growth of 28% (6% organic)
Traditional data and list processing activities remain challenging
Organic growth from email marketing, database solutions and business strategies
Significant acquisition activity including CheetahMail, Simmons, QAS and ClarityBlue, helps reposition the business
EBIT margin impacted by restructuring activity in Americas in FY04
US$m
380
50128% (6%)
62727% (6%)
11
FY042.7% margin
FY058.9% margin
FY069.1% margin
0
50
100
150
200
250
300
350
400
450
500
550
600
650
44+300%
57+31%
Continuing EBIT US$mAmericas UK & Ireland EMEA / A-PContinuing revenue US$mContinuing (organic)revenue growth
82
Interactive – financial highlights
Average revenue growth of 88% (31% organic)
US Consumer Direct is market leader in a market driven by heightened consumer awareness of credit issues and identity theft
Interactive business strengthened by the LowerMyBills.com, Affiliate Fuel, ClassesUSA and PriceGrabber.com acquisitions in FY06
UK Consumer Direct business developing scale and is now profitable
US$m
34
29563% (36%)
628113% (25%)
52+51%
122+131%
FY0418.9% margin
FY0517.7% margin
FY0619.2% margin
180
0
50
100
150
200
250
300
350
400
450
500
550
600
650
Continuing EBIT US$mAmericas UK & IrelandContinuing revenue US$mContinuing (organic)revenue growth
83
FY06 cost analysis
Globally, labour represents more than half of all costs
Higher % of customer acquisition spend in Americas due to Interactive
Greater mix of labour costs in EMEA/Asia-Pacific due to Transaction Processing
Year on year cost growth includes the impact of acquisitions and investment in products, geographies and infrastructure
Americas UK & IrelandEMEA/
Asia-Pacific
Global
1%
7%5%12%
11%
21%43%
EBIT
Labour
IT
Data
Customer acquisition/marketingOther
Central activities
58%
12%
16%
1%4%
9%
49%
28%
8%2%
4% 9%6%
6%19%
11%
23% 35%
Percentage of FY06 revenue
84
Strong conversion of EBIT to operating cash flow
Exceptional three year track record with operating cash flow as a percentage of EBIT typically between 90% to 100%. (US $44m GUS-related item in FY04 inflated conversion by 10%)
Capital expenditure typically modestly higher than depreciation
Debtors would normally grow in line with revenue growth with some offset from creditors/accruals
Note: * Operating cash flow = Total EBIT less trading working capital add depreciation/amortisation less capital expenditure and less retained profit in associate
US$m
Operating cash flow*Operating cash flow as a percentage of EBIT
Total EBIT
0
200
400
600
800
FY04 FY05 FY06
71799%
53594%
495108%
457
727
567
85
Acquisition investment
Acquisitions in three years to March 05 delivered double-digit post-tax returns in FY06
FY06 acquisitions performing on planAcquisition investment
Major acquisitions: QAS
Simmons
MotorfileDMS Atos (part)
CheetahMail
MetaReward
Consumerinfo.comNIG
Scorex
Affiliate FuelBaker Hill
ClarityBlueClasses USA
FootfallLowerMyBills.comPriceGrabber.com
Vente
* Acquisition spend = actual maximum spend at actual exchange rates** Number of acquisitions, including affiliates
FY03 FY04 FY05 FY060
500
1,000
1,500
2,000
Acqu
isiti
on s
pend
* US$
m
US$0.3bnUS$0.3bn
US$1.6bn
US$0.5bn27**19**
16**
20**
86
Acquisition process – critical factors
Business unit ownership of the transaction
Rigorous evaluation process
Strong internal governance review
Professional internal transaction management
Strong potential for synergies
Excellent reputation as an acquirer
87
Public company and global functions being established in new Dublin and London premises
Annual central costs estimated at c.US$50m of which US$31m was reported in Experian in FY06
Modelling considerations
Incentive costs
At the time of the demerger, Experian intends to set up a number of share incentive schemes for all staff, most of which will be on a one-off basis
The estimated cost of these schemes will be about US$135m, which will be charged to profit and loss below Benchmark PBT over the following five years
Discontinuing activities
Experian has announced its withdrawal from two markets :
Incentive marketing websites in the US through MetaReward – closure costs of US$5m in FY07 (FY06 revenue US$70m and EBIT US$5m)
Account processing in the UK – closure costs of US$27m (FY06 revenue US$79m and EBIT US$36m)
Account processing closure cost will be charged below Benchmark PBT in FY07
Both businesses will be classified as discontinuing activities in FY07 (but included in Benchmark PBT)
Central activities
88
Modelling considerations
A strong, flexible capital structure will be maintained
It is expected that c.US$1.4 billion (£800 million) will be raised through the issue of new shares
Net debt of c.US$1.8 billion is expected on receipt of new equity
The following credit ratings are anticipated:
S&P: BBB+
Moodys: Baa1
Interest costs of new banking facilities will be in line with GUS existing facilities
Debt mix will reflect the international portfolio of the business, predominantly US dollar and pound sterling
Debt maturities will be well spread with interest rates fixed for short and medium-term periods
Capital structure and credit rating
PensionsExperian will assume existing GUS pension schemes (ARG has its own)Pension assets US$895mPension and related liabilities US$909m (including $50m of unfunded obligations)UK defined benefit scheme is 104% funded
89
Modelling considerations
Experian benefits from a lower overall tax rate than the average standard tax rate in its countries of operation
Continuation of GUS tax planning approach
Reflects international nature of business
Expecting a tax rate of c.23% subject to no adverse change in tax legislation
Experian continues to benefit from tax relief on goodwill acquired in the US
NPV of these cash flows is c. US$250 million
The majority of this relief is expected to be utilised by 2011
Experian expects to operate a dividend policy with cover of no less than three times
Tax
Dividends
90
Pro forma EBIT for year ending 31 March 2006
EBIT of UK account processing (US$36m) and MetaReward (US$5m) are to be treated as discontinuing in FY07
Expected ongoing central activities of c.US$50m
Interest charge on a blended interest rate of 5%* applied to pro forma debt
US$m Per circularEBIT
MetaReward Central activities/interest
Pro formaEBIT
Principal activity - continuingCredit Services 476 (36) 440Decision Analytics 102 102Marketing Solutions 57 57Interactive 122 (5) 117Central activities (31) (19) (50)
726 (36) (5) (19) 666
Principal activity - discontinuingCredit Services 1 36 37Decision Analytics -Marketing Solutions -Interactive 5 5
-727 - - (19) 708
UK account processing
Adjustments
715 (104) 611
Interest
Benchmark PBT 36 5
(85) (12) (97)
*After the effect of interest rate swaps
91
Pro forma combined balance sheet as at 31 March 2006
Elimination of intercompany balances with other GUS group companies, plus expected transfer of cash from ARG
Proceeds of c.US$1.4bn less costs incurred of c. US$40m
Net debt of c.US$1.8bn
US$mPer circular Pro forma
Fixed assetsGoodwill 2,070 2,070Intangible and tangible fixed assets 832 832Acquisition intangibles 445 445Other long term assets 735 735
4,082 4,082
Working capital assets 689 689Working capital liabilities (881) (881)Other assets 2,716 (2,309) 407
Deferred consideration payable (115) (115)Other liabilities (2,535) 1,850 (685)
(2,650) 1,850 (800)
Net debt (3,356) 190 1,355 (1,811)
Net assets 600 (269) 1,355 1,686
Elimination of interco bals and transfer of cash
Proceeds of equity issue
Adjustments
92
Pro forma cash flow for the year ending 31 March 2006
Assumes the central activities ($19m) and the interest ($85m) adjustments convert to cash
Pro forma tax cash flow equates to the tax charge less $45m in respect of goodwill deduction
US$mPer circular Pro forma
cash flow
EBIT 727 (19) 708Depreciation 204 204Capital expenditure (212) (212)Change in working capital 18 18Retained in associates (20) (20)Operating cash flow 717 (19) 698
Interest (23) (85) (108)Corporation tax (32) (46) (78)Free cash flow 662 (150) 512
Adjustments
93
Financial objectives
Drive organic revenue and profit growth
Manage costs to maintain or improve margins
Maximise EBIT conversion to cash
Supplement organic growth with targeted, value-enhancing acquisitions
Continuing to increase shareholder value
94
Section 5
Conclusion
95
Experian – four key investment highlights
Four key pillars supporting Experian’s global market leadership
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