Good day, and welcome to the Experian Half Year Results Presentation hosted by Brian Cassin. My name is Nigel. I'm your event coordinator.
I
would like now to hand the call over to Brian. Brian, please go ahead.
Thank you very much, and good morning, ladies and gentlemen, and welcome to our half year results presentation. Hope you and your families have stayed safe and well during these times. As you can see from our results announced this morning, Experian has done well in the first half of FY 2021. We're now many months into the pandemic and so far, our business has been resilient. The biggest impact for us came in our Q1, which you will recall, was negative 2%.
We rebounded to growth in Q2, very substantial growth in some cases, we're at the upper end of our expectations for Q2 and for the half.
So we'll go through the
puts and takes a few minutes, but we've already highlighted areas where we have seen actually strong performances. Consumer Services in North America Brazil deserve a special mention, but there are plenty of others. That said, progress is uneven and we continue to see weakness in some parts of the business, which did moderate as we went through Q2. We still have some negative numbers knocking about. With virus spikes and new lockdowns, you'll forgive us for saying that we can't be 100% precise that had the next few months play out.
So we are cautious by giving full year guidance. But as you can see from these results, we are incredibly well positioned. Even in the midst of the pandemic, we've been able to grow organically, our driver innovation over the past few years and strategic decisions on where to position our business, in particular in consumer service have and will continue to pay off. We continue to look for new areas of growth in areas to streamline our business and improve performance going forward and we're even more excited about the opportunities we have ahead of us. Q2 organic revenue growth was 5%.
That took us to organic revenue growth for the half of 2% after the 2% reduction in Q1. Total H1 growth was 3% when you include acquisitions. North American And Latin America delivered strong growth in context of 7 dollars 5% for the half, respectively. There's no doubt that we benefited from the spike in mortgage refi in the U. S.
But we have been working hard over the past few years to position ourselves better in this segment, and we have benefited from that. As we all know, we have deliberately and methodically positioned ourselves strongly in consumer services, and this is paying off hugely. Globally, we are closing in on 100,000,000 consumer memberships. This already makes us 1 of the largest direct to consumer platforms in the world something which will assume even more importance and relevance in the world where digitization is accelerating rapidly. Of course, not everywhere performed well, the UK and EMEA Asia Pacific faced more challenges.
Some of that is down to less favorable mix in those regions, and some because the pandemic has hit economies in different ways. Trajectories generally improved in Q2, but we are still in negative territory. Cost management has been an area of focus for us. 1 of our key principles has been to make sure we make the right decisions for the long term, retaining our operational capacity, building our employer brand and continuing to invest for growth. And we think we've judged it right so far.
For example, we acted quickly on discretionary items, whereas we actually increased our marketing investment in consumer services, and this is obviously benefit the business not just in the short term, but we believe for many years to come. We did take additional measures to rebalance our business in half 1, The majority of this relates to the UK, which, as you all know, has been an underperforming region for us and is in the midst of a significant overhaul. As part of our transformation program. And Lloyd will discuss that in a bit more detail shortly. EBITDA in the half did slightly better than we expected at constant currency was up 1%.
There was some margin impact, particularly as we navigated through the early stages of the crisis. And benchmark EPS was up 2% at constant currency, down modestly after the FX headwind. And our commitment to our capital priorities and to dividends unchanged, the first interim dividend of $0.145 per share is the same as it was this time last year. Now there are some clear trends emerging from this crisis. In the short term, we will continue to face macroeconomic pressures and lockdown uncertainty, which will act as a constraint.
However, as we have demonstrated cancer cyclical elements in the business and deliberate actions and strong strategic positions in areas like consumer services, health and mortgage have meant that we've been able to continue growing our business during the pandemic. Our innovation pipeline is very strong. We are benefiting from new products introduced during previous years as well as specifically during the pandemic. In a little over 6 months, we generated a significant pipeline of new COVID related opportunities. Many of these are for fraud and collections, they include things like new attributes and scores, recovery scores, downturn triggers, a new product called Ascend Loss Forecaster, recession relevant bundles and many other examples.
Now you've probably heard this many times by now, but the has accelerated trends that we believe were already evident. Banks were already accelerating investment in digital platforms. They're now moving faster to take our costs, and crucially to improve customer performance in an accelerated digital world. And this means greater opportunities for solutions we provide not software solutions like Ascend, but smart and new uses of data combined with platforms to help them reduce cost and improve performance. The shift to cloud based solutions already a strong trend before COVID has accelerated significantly.
We recognized this trend several years ago and start cloud enable our suite of decision products through the Experian 1 platform, including preconfigured solutions for organizations to prefer standard out of the box applications and highly configurable solutions for clients with more sophisticated needs. One thing I would like to point out is that as we've been investing in cloud, we've also been developing our core PowerCove suite of propositions So in effect, we've been due running our investment and decisioning over the last 3 to 4 years. And it's not trivial to exercise, but we are now at a point where we have real traction cloud based solutions amongst our core client set, and that puts us into a very good position as we look forward. Online Broad is on the increase and we have many ways to meet that need through cross core, short profile and a number of other market leading capabilities. And consumers, as we all know, have shifted massively online just at the time when personal finances have become more stressed and the need for personalized services has intensified and we're incredibly well positioned to satisfy these needs.
In health, consumers want the same kind of digital experience they get in other industries, especially since their share of the bill continues to increase and we see healthcare providers investing in better patient experiences. In the last few years, we've added 100 of 1,000,000 of dollars in new revenue from products that not previously exist, and we shall continue to benefit from these trends going forward. Turning now to progress in the half. It's very clear we made substantial progress in North America. B2B had a solid first half, up 4%.
Our mortgage volumes have been strong refinancing volumes in particular, As I said earlier, this is an area we identified for expansion pre COVID, and we have taken some market share, and that's put us into a good position during the cycle. Do expect there will be some reversal of this in Q4. Current and banking volumes are still depressed as can be seen on this chart, lenders have cautiously increased the amount of credit being extended, but their near term focus is on credit quality and they've built up record loss reserves. Understandably they're cautious and cost focus, but in good shape generally. Lending will recover from these lows at some point.
We can't be precisely certain when. Essend has done really well. It continues to build momentum. Total contract value is now almost $350,000,000 globally, team in North America have done a great job and it was a material contributor to growth in the half. Add it to this now is the global rollout, which is really gathering momentum.
The product roadmap is full, Ascent Marketing, as count review, data services and CECL Forecaster. These are all new modules each of which attacks a different sizable market segment. So our addressable market is growing. And I think in time, it's saying globally, we'll probably be larger than our core NII North America CIS business in coming years. The ExperianOne pipeline is growing and bookings are up mid tier clients in particular in the market for decisioning software.
Some are finding the need to augment their online digital decisioning capabilities. Sometimes, we put this together with data as a package service. This is a very powerful platform and is further strengthening as we add to it, host different capabilities. And I think this is yet another example of how our competitive advantage is really the breadth and depth of our solution set and our unique capability to bring it all together. Put it another way, no single competitor can match the combination of the advanced technology platforms, decisioning software and analytics and vast data sources.
As lenders and credit ground has retool and update their data and decisioning systems, we see more opportunities to play to this fundamental strength, the ability to provide, integrate and deliver the various components to solve larger puzzles for our clients. Our verticals have been a source of resilience and we have accelerated investments to capitalize on some clear market opportunities. Health continues to deliver solid revenue growth and robust sales despite the fact that industry was hit hard by hospital and clinic shutdowns. We believe this is a good indication that products and services we offer are critical to the health care market. The pandemic has accelerated several trends, as the demand for digital health care and transition to alternative care settings like telehealth, and this is helping drive growth in several of our product lines and these trends believe are here to stay.
We're very pleased with the performance of both our core revenue cycle management business, our recent acquisition of My Health Direct, as well as our recent investments experience consumes enormous amount quantity of Experian Bureau data and marketing data to enhance workflow and analytics that we provide to clients. New business performance has been strong. 27 percent of sales in H1 were from new customer logos. This is significant because typically most of the growth comes from selling additional capabilities. So it bodes really well for the future.
And then we highlight automotive here, which actually was initially hit quite hard. The pandemic started. And since then, it's booked the trend of a challenging environment as car sales recovered and new initiatives and new products our growth strategy there. Our performance in Consumer Services has been outstanding. You only have to look at the reported performance elsewhere to see that we are outperforming the market pretty much in every category.
In North America, growth of 13% is really good results, we've achieved this as others in the industry have had to reduce headcount and pull back on marketing spend. By contrast, our brand awareness has grown, as shown here, Half of the U. S. Population is now aware of Boost and we continue to enhance the proposition. Consumers can now add payments.
They make streaming services like Netflix and Hulu. Again, this is important because when consumers are under financial stress, they want to better understand their financial position. There is still also demand for credit, and we've delivered record numbers of credit approvals on credit match. And we continue to invest to enhance opportunity for us in the U. S.
Taking a step back from performance in short term, we now address nearly 100,000,000 consumers globally, that gives us a tremendous opportunity to continue the strategic progress and growth of this business. That said, we still have a long way to go. Compared to the 1,300,000,000 consumers that we have on file. And I'd like to remind you that we see this not only as a growth business. But for a business whose largest asset is data on over 1,000,000,000 consumers worldwide, our key plan in fulfilling our obligations as a company to society more broadly.
Turning to Latin America. We had a very good performance for the half as a whole, up 5% organically. Brazil has coped remarkably well. All things considered Q2 was outstanding up double digits. Positive data is making progress We already have 15 positive data products in market.
We plan to launch another 29 across the rest of 2020. Still early days, but we've already implemented scores, attributes, and we've had very positive client feedback. Growth drivers are not limited to positive data though. We've had successes for Ascend, and one of the largest contracts signed outside the U. S.
To date, and we push forward with Experian 1 use cases as well as cross corridor. This combination of factors is hard for others to replicate data is superior. We have unmatched product capability, and we combine and integrate these to create unique and hard to replicate solutions that deliver incredible value. At to this is the direct relationships we now have with 1 third of the Brazilian adult population. And you can see we have a very exciting future for our business there.
No other company focused on financial services in Brazil has anywhere near this number. We now have 51,800,000 consumers connect to the platform. 88% of all consumers in Brazil say they are aware of the Sarassa brands. Memberships are translating into commercial success. Revenues more than doubled in the half with big success for lymphenome, We also expect that SRAZA will fast become one of the go to places to get credit in Brazil, SCOR Turbo, which we recently launched will facilitate this.
Skoritobas related to Experian burst boost, sorry, it works by enabling consumers to pay their bills using our platform which can help to instantly improve scores and get instant access to new sources of credit. And this matters because not only does it build our brand further, but we also collect data every time we interact with the consumer, so we enrich services for consumers while also extending our lead and data itself. Credit Matching is fast becoming a revenue driver and we expect to further develop the business. Brazil is already one of the most digitized societies in the world, but it is also underpenetrated for credit. Income is a low and the banking system is highly concentrated.
So is an attractive combination of drivers notwithstanding the current macroeconomic environment. It was a tough half in the half here in the UK, down 12%. We don't have the same extent of countercyclical revenues in the UK, no health vertical, for example, and the mortgage market arise from the complexity of the technology estate built up over many years. And the cornerstone of our transformation about simplifying the estate, modernizing it removing this is an issue and then getting back to profitable growth. The goal is to have a much simpler, stronger core, which will be better positioned to take advantage of the large and numerous opportunity we see ahead of us.
So what have we done? Well, in the last 12 months, we've completely reorganized how the business is structured. We've massively improved service levels and we've reduced our cost base substantially. Pandemic aside, we had expect to see that improve our performance this year. Obviously, that didn't happen them.
But the underlying improvements are there, and that will set us up for significant progress as we go into FY22. Alongside all this, we've not let up on innovation and we've moved ahead with key investments. We secured new wins for experience end, including with a tier 1 lender, and we have considerable traction with affordability and vulnerability solutions, which are well suited to the current climate. Perhaps most noteworthy of all, we have launched Experian boosts, first for the UK market, and which comes at a time when consumer finances are under lost pressure. In summary, we've done a lot of heavy lifting and we are on an underlying improving trajectory in this part of the business.
EMEA Asia Pacific declined 18% as COVID-nineteen shutdowns materially affected volumes and caused delays of software implementations. This region has a much higher proportion of decision analytics software, and this has been hardly hit. There is a lot of volatility in the outlook. Many countries in this region are in some form of renewed lockdown, so it could be long before we see material improvements. Are getting more focused on some key markets where we can see a path to scale.
And some markets, despite the challenges, have great momentum right now. And I'm very pleased to say that the acquisition in Germany has gone really well, even better than we'd hoped. Volumes are strong. Had some great wins in the market. We've already launched products like Ascend into the German market.
I want to just quickly give you a brief update on ESG. This is essential to how we manage the business and you can see our 3 core pillars here. My earlier comments on consumer services show how transforming financial lives is actually integral to what we do as a company is not just something, which we do on the side. Since 2013, we've helped 35,000,000 people with our social innovation products, and we aim to increase this reach to over 100,000,000 people by 2025. We've used our data and analytics to help governments help most vulnerable during the pandemic, and we've launched United for Financial Help, aiming to help 15,000,000 people and small businesses most affected by the crisis.
More widely, women now make up 40% of our board, and it's important to note that we meet the recommendations of both the Hampton Alexander and Parker reviews on gender and ethnic board diversity. And we're pleased to have been recertified as a great place to work for the 3rd year in a row. Last year, we cut our carbon intensity by 14% and we're now committed to be carbon neutral in our own operations by 2030. This is always going to be known to work in progress with this, but I think we're very proud of the positive steps we've taken not just this year, but in the years that led up to it. And so with that, I will hand it over to Lloyd to take you through the financial update.
Okay. Thanks, Brian, and good morning, everyone.
Hope you and your families are all safe and well. Starting with the highlights, as you've heard from Brian, against the unprecedented backdrop of the pandemic, would perform well in the half. After a 2% organic decline in Q1, we returned to growth in Q2 at the top end of our updated guidance. With organic revenue growth of 5%. Overall, in half 1, we delivered organic revenue growth of 2%.
Total revenue growth at constant exchange rates was 3%, benefiting mainly from the German Bureau acquisition. Exchange rates were 3% revenue headwind in the half, mainly due to weakness in the Brazilian reais. And as a result, total revenue and actual exchange rates was in line with the prior year. Constant currency growth in benchmark EBIT was 1%. Benchmark EPS grew 2% and a half constant rates, but declined 2% after the FX drag.
We delivered a very strong operating cash flow conversion in the traditionally weaker first half, at 89% conversion. The board approved a first interim dividend of $0.145 unchanged on last year. And we ended the first half in the lower half of our operating leverage range, with our financing further strengthened. Touching briefly on our organic revenue trends after a strong finish to FY 2020, we saw the impact of the pandemic during Q1 with a 2% decline in organic growth. However, we grew band strongly in improved between Q1 and Q2, but there were a few standout drivers which helped deliver the return to growth.
U. S. Mortgage strengthened further adding 3% to Q2 organic revenue growth, up from 2% in Q1. Consumer Services revenue grew 17% globally in the 2nd quarter improving from 8% in the first. We'd like America Consumer Services delivering triple digit growth.
We continue to see strong demand for Ascend as we scale the product globally, and these contracts are now of data in Brazil is growing as we launch more products to the market, and we also saw an improvement in underlying credit market trends. While these are still not back to pre COVID levels, they were better in many locations in Q2 over Q1. And these factors helped drive recovery organic growth from minus 2 percent in Q1 to the plus 5 percent in Q2 despite the continuing uncertainty in a number of our end markets. Looking a little deeper at the 2 of our largest businesses in North America. The chart on the left shows the relative contributions to organic growth in our Consumer Information Bureau, split between mortgage, in the light blue and the rest of the Bureau in dark blue, with a combined performance shown at the top of the bars.
Mortgages performed very strongly over the last three quarters, since the Fed rate cut in Q4 of the prior financial year, adding 3% to group growth in Q2. We've taken current volumes in mortgage into our guidance range for Q3 organic revenue growth. Looking further ahead, forecasting is very uncertain. However, if, for example, you take the MBA Mortgage Bankers Association forecast for mortgage volumes for Q4, the 3% contribution to group growth we've seen during Q2 would slow to between a 0% 1% contribution in the 4th quarter. Outside of mortgage, you can see the improved growth in the rest of the Bureau from Q1 to Q2.
So this has been driven by a strong contribution from ASCEND whilst in other areas, volumes remained subdued as you saw in Brian's presentation. On the right hand chart, you can see the trends in our consumer services Our subscription products in light pink have contributed very strongly in the last two quarters, particularly as consumers look to better understand their financial position during this time. Despite the very challenging market backdrop, lead generation has continued to grow well, more than offsetting variability in our partner solutions, both. Compared to some of the sharp drops from some of our lead generation competitors, This represents a great performance from our team as we've continued to take market share. And this highlights the strength of our brand and the innovation we're driving through our diverse portfolio of direct to consumer products.
And it's worth noting that the 16% growth we saw in Q2 came on top of a very strong prior year performance. These next two slides show the breakdown of performance from our businesses within each of our regions, and in line with our discussions earlier in the year, we wanted to provide this additional disclosure given the unprecedented trading environment this year. Our North America business performed very well with organic growth increasing from 4% in Q1 to 9% in Q2. Our core bureaus were very resilient with organic revenue growth improving from 4% in Q1 to 14% in Q2. This was driven by the continued strength in mortgage profiles, Ascend and an improvement in core credit profile volumes.
Automotive bounce back to growth in Q2, driven by healthier volumes. Our health business has strengthened over the first half with 4% revenue growth in Q2. This has been driven by better performance in collections and patient access as hospitals have adjusted to the current situation, increased capacity and started elective surgeries again. Our Consumer Services business strengthened over the half with revenue growth increasing from 10% to 16%, driven predominantly by subscriptions I mentioned earlier. Latin America declined by 1% in Q1, but achieved 10% growth in Q2 to deliver 5% growth for the half.
Bureau revenues improved from a 5% decline in Q1 to 1% growth in Q2, driven by an improving trend in our Bureau volumes, positive data and growing revenue from Ascent. The Consumer business has continued to be very strong with revenue more than doubling in Q1 and nearly tripling in Q3 2. It's benefited from an excellent performance in Brazil from Limponome, our debt resolution tool. So overall, across North And Latin America businesses, which account for almost 80% of our group revenue, organic revenue was up 6% for the first half. Our UK and Ireland business improved over the half from 15% down in Q1 to 8% down in Q2.
We saw the supply of credit improve over the 2nd quarter leading to higher transaction volumes and driving better performances in our bureaus. Decision analytics saw some improvements from the lows of Q1 improving from minus 16% in Q1 to minus 8% in Q2. And this has helped, was helped by some improvements in new business environment and higher volumes in our fraud and identity business. Consumer Services moved from minus 18% in Q1 to minus 11% in Q2 with the improvement coming from growth in subscription revenue which is proving itself to be countercyclical. The paid member base grew sequentially through the second quarter and we expect this trend to continue.
And this has offset weakness in lead generation where we see healthy consumer demand to borrow, but where supply has not yet fully recovered. And our EMEA Asia Pacific business improved from Q1 to Q2, driven by a better performance in EMEA, which saw an improving trajectory in Bureau volumes. Spain is recovering quite slowly, but Denmark and Norway, Italy and Netherlands are now close to prior year levels. And volumes in Germany are actually at forming last year on a pro form a basis due to the strong position in e Commerce. Our Asia Pacific business weakened due mainly to delays in software implementations.
So turning now to managing our cost base, we outlined earlier in the year, we've been managing our cost base very closely and deliberately in the first half. We took the decision to continue to invest behind our growth programs and through the depth of pandemics during Q1 to maintain our capacity across our businesses, despite the very different performances in different regions. For this year, we'll continue to explain the main movements in our overall cost base by category. Starting with volume variable costs, the 15% of our cost base in this category increased as expected broadly in line with revenue. 16% of our costs are discretionary, and about 80% of this is marketing.
And given the strength of our U. S. And Brazilian and consumer businesses, we've continue to increase levels of investment in marketing as we continue to gain market share in the direct to consumer segments. This rising marketing spend was more than offset by significant reductions in travel and other discretionary costs. 45% of our cost base is labor, and here we saw a slight increase in headcount due to acquisitions and the annualization of prior year merit increases.
We controlled organic headcount strongly, and overall, we ended the half with headcount broadly where we ended last year, including the impact of acquisitions. And lastly, 25% of our costs are fixed in the near term, mainly depreciation, technology infrastructure, facilities and data costs. These costs have increased due to higher depreciation, reflecting increasing technology investments in prior years. We've also seen an increase in dual running costs related to our technology transformation as more of our products and services move to cloud provision without a reduction in our fixed surgery plans. Overall, then you can see the near term approaches resulted in spend.
And the net effect is that our organic costs were up 2% in the first half, in line with the guidance range we gave. For the second half, we expect a broadly similar level of organic cost growth of 2% to 3%. Some benefits of cost actions in Regions most in by external trends is more than offset by increased investment in consumer marketing and the continuing trend of technology dual running costs. As the longer term impacts of the crisis become clearer we'll clearly keep all our options under review. Turning to the EBIT margin and looking on a geographic basis, starting from our reported prior year margin of 26.9 percent.
North America grew EBIT by 12%, contributing 100 basis points to group margin. We saw strong operating leverage in B2B, and also an improved consumer services margin, even as we increase marketing expenditure. Margins in Latin America slightly with a 30 basis points drag on group margin due to adverse mix effects as the consumer business, which is still in its investment stage, grew the new, impacting group margin by 130 basis points. The margins in EMEA and Asia Pacific reflected revenue weakness in the region, which more than offset the benefits the addition of the German Bureau acquisition. And within other, we saw a positive impact of 100 basis points, reflecting strong central discretionary costs control and positive mix effects in the heart.
Turning now to EPS, starting from the first half of FY 'twenty, in which benchmark EPS was $49..1 a share. Growth in benchmark EBIT from continuing operations was 1%, reflecting the organic revenue growth performance. Interest expense decreased $60,000,000 to $60,000,000 as a result of lower average global interest rates. The tax rate is flat at 26.2 percent, and we saw higher weighted average numbers of shares at $907,000,000 in the half. EPS was therefore up 2% on a constant FX basis and down 2% at actual FX rates, reflecting the weaker Brazilian real.
So now taking a look at our usual reconciliation to statutory results, amortization of acquisition intangibles increased to 65,000,000 consistent with the increased acquisition activities last year. Acquisition related items remained flat at 14,000,000 exceptional items reflect restructuring costs, which we've recorded in the half. At the end of last year, we talked about up transformation program in the UK business, which we were initiating to improve the performance of the business. As a most complex technology and application estate, we've been establishing a roadmap to simplify our technology estate, enhance customer experience and return the business to profitable growth. In the first half, we started to implement our plans with a new organization structure focused on delivering enhanced outcomes for our clients alongside a multistage technology transformation program.
In addition, following a number of acquisitions and growth initiatives, to bring scale to some of our smaller markets. We also initiated a number of restructuring actions to gain greater operational efficiency and focus our activity on a smaller number of scaling end markets in EMEA and Asia Pacific. These changes are all focused on improving the operating performances of the business and have strong near term paybacks. In half 1, we recorded $22,000,000 of exceptional restructuring costs, and we expect the total for the full year, cash costs to be $50,000,000. With strong line of sight on the benefits of the changes we're making and expect them to deliver $40,000,000 of year over year annual cash cost savings.
From FY22. And finally, on this slide, noncash financing remeasurements decreased from $51,000,000 to $29,000,000 which include FX losses on the Brazilian real intergroup funding. So turning now to cash flow. We saw very strong cash flow generation from 89% with 89% conversion in half 1, which is the historically weaker half for cash flow. This includes some catch up, from the end of last year when we saw the impact on cash of the emerging pandemic at the end of our financial year.
And also the mix of very strong 9% in the half in actual rates. There was a reduction in capital expenditure with a disciplined approach to infrastructure spend and maintaining the prioritization of product development. Net capital expenditure represented 8% of half 1 revenue, broadly in line with the 9% we saw in FY 2020. And lastly, depreciation and amortization has increased driven by investment in the previous years.
Looking at the balance sheet.
As you know, our target net debt to EBITDA range is 2 to 2.5, and we finished half 1 at 2.2 times. Just in the lower half of the range. We continue to hold strong investment grade ratings, and these have been stable since 2011. Looking at our funding, we issued a new GBP 400,000,000 sterling bond in October to take advantage of the current low interest rates. And this bond provides funding for the bond maturing in October next year.
After that, we don't have any bonds to refinance until September 2024. And we spread our maturities to ensure we don't have large refinancing requirements in any one period. And reflect on our capital priorities and given the resilience of the business this year, our strong financial position, our confidence in our business model, The board's recommended a first interim dividend of $0.145 per share, unchanged on last year. Turning now to our near term expectations, there's clearly still a high degree of uncertainty as we look ahead, particularly around potential for further lockdowns and variability in economic activity. We therefore won't give full year guidance, but will provide some elements of ranges in our revenue and cost expectations.
Our current view is that organic revenue for Q3 will be in the range of +3 percent to +5 percent with a further 2% from acquisitions, all at constant currency. The outlook in this range will depend on the continued strength in mortgage volumes in the U. S, and the progress of our North American and LatAm consumer business. We're also watching closely the impact of renewed lockdowns on credit volumes across our key geographies. On costs, we continue to finally balance high cost control with investment in the business to position ourselves for recovery And for the second half, we expect a broadly similar level of organic cost growth of 2% to 3%.
Some benefits of cost actions in regions most impacted by external trends is more than offset by increased investment in consumer marketing and the continuing trend of technology dual running costs. As the longer term impacts of the crisis become clear, we'll clearly keep our options under review. And lastly, turning now FY21 modeling considerations. We expect acquisitions to add around 2% organic revenue growth for the year. We expect FX will be between a 4 percent to 5 percent headwind to EBIT growth in FY 2021, assuming current rates continue.
We expect net interest to be around $120,000,000, reflecting the lower market interest rate The benchmark tax rate is expected to be around 26% to 27% reflecting the mix of profits. Due to the ownership structure of the German Bureau, we expect full year minority interest to be around $5,000,000 to $6,000,000. And finally, taking into account the shares we issued for the consideration of the German Bureau, the weighted average number of shares is to be in the region
Great. Thanks, Lloyd. Just to wrap up, I think this has been a pretty extraordinary half year for everybody. But Experian has come through very well, delivering growth and a very strong cash flow performance. If you think our business will emerge from this crisis very strongly, And we also think we're just really at the start of some exciting new growth stories that you can see from the results today.
More broadly, the secular trends for the business like ours, we think have become more pronounced. The investments that we've made before the crisis and indeed continue during the crisis mean we're very well positioned to take advantage of these. And so while we can't say for sure precisely what the next 6 months will bring, we're very enthusiastic about where positioned, and we're very enthusiastic about the opportunities for our business ahead. And now I'm going to hand back to the operator for your questions. Which we will also be joined by our Chief Operating Officer, Kerry Williams.
You.
We do have some questions that have already come in. The first one is from Paul Sullivan from Barclays. Please go ahead.
Yes, good morning, everybody.
A couple on consumer and then one on margin from me. Firstly, can you clarify the lead gen contribution to growth in the U. S? And your thoughts on mortgage contribution to consumer in the second quarter and the sustainability into the second half. And then don't say this the wrong way, but you talked about engagement versus memberships.
And if half of America is aware of boost, why have only 5,000,000 people signed up? And then Then on margin, how do we think about the evolution from here going into next year with those cost savings kicking in? Is there any reason perhaps linked to mortgage why the U. S. Margin would reverse if the UK recovers?
And is 20% to 30% still a sensible margin target for the UK over the medium term? Thank you.
Sure. Hi, Paul. Thanks for those questions. I'll let Lloyd chip in in a second. First point about consumer services is, the lead gen business is still growing.
Actually growing strongly. And that growth has been impacted by the market environment, but I think the fact that we're able to grow, just shows strength of proposition that we have. And so that's the first question. The second bit was about engagement and sustainability. Engagement is really, really important because it's all very well to have millions of consumers as members of your form.
But if they're not engaging with the platform, the value of those consumer relationships is significantly lower. And what's been consistently happening in all of our businesses, U. S, UK and Brazil, is that engagement levels have been increasing dramatically. And that means that gives us a broader license to continue to innovate and offer propositions on the platform. We mentioned insurance in North America good example of that.
We launched that product at the start of the year, growing really, really strongly. We see that as another very exciting and huge opportunity for us to play in, where we have every right to play and already demonstrating success. And we won't take your question the wrong way, Paul. But 5,000,000 people signing up to give you access to their bank accounts is not trivial. The product that might seem like we've been talking about for a while, actually it's a little over a year and a half we introduced it and we continue to see great engagement from that.
I think as we continue to evolve the proposition. We expect to see, connections continue to escalate There's still a little bit of friction in the consumer experience. So it takes a little bit longer for people to sign up than we would like We've got a
few things to fix that.
But I think we're very happy with that. I think if the outset we would have, we'd absolutely taken that. And I think it's broader than that. I think that the proposition itself has completely changed the brand perception of experience in the market. It's given us a completely differentiated thing to talk about and it's elevated our brand proposition.
So the broader benefit of something like Experian Foods goes beyond the actual number of connections and to the sort of halo that it gives around us as a company and, and license to engage with a very broad population. So even though we only have we have 5,000,000 consumers connected, the traffic that it drives the site is very, very significant. So, overall, I think we're very happy with that. I'll hand over to Lloyd to talk about the balance of the question in terms of a split growth and, I think on the margin, UK.
Yes, I think, just on the balance of of consumable. I think it's important to take it to think about it all together. So on Boost, we ended last year with 3,000,000 connections. We're now at 5. So you can see really good progress in the first half of this year, particularly given what's been happening in the world.
And that combined with the membership base we have has meant that we've been able to continue to grow lead generation a time when our competitors are seeing that really fall off a cliff. So, the lead generation overall in the second quarter was still growing, between 30% 40% and including the introduction that we in the auto insurance marketplace during that time as well. So you stand back and you look at the performance of the consumer business, how each of the propositions are feeding off each other and compare it to the performance of the competitors, we feel really see the benefits of the investments we've made there. On margin, to bits of your question, I think. Clearly, around mortgage comes at a pretty high margin.
So next year, we'll have to find a way to lap that in North America. But equally, you're seeing, the investments that we're making in the UK to launch boost and to get the operating performance there. Improved similarly in the Air And Asia Pacific and also the investments that we've been making in consumer and positive data in Brazil. So overall, that plus the restructuring cost benefits could give us, I think, plenty of options with margin either for operating performance or for further investment next year.
Thank you. That's that's very clear. Thank you very much.
Thank you. The next question then is from Sylvia Barker from JP Please go ahead.
Good morning, everyone, and thanks for taking the questions. Maybe just going back to the margin point, just could you give us some some detail around the North American margin, within kind of consumer services, which you said has done really well and we can see the overall consumer services EBIT and margins are up quite strongly in the first half. And then on the B2B side, and if there's anything else that you can say around the profit contribution from mortgages will be quite helpful. And then secondly, on the UK, Will you see any benefits from the measures you're taking in the second half of this year already or should we only think about that as as a boost into next year. And maybe he can just talk about a little bit the second half margins this year, given we're obviously seeing some improvements in the underlying growth, but perhaps the savings are not kicking in quite yet.
And then if we think about your mortgages comments and the guidance It seems that essentially your organic was quite consistent overall. During the quarter, the group level, if you can maybe comment on that. And then mortgages seems to be still running at a decent pace or all your kind of slowdown comments are more relevant to Q4. And so I can just check that.
Okay. So maybe I'll start with the mortgage, mortgage question. So in in the second quarter, mortgage contributed, as I mentioned, 3% to group growth. It was, it was up a bit over 60% in the quarter. That's how you get to that 3% contribution.
As you look out, this quarter, clearly, there are a range of outcomes. We might see it reduce a little from that 3% more to something like 2%, but but there's clearly a range. The comments I made were mostly around the 4th quarter when we start to lap, tougher, tougher comps and where the external forecasters are suggesting that mortgages might be, a little less strong. Again, clearly a range of outcomes there. On margin.
So about 2 thirds, I would say, of the margin progress that we made in North America, it comes from the very strong position we've had in mortgage. And, that clearly comes at a higher than average margin. So we'll see that next year. But there's a range of other movements across the North America business where we've been investing. If you recall, this time last year, we have the the additional marketing spend for the boost launch in North America.
And we've actually overspent or spend over that elevated level this year given the positive trends that we've had in that business. For the UK, we, the majority of the benefit of the restructuring program in the UK and EMEA Asia Pacific will flow next year. There's a little bit in the second half, but the majority is is next year. And then I think, 2nd half margin, yeah, the, clearly, the revenue drops the elevated revenue drops we had in the first quarter really weighed on first half margin. So, you'd expect an operating margin that's more approaching the prior year in the second half.
So an approved position for the full year as a whole as opposed to the first half. And that's, that's in line with that 2% to 3% cost guidance that we've given. So hopefully that's clear, Sylvia.
Thank
you. The next question then is from Brett Huff from Stephens Inc. Please go ahead.
Good morning, guys. Congrats on a nice quarter.
Two questions from me. I did some quick math on the Brazil consumer, because I think this is maybe the first time you've explicitly broken it out. You said 1% of group revenue. And if we just assume sort of a $5,000,000,000 kind of full year, that gets you some of like $50,000,000. And then, the North American consumer business is at about $1,000,000,000 give or take.
As we think about Brazil and it getting bigger how should we compare that to that North American $1,000,000,000 over time?
So, clearly, we're, we're really excited about the potential of the Brazilian consumer business just at the point when positive data is becoming available in that market to have our brands and the IP in our consumer products to be able to bring to that market, we're pretty excited we sized the opportunity about a year ago by saying we thought we could develop a consumer business of several 100 of 1,000,000 of dollars. Clearly, we're well on our way, to maybe to the first 100,000,000 FX has been a bit of a drag for us against that, but you can see the progress we're making, but that's the sort of sizing we put on it.
Okay. And then second question is, as we're thinking about the marketing spend, I've seen a lot more of your boost adds on TV. So, I'm definitely receiving the message. So it's working. When you think about the like the LTV, the customer acquisition costs or other metrics like that.
How much more gas can you put on that fire and still have a, compelling LTV to CAC range? Or how do you guys think about that?
Yes. So we monitor that really closely, and the complexity in it, Brett, that we're, we're learning as we develop the diversification in our businesses, the extent to which we get, cross sell from one customer acquisition channel, into other products with a lifetime value. And that's the area that we've been, I think, super surprised over the last year to 18 months, as we've seen that boost membership and that boost traffic come in, the ability to convert that into other products into lead generation or credit on auto insurance and identity. So the you have to think about the holistic lifetime value across the whole diversity of products. And, we watch that really, really closely.
Yes, Brad. One other thing I would add to to what Lloyd said is, the marketing spend is very deliberate. It does give you an immediate return, as you can see, actually in the results. But I think what's more significant is some of the brand metrics that we put up in the presentation because We know that continuing to invest in this isn't just a 1 year payoff. This will payoff for many years to come because you just sort of embed the in the minds of the consumer, the brand name and the propositions, and that gives you a very significant long term benefit.
So I think we see this as both tactical, as well as very strategic and I think we're pretty happy with some of the metrics that we put up on the presentation earlier.
The next question then is from Rajesh Kumar from HSBC. Please go ahead.
Good morning. Thanks for taking the questions. First is when you think about boost and your consumer business in the medium term, obviously, you have to inform the business there is a lot of great growth opportunity but we have seen some incremental noise around data regulations Could you share your thinking on the subject in terms of how you are going to strategically position yourself in North America, UK and Brazil. The second one is on the restructuring expense. Can you run us through how much of the expenses will be cash expense this year and how much of it is basically a provision that can be used up next?
Thanks, Rajesh. I'll deal with the first one of those. On the consumer services business, I think you have to think back really to the original incarnation of what we set out to do strategically here. We set out to use our position as a credit bureau to develop propositions, which demonstrated the value that we bring to consumers more broadly. And so entry point of view.
This is exactly in line with where regulators all over the world want to see a business like ours going, which is, 1st of all, it's consumer consented because every consumer that we have as a member has signed up to be a member and has agreed to the use of data in accordance with the terms we set out. Not only that, they're actually we know this from the interaction. They're really, let's say, happy to see that their data is being used. To enable them to get better outcomes. And that's the key point.
So I think this is completely compliance from the direction of travel of where we see regulation going. It puts control back into the hands of consumers. It gives them more information more ability to influence outcomes for them. And I think the reaction we get from consumers is very, very strong. So I think that's, in terms of the future of the business, I think we were very excited about it because not only have we proven the ability to grow business in the verticals that we've dealt so far, we've given us a broad license to continue to innovate in different parts consumer's lives.
And I think as we move forward, you'll see us branch into other areas of significant spend. On the restructuring,
Rajesh, the the $50,000,000 will be, mostly cash this year. So vast majority is cash expense and it's cash this year. And just to outline, these are These are changes that aren't really COVID related. They're focused on areas of the business that we targeted for improvement before we saw the pandemic, so improving the UK business, as we outlined pretty heavily last year and also improving the focus in the EMEA and Asia specific region. So that, that combined is where we're targeting this and it's cash costs.
Thank you. The next question then is from George Gregory from Exane BNP Paribas. Please go ahead.
Good morning, everyone. I had 3 questions, please. Firstly, just just following up on the earlier questions on consumer, just keen to understand how we should think about the phasing next year, as we comp against the very strong growth in, in both North America and Latin America and consumer. Any sort of rough sense of how much of that in each business should or might drop away, due to the sort of mortgage dynamic in North America and debt reconciliation Brazil? And secondly, I wondered if you could elaborate on what exactly you're doing to your technology estate in the UK a bit.
And finally, on the related topic, thanks for your ESG comments. I just wondered, to what extent you'd consider accelerating the migration of your data estate to the cloud? In order to benefit from the, the energy efficient architectures of some of the cloud vendors. Thanks.
So I think, Lloyd, would you take the question on Consumer? And then we'll hand it over to Carrie to address the technology question in the UK and, and the broader cloud point.
Yes, I think obviously, next year is quite a way away and there's quite a lot of, variability in markets. Clearly where we've seen strength this year, we'll need to lap that. I think the Brazil opportunity is large. So whilst we might see the percentage growth rate, reduce, nominally, we would hope to continue to progress that business. With a similar contribution.
And we're pretty excited about the opportunities to diversification, in the North America consumer market. So lots of exciting ideas. So I think we'll probably give you a bit more George in May. But we have, a lot of ambition for our consumer business given the investments and the strategic muscle we've been putting behind that. On technology in the UK, maybe Carrie wanted to come in for that.
Yes, hi. Good morning, everyone. So on the technology estate in the UK, you break it down into two pieces. On the consumer side, we're well progressed on our technology transformation. We've already, brought in and are live on our, what we internally call our Corvette platform, which was created in the U.
S. And so we were able to bring that over to the UK and you've seen innovations starting to now come off of that new technology capability in the form of launching boost in the UK market. So we're, we're well progressed on new technology in the consumer business in the UK. We're now turning our attention to the B2B Estate in the UK, which is a arguably significantly more complex and a larger technology estate than consumer business was. And we're starting, we're starting down that journey.
So this is, in the early days a technology perspective in the UK. In terms of the question around, migrating data to the cloud, We have been doing that for some time now. We've been leveraging the cloud capabilities, particularly in our consumer businesses, for several years. And then our customers on the B2B side, there are still some customers that would prefer not to have their data in the cloud. And so what we've done with our technology vision and roadmap going forward as we have the ability to either host data in the cloud or host it within our facilities or at a third party location or even on prem at the at the customer site.
So we're very flexible about where we, store the data in the cloud or elsewhere. And, each one of those decisions as we bring up a new technology platform, is made based on the needs of the customer's operating efficiency and the flexibility in the platform that we want to get to. So it's a, it's an opportunity for us for sure to continue that migration, but there's also some desire from some customers to not have data in the cloud. And we manage that on a geography and customer basis. I'll stop there.
Thank you. The next question then is from Andy Grobler from Credit Suisse. Please go ahead.
Hi, good morning. Just a couple from me if I may Firstly, on, well, actually both really on Latin America. From a margin perspective, as that consumer business in Latin America really grows up to 100 of 1,000,000, hopefully. What level of margin should we expect? Is it going to be similar to the broader B2C group, group margin or or above that within, within Brazil.
And then secondly, you talked about product launches from positive data into Brazil. Can you just talk a bit more about what which products have been launched and what momentum you are expect into the second half. And I guess over the next 18 months as those products begin to to get that momentum. Thank you very much.
Hi, Andy. So just on the clarification on the product launches, I think we said that the product launches related to COVID were brought across the portfolio, really, not specifically Brazil, though we do have products in Brazil like anywhere else. I think the bigger story in Brazil, over the last year, really has been positive data and that's where the big focus is. So I'm going to ask Keri really to talk a little bit about that. And then ask Lloyd to address the LatAm margin expansion question.
So, Kerry, do you want to address the product 1 first?
Yes. Yes, sure. So, Andy, as you would imagine, we, started with the path of least resistance, and the greatest demand in the marketplace. And that would be around scores and reports. So, scores around positive data were the first product into the market.
That's part of the 15 products that we that were referenced in Brian's overview of the business. And so we continue to look at other areas we're moving, into the triggers world, which has had great success in other areas with positive data. We've launched ASCEND, as Brian referenced, in the Brazil market and ascend now with positive data becomes highly desirable in the Brazil market as opposed to just in a negative paid environment. So really, the initial roadmaps for us have been around scores and reports, attributes in the marketplace. We're moving towards triggers and obviously, ascend and then all of the capabilities that we do at ASCEND, whether it's the analytics, marketing capabilities or, other capabilities that we hang off of the ASCEND platform.
That's the immediate focus.
And, Kerry, can I ask, in terms of incremental revenues from those products, I know it's difficult to be precise, but over the next 18 months, couple of years, what could we expect from those to data products?
Question, Andy. Thank you.
Yes. I think we, we think of, our deposited data products, it really is integrated proposition. So, we sell them differently across different clients. So we only call out the the separate revenue that we expect that to bring, but clearly positive data is going to be a tailwind, not just in terms of the products we sell, but the feed through of what that will do to availability in the market, which then broadens our end market. So, not specific answer, but we expect it to be a continual tailwind for quite a number of years.
On the on margin, two ways I guess to answer this. So if you look at the Latin America business without our consumer business, the margin would be about 4 points higher. So you can see the effect of the investment that we've been putting into the consumer business. We've always said we think a consumer business at maturity can generator margin of something around the mid 20s. And of course, if you look at North America, we're currently beating that and that business pays a royalty fee to the consumer bureaus.
So it's actually accretive to group margins. So that gives you a sense of where a mature market could get to. Clearly we're a long way from that in Latin America and we're really, developing our market position. It's really clear. If you carve out a relationship with consumers and be the leading brand, which we are today and we're investing behind there's a long runway then that you can monetize behind that.
And that's what we're pretty excited about.
Thank you very much.
Thank you. The next question then is from Anvesh Agrawal from Morgan Stanley. Please go ahead.
Hi, good morning. I've just a couple of questions. On the boost clearly, I was wondering, like, once I consumer sort of receives the higher credit score through Boost, can he or she go to, let's say, retailer or a bank to say that please use my Experian Boost score? Because if that is the case then in that, you obviously got tailwind on the B2B side of the business as well rather than just on the B2C side or consumer don't really have that power in terms of what credit score is being used by the finances? And then second, just a clarification, like, how much is the double running cost on the IT done and when should we expect it to end?
Thank you.
Okay. And just on the boost proposition, the way we've designed Boost is that it becomes an integral part of the credit pool. So the lenders don't have to do anything to accept the boosted score. They do have to decide to use it. So as bigger part of the proposition to the as the proposition to the consumers is convincing the panels of lenders to make products available using the boosted score.
That does take some time, but we now have a fairly significant panel of products, which are being made available to U. S. Consumers with the boosted proposition. So people get really get different and better offers when they boost their score. And in the UK, And we've launched it last week.
We were very adamant that we would launch with propositions in market whereas consumers actually were able to boost the score. They would see an enhanced proposition. Obviously, that starts off with a limited number of offers and we believe over time, as we saw in the U. S, that will extend as people get more and more comfortable. So it's very much a two way proposition But the key is that the it's seamless.
So as once the consumer boosts, the information is available for you lenders. And they don't really have to do anything else, but just consume the data. That's, you would put a lot of thought and effort into design of the product that way. And just a final point really, we've only been in market 5 days in the UK we already have 100,000 people in the UK who've signed up for the who have boosted their score through the platform. So in 1 week, I think you can see the kind of impact that we can have in markets.
On Amish, on the dual running costs, I called this out. I know some of our larger competitors, report this separately outside of their benchmark operating profits. I called it out because it's in our base P and L. And one of the reasons, we continue to put it out, it's almost impossible to clearly identify exactly what is a dual running costs. As we move to the cloud, we've clearly got existing fixed investment and fixed running costs with spare capacity on our owned infrastructure.
So you've got that dual running as you then paying for cloud, related services. It's significant. It's tens of 1,000,000 of dollars a year, but, not, identifiable with a degree of a precision to call it out as an exact number.
Yes, but maybe just like in terms of when it should expect it to end, if not the exact number, like does it continue next year as well or beyond that?
Yes. So I mean, our transition to cloud is a multi year project. So this would take us another 3 to 4 years in total to be completely So it's not a short term effect.
Thank you. And that was the end of the question queue.
All right. Well, thank you very much everybody. That concludes today's session. Thanks for joining. Wish you all good day and look forward to speaking to you again in the future.
Thank you. Then does conclude the call for today. You may now disconnect. Thanks for joining, and have a very good day.