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Experian shares soar on bumper cash return

RESULTS: Credit-checking company Experian announce a $500m share repurchase alongside a 9 per cent dividend hike and guides towards mid to high single-digit revenue growth in the year ahead.
May 9, 2013

Shares in Experian (EXPN) surged almost 6 per cent after the credit-checking specialist announced a $500m (£321m) share repurchase programme and a 9 per cent dividend hike. Benchmark profit before tax improved 6 per cent to $1.19bn which drove EPS almost 9 per cent higher to 85.7¢. The reported results in our table were impacted by a one-off $558m charge on a put option related to the $1.5bn acquisition of Brazilian credit data provider Serasa SA in October 2012.

IC TIP: Buy at 1241p

The America's once again buoyed the group performance. Organic revenue improved 14 per cent in Latin America and by 7 per cent in North America, underpinned by strong demand for credit services, analytics and fraud and ID management services. The two regions account for $3.26bn of turnover, or over two thirds of the total. These gains more than offset a flat performance from Europe, Middle East, Africa and Asia Pacific.

The Serasa acquisition was the main reason behind the increase in net debt from $1.12bn to $2.94bn, but this should be manageable with cash conversion (of operating profit into cash flow) forecast to remain above 90 per cent. And trading margins are being boosted by tight cost control. A cost saving programme is expected to generate annual costs savings of $75m at a cost of $110m, half of which was incurred last year.

Analysts at Jefferies are forecasting current year adjusted pre-tax profits of $1.29bn and EPS of 97.2 cents.

EXPERIAN (EXPN)

ORD PRICE:1,240pMARKET VALUE:£12.5bn
TOUCH:1,238-1,240p12-MONTH HIGH:1,268pLOW: 859p
DIVIDEND YIELD:1.8%PE RATIO:52
NET ASSET VALUE:315¢*NET DEBT:91%

Year to 31 MarTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20093.8757846.820.0
20103.8860059.023.0
20113.8965649.428.0
20124.4968966.832.0
20134.7344037.134.8
% change+5-36-44+9

Ex-div: 19 Jun

Payment: 19 Jul

*Includes intangible assets of $5.5bn, or 548¢ per share

£1 = $1.56