28th Jan 2015 07:47
LONDON (Alliance News) - Experian PLC Wednesday said it will buy USD600 million worth of shares over the next 14 months, pledging to return surplus capital to shareholders from time to time, as the information services company outlined its strategy to analysts and investors in London.
In November, Experian pledged to drive earnings growth and returns by focusing on its key strengths, improving performance, taking advantage of opportunities to grow across a number of markets, driving efficiency and productivity, and optimising capital. The information services company also had promised more details on the way it will allocated capital, after it undertook a review into its capital allocation framework.
As part of the presentation in London, Experian, which provides data and analytics to clients, said its "aspiration" is to deliver annual average growth in organic revenue in the mid-single digit range.
"With the application of our cash flows into organic investment opportunities, acquisitions and returns of excess capital to shareholders, we have the potential for strong growth in earnings per share," Experian said.
The company also said it is adopting a new target leverage range of 2 to 2.5 times net debt to [earnings before interest, tax, depreciation and amortisation], moving away from its previous target of 1.75 to 2 times net debt to EBITDA. It said this is "consistent with striking a balance between operating an efficient balance sheet, where our weighted average cost of capital is optimised, and maintaining good access to the debt capital markets".
Experian intends to move into the new leverage range over the course of the financial year ending March 31, 2016.
In addition, Experian said it will continue with its progressive dividend policy. It expects to grow dividends at least in line with growth in benchmark earnings.
Setting out its intention to allocate capital in support of the growth it wants to achieve, while becoming more efficient and generating good investment returns, Experian said it will make growth investment in its core activities a priority.
"Acquisitions will continue to form part of the investment mix, assessed by a range of stringent criteria. We will also continually evaluate peripheral activities and, where appropriate, rationalise accordingly," Experian said.
"To achieve this, we are implementing changes in the way we assess risk and the way we allocate capital internally, with a more prominent focus on return on capital employed and internal capital rationing. We will require organic and inorganic investment returns to be significantly in excess of the group's weighted average cost of capital and we will test all acquisitions against the use of capital for share repurchases," the company added.
By Samuel Agini; [email protected]; @samuelagini
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