Half Yearly Report

RNS Number : 4852Q

Moneysupermarket.com Group PLC

04 August 2010

 



4 August  2010

Moneysupermarket.com Group PLC interim results
for the six months to 30 June 2010

Moneysupermarket.com Group PLC ("Moneysupermarket.com" or the "Company"), the UK's leading price comparison website, announces its preliminary results for the 6 months to 30 June 2010. 

Financial highlights	Six Months Ended June 2010	Six Months Ended June 2009	Change
Group Revenue	£71.6m	£68.5m	4%
Gross Margin	£51.1m	£47.7m	7%
Adjusted EBITDA (1)	£18.1m	£18.6m	-3%
Statutory profit after tax	£2.0m	£0.7m	187%
Cash balance	£28.3m	£75.6m	-63%
Dividend for the period	1.3p	1.3p	-

Financial highlights

·      Strong financial results and cash generation

·      Investment programme increased in the first half of the year in both product and brand building

·      Total revenue of £71.6m (2009: £68.5m)

·      UK internet revenues 6% ahead of the same period last year

·      UK internet revenues excluding Travelsupermarket 10% ahead

·      Adjusted EBITDA of £18.1m (2009: £18.6m) with profitability improving throughout the course of the first half

·      Gross margin increased to 71.4% (2009: 69.7%)

·      Cash balances of £28.3m (2009: £75.6m) at the period end after returning £67.8m of cash to shareholders in the period from 1 July 2009 to 30 June 2010. The Group remains highly cash generative, converting 94% of EBITDA to cash 

·      Interim dividend held at 1.3p per share

Operational highlights

·      Significant improvements to the website in look and feel and usability improving revenues

·      New credit card channel launched January 2010

·      New motor insurance channel launched February 2010

·      New home insurance beta June 2010

·      New savings channel June 2010

·      New mobile vouchers application launched June 2010

·      150,000 plus downloads so far

·      In top 15 free lifestyle apps having held number one position during July

·      Market-leading position and market share maintained

·      Brand proposition strengthened with a new television advertising campaign in Money, Home & Motor Insurance and a move into radio advertising

·      Visitors to moneysupermarket.com up 3%

·      Visitors to travelsupermarket.com down 4% as business was managed for margin ahead of second-half plan to redevelop Travel vertical

·      Board further strengthened with the appointment of Bruce Carnegie-Brown as non-executive director

Outlook

Group trading in July has been broadly in line with the first half of the year, with Travel improving slightly. As indicated, the Group anticipates that its cost base in the second half will be lower than the first half of the year, with reduced spending on third party contractor resource as skills have been transferred in-house and lower marketing spend, with the cost of creative reduced now the advertising campaigns are well established.  

While the outlook for the consumer economy remains uncertain, we believe our focused determination to help every household make the most of their money leaves us well placed to continue to make good progress. Overall our trading outlook for the full year remains in line with the Board's expectations.

Peter Plumb, Chief Executive Officer of moneysupermarket.com, said:

"moneysupermarket.com has delivered a strong performance in the first half as we started to reap the benefits of the targeted investments  made in both our site and our marketing. Our brand is stronger and we are delivering on our aim of helping every household make the most of their money.

"Our customers tell us that we have the best site for core insurance and credit card products - and we have exciting plans to keep up this momentum in the second half. Launches will include new Home Insurance and Savings channels, along with a mobile application for our vouchers site. We are developing an investment plan designed to deliver a stronger offer on travelsupermarket.com, which has weathered a tough time in an extremely challenging environment.

"Looking ahead, in spite of the on-going economic uncertainties, we believe the business is well placed to continue to make good progress."

- ends -

Results presentation

There will be a presentation for investors and analysts at UBS Offices, 1 Finsbury Avenue, London, EC2M 2PP at 9.30am this morning.  The presentation will be streamed live: visit http://corporate.moneysupermarket.com/ to register and listen.

For further information, contact:

Paul Doughty, Chief Financial Officer, moneysupermarket.com

Tel:  [phone]

Susanna Voyle or Tom Murray, Tulchan Group

Tel: [phone]

Financial and Business Review

The Group has presented below an extract of the Consolidated Statement of Comprehensive Income for the six months ended 30 June 2010 and 30 June 2009 along with a reconciliation to adjusted EBITDA. Revenue for the six months ended 30 June 2010 was £71.6m (2009: £68.5m) which generated a reported operating profit of £2.7m (2009: £1.4m). The Directors believe that the presentation of an adjusted EBITDA measure will allow users of the financial information to gain a better understanding of the underlying performance of the business.

Extract of Consolidated Statement of Comprehensive Income

for the six months ended  30 June 2010

	6 months ended     30 June 2010	6 months ended     30 June 2009
	£000	£000
Revenue	71,594	68,521
Cost of sales	(20,478)	(20,784)
Gross profit	51,116	47,737
Distribution expenses	(11,441)	(9,284)
Administrative expenses - excluding Directors' and senior managers' share based compensation	(35,995)	(34,575)
Administrative expenses - Directors' and senior managers' share based compensation and related costs	(933)	(2,528)
Administrative expenses	(36,928)	(37,103)
Profit from operating activities	2,747	1,350
Reconciliation to adjusted EBITDA:
Profit from operating activities	2,747	1,350
Pre IPO share based compensation	403	2,576
Amortisation of intangible assets	12,537	12,600
Depreciation	2,390	2,032
Adjusted EBITDA	18,077	18,558
Adjusted earnings per ordinary share:
- basic (p)	2.3	2.4
- diluted (p)	2.2	2.4
Normal earnings per ordinary share:
- basic (p)	0.4	0.2
- diluted (p)	0.4	0.2

Notes

1. Basis of Preparation

The results show the trading results for the six months ended 30 June 2010 and 30 June 2009. The following adjustments

have been made in arriving at adjusted  EBITDA:

·          The acquisition of Moneysupermarket.com Financial Group Limited by the Company gave rise to £207.2m of intangible assets. These are to be written off over a period of 3-10 years with a charge of £25.2m per annum to be recorded in each of the first three years post acquisition. Charges of £12.5m and £12.6m have been included for the six months ended 30 June 2010 and 2009 respectively.

·          Certain share option charges relating to Directors, senior management and other employees of the Group arising from the time the Group listed or when it was privately owned have been added back to calculate adjusted EBITDA.  A charge for awards made under the Group's Long Term Incentive Plan is included within the adjusted results for  2009 and 2010.

Reference is made in the Overview and Financial Highlights sections to adjusted cost base, adjusted distribution and administration expenses, and adjusted staff costs.  These measures represent the costs charged to the Statement of Comprehensive Income, less the intangible amortisation and pre-listing share option charges.

Overview

We present a solid set of financial results for the six months ended 30 June 2010. Revenue for the six months was £71.6m (2009: £68.5m) generating adjusted EBITDA of £18.1m (2009: £18.6m).

During the first half of 2010 the Group has continued to focus on and invest in developing and enhancing its existing product portfolio while continuing to develop its brand, building on the momentum of the second half of 2009.

Significant product enhancements have been delivered in the period, including new credit cards and savings channels in the Money vertical, new motor and home insurance channels in the Insurance vertical and the launch of a new mobile application for vouchers. The adoption of new agile software development methodologies by the Group has enabled the business to increase its development velocity significantly and this will provide a solid platform for the Group moving forward. The Group invested an additional £1.3m in third party resource over the course of the first half of 2010 to support these efforts relative to the same period last year. However it is expected that these costs will be substantially reduced in the second half of the year as the skill sets and methodologies to support 'agile' become more intrinsic to the organisation.

The Group has continued to develop its brand proposition launching new television advertising creative around the concept of a 'Haggle Hero' for typically negotiation-shy British consumers featuring comedian Omid Djalili. The series of advertisements, which have featured across both the Money and Insurance verticals, have been successful in extending the Group's reach with consumers outside the motor insurance channel. This has in part helped the Group increase its gross margins as the proportion of direct to site revenues increased as detailed below.  The Group invested an additional £2.3m in its media campaign both in media and creative to build and establish the campaign. The Group anticipates a broadly similar level of investment in the second half of 2010 in its media campaigns.

Financial Performance

Revenue increased by 4% to £71.6m (2009: £68.5m) and adjusted EBITDA fell by 3% to £18.1m (2009: £18.6m). The Group saw revenue growth in its Money, Insurance and Home Services verticals of approximately 10% against the same period last year whilst revenues in the Travel vertical declined by 20% in difficult market conditions as the business continued to be managed for margin. The Group maintained its dominant market share in financial services measured by Experian Hitwise against its key competitor set.

Group gross margins at 71.4% improved by more than 1.7 percentage points over last year. The underlying increase was higher at 2.9 percentage points with gross margins in the first half of 2009 benefiting from an accrual release of £0.8m within cost of sales following the resolution of a dispute with a portal partner during the period. The Group improved its proportion of direct to site revenue in the year whilst reducing its reliance on Google paid search. Direct to site revenues improved to represent 67% of revenue (2009: 62%) whilst Google paid search represented 22% of revenue in the first half of 2010 (2009: 26%). This improvement has in part been supported by the new television advertising campaign featuring Omid Djalili.

The adjusted administrative and distribution cost base increased by 14% from £31.2m to £35.4m in the first half of 2010. Distribution expenses increased by £2.2m over the prior year driven by increased spend on creative costs and media. The Group increased its presence or share of voice on television broadcast media relative to its competitor set during the period as it launched the new campaign.

Adjusted administrative costs increased by £2.1m (10%) over the prior year from £21.9m in H1 2009 to £24.0m in 2010. Adjusted staff costs (including contract resource) increased by 5% from £13.2m to £13.8m.

The Group invested approximately £1.4m in the first half of 2010 in flexible resource to improve its core technology and product and made a number of significant releases to its product set throughout the first half of 2010. Underlying headcount costs decreased by £0.8m after adjusting for £0.5m of reorganisation costs in the first half of 2009 relating to headcount reductions made across the business in April 2009, and the changes to share based compensation charges referred to below. Headcount decreased from 476 to 427 from June 2009 to June 2010 as the Group has continued to manage its cost base tightly. Charges for post IPO share based payments increased by £0.5m reflecting a full six months charge for the 2009 LTIP scheme issued in April 2009 and three months charge for the 2010 scheme.

Other costs, including irrecoverable VAT, increased by £1.0m over last year. The VAT rate returned to 17.5% from 15% in the same period last year increasing the input tax incurred by the business and therefore the quantum that was irrecoverable.

The Group incurred a loss of £0.6m in Germany in the first half of 2010 (2009: loss of £1.3m). As previously announced, following a review of its German business, the Group took the decision to close the German operation and all costs associated with this activity have been recognised in the first half of 2010.

Adjusted EBITDA margins declined from 27% to 25% against the same period last year reflecting the levels of increased investment detailed above, with profitability improving in the second quarter as the Group began to see the benefits of some of the investments made in the second half of last year and in the first quarter of 2010.

The Group operates its internet business across four vertical markets. These are discussed below:

	Revenue
	6 months to 30 June 2010		6 months to 30 June 2009
	£000	%	£000	%
Money	20,673	29	18,585	27
Insurance	40,590	57	37,143	54
Travel	7,543	10	9,478	14
Home Services	2,633	4	2,414	4
Total Internet UK	71,439	100	67,620	99
Germany	130	0	158	0
Total Internet	71,569	100	67,778	99
Intermediary	25	0	743	1
Total	71,594	100	68,521	100

Internet business

The Directors use key performance indicators ('KPIs') to assess the performance of the internet business against the Group's strategy. These are reviewed on a regular basis. The principal KPIs for the internet business are as follows:

Visitors

The Group measures the number of visitors to its websites as the number of unique visitors per day per channel, measured on a cumulative basis using cookie-based tracking methodologies.

Transactions

The Group measures transactions at the point in time that the customer leaves the Group's websites having clicked through to a third party website, or in some cases having completed an application form hosted on the Group's websites.

Revenue per visitor ('RPV')

The Group measures the total revenue (including click and other internet revenue) divided by the number of visitors defined above.

Revenue per transaction ('RPT')

The Group measures the click based revenue divided by the total number of transactions defined above.

The relative performance of each of the internet verticals is discussed below:

Money

The Money vertical offers customers the ability to search for, and compare, products for, amongst other things, credit cards, current accounts, mortgages, loans, debt solutions, savings accounts and business finance. It also includes elements of the Group's lead business (PAA) and advisory business (MCAT) together with advertising revenue that is derived from financial products.

The KPIs for the Money vertical are shown below:

	6 months to 30 June 2010	6 months to 30 June 2009	Change
Visitors (000)	17,301	19,116	-9%
Transactions (000)	6,544	5,846	12%
Revenue (£000) - click based revenue	17,916	15,750	14%
Revenue (£000) - other	2,757	2,835	-3%
Revenue (£000) - total	20,673	18,585	11%
RPV	£1.19	£0.97	23%
RPT	£2.74	£2.69	2%

Total revenue in the Money vertical increased by 11% from £18.6m to £20.7m and click based revenue by 14% from £15.8m to £17.9m. Visitors were 9% lower. The visitor count for the first half of 2009, and in particular the first quarter of 2009, to the Group's savings channels were buoyed by the financial uncertainty that existed following the collapse of a number of financial institutions. The economic backdrop for the first half of 2010, although challenging, has been significantly more benign and underlying visitor levels have generally returned to a more normalised base.

Trading in the Money vertical was strong relative to the same period last year. Conditions in the credit markets in which the Group operates improved over the same period last year and were at least consistent with the second half of 2009. Trading in credit products, defined as total revenue from secured and unsecured loans, credit cards, debt solutions and mortgages excluding impression based advertising revenue was approximately 22% ahead of the same period last year. Credit card revenues in particular were very strong.

Revenue from other banking products, particularly savings accounts, was weaker against a tough comparator period. Savings revenue increased significantly in the first quarter of 2009 as financial institutions sought to bolster their balance sheets through retail deposits.   The change in sales mix towards credit based products, which generate higher transaction revenue, away from general banking products increased RPT and RPV in the first half of 2010 against the same period last year.

Other revenue, which includes revenue from leads, commission based sales through MCAT for mortgages and loans, and advertising revenue was broadly flat.

Insurance

The Insurance vertical offers customers the ability to search for, and compare, insurance products for, amongst other things, breakdown, dental, home, life, medical, mortgage payment protection, motor, payment protection, pet and travel insurance. It also includes elements of the Group's lead business (PAA) and advisory business (MCAT) together with advertising revenue that is derived from insurance products. 

The KPIs for the Insurance vertical are shown below:

	6 months to 30 June 2010	6 months to 30 June 2009	Change
Visitors (000)	12,640	12,134	4%
Transactions (000)	7,066	6,782	4%
Revenue (£000) - click based revenue	37,543	33,695	11%
Revenue (£000) - other	3,047	3,448	-12%
Revenue (£000) - total	40,590	37,143	9%
RPV	£3.21	£3.06	5%
RPT	£5.31	£4.97	7%

Revenues in the Insurance vertical increased by 9% from £37.1m to £40.6m. Transaction revenue increased by 11% from £33.7m to £37.5m.

Revenues in each of the three major lines of business, being motor, home and travel insurance, were ahead of the same period last year with motor performing particularly well. The motor channel was redeveloped during the first quarter of the year with a focus on improving usability for the customer. This has been reflected in improved provider conversion in the period, increasing revenues and RPV. A new home insurance site is being beta tested and will be released fully to the live environment in the third quarter this year.

Other revenue declined by £0.4m driven by lower advertising revenue.  This was due to a continued deliberate reduction in the advertising real estate made available to advertisers following the site redesign in the first quarter with the aim of continuing to improve the customer experience of using the website, in line with our brand building strategy.

Travel

The Travel vertical offers customers the ability to search for, and compare, amongst other things, car hire, flights, hotels and package holidays.

The KPIs for the Travel vertical are shown below:

	6 months to 30 June 2010	6 months to 30 June 2009	Change
Visitors (000)	19,991	23,959	-17%
Transactions (000)	12,539	17,014	-26%
Revenue (£000) - click based revenue	6,804	8,530	-20%
Revenue (£000) - other	739	948	-22%
Revenue (£000) - total	7,543	9,478	-20%
RPV	£0.38	£0.40	-5%
RPT	£0.54	£0.50	8%

Revenue in the Travel vertical fell by 20% from £9.5m to £7.5m. Transaction revenue declined by 20% from £8.5m to £6.8m. Visitor levels declined by 17% compared to the same period last year whilst RPV remained broadly flat. 

In what remains a challenging market, with consumers managing discretionary expenditure tightly, the Group has continued to manage the business for margin in the first half of the year and in particular has minimised its marketing costs. Consequently visitors to most channels within the Travel vertical were lower than in the same period last year.

The Group intends in the short term to continue to manage the Travel vertical in a similar manner. However in the second half of the year the Group will focus some of its development resource in improving the product proposition in a number of the Travel channels to ensure that it remains well placed to compete when the travel markets in which it operates return to more normal levels of activity.

Home Services

The Home Services vertical offers customers the ability to search for, and compare, products for broadband, mobile telephones, vouchers, shopping and utilities.

The KPIs for the Home Services vertical are shown below:

	6 months to 30 June 2010	6 months to 30 June 2009	Change
Visitors (000)	10,896	8,432	29%
Transactions (000)	3,475	1,926	80%
Revenue (£000) - click based revenue	2,432	2,343	4%
Revenue (£000) - other	201	71	183%
Revenue (£000) - total	2,633	2,414	9%
RPV	£0.24	£0.29	-16%
RPT	£0.70	£1.22	-43%

Revenue in the Home Services vertical increased by 9% from £2.4m to £2.6m in the six months to 30 June 2010. This was driven largely by an increase in revenues from the utilities channel which represents the Group's largest line of business within the Home Services vertical.

Visitors grew by 29%, predominantly to the shopping and vouchers channels which are high volume but low transaction value channels. This has reduced both RPV and RPT over the same period last year.

Cash Balance and Dividend

As at 30 June 2010 the Group had a cash balance of £28.3m (2009: £75.6m). The Group continued to strengthen its cash position throughout the period after payment of dividends of£36.2m in the first six months of the year. Having reviewed the cash required by the business and the performance of the Group, the Board has decided to pay an interim dividend of 1.3p per ordinary share, equivalent to the interim dividend paid in 2009.

The Board is therefore declaring an interim dividend of 1.3p per ordinary share (£6.6m in aggregate). The ex-dividend date is 18 August 2010, with a record date of 20 August 2010 and a payment date of 17 September 2010. Shareholders have the opportunity to elect to reinvest their cash dividend and purchase existing shares in the Company through a Dividend Reinvestment Plan.

Earnings per ordinary share

Basic statutory earnings per ordinary share for the six months to 30 June 2010 was 0.4p (2009: 0.2p). Adjusted basic earnings per ordinary share decreased from 2.4p to 2.3p per share. The adjusted earnings per ordinary share is based on profit before tax after adding back intangible amortisation and share-based payment charges arising from pre-listing share options. A tax rate of 28% (2009: 28%) has been applied to calculate adjusted profit after tax.

Outlook

Group trading in July has been broadly in line with the first half of the year, with Travel improving slightly. As indicated, the Group anticipates that its cost base in the second half will be lower than the first half of the year, with reduced spending on third party contractor resource as skills have been transferred in-house and lower marketing spend, with the cost of creative reduced now the advertising campaigns are well established.

While the outlook for the consumer economy remains uncertain, we believe our focused determination to help every household make the most of their money leaves us well placed to continue to make good progress. Overall our trading outlook for the full year remains in line with the Board's expectations.

Responsibility statement of the Directors in respect of the half-yearly financial report

Each of the Directors, whose names and functions are listed below, confirms that, to the best of his knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU

• the interim management report includes a fair review of the information required by:

(a)  DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b)  DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last annual report that could do so.

Name	Function
Gerald Corbett	Chairman
Simon Nixon	Deputy Chairman
Peter Plumb	Chief Executive Officer
Paul Doughty	Chief Financial Officer
David Osborne	Marketing Director
Graham Donoghue	Managing Director, Insurance, Home Services and Travel
Michael Wemms	Senior Independent Non-Executive Director
Rob Rowley	Non-Executive Director
Bruce Carnegie-Brown	Non-Executive Director

3 August 2010

Principal Risks and Uncertainties

Set out below is a summary of the principal risks and uncertainties facing the Group for the remaining six months of the year.

Financial risks

Significant worsening in credit markets

Financial institutions may reduce the quantum of lending and tighten their acceptance criteria for customers seeking to obtain credit. This may reduce Group revenue. Providers may increase their focus on customer retention rather than acquisition. This may reduce commissions available to price comparison websites.

Reduction of providers

Providers may consolidate, withdraw their products from price comparison websites or reduce their customer acquisition activity via price comparison websites. This may reduce competition for business, customer choice, Group revenue and the customer proposition of price comparison websites.

Investment in new areas

Significant capital invested in new products and services may fail to make a return.

Financial services and other markets regulation and taxation

The business model in financial services or other lines of business may be compromised by changes to existing regulation or the introduction of new regulation, or changes to the tax legislation, particularly value added tax.

Operational risks

Competitive environment

Loss of market share and erosion of margins from increased competition.

Brand perception

Reduction in customer loyalty with existing customers and an inability to attract new customers if the business fails to maintain its position as a leading price comparison website or if its reputation is negatively impacted by any event.

Capacity and functionality of IT and systems infrastructure

Failure to provide adequate service levels to customers or maintain revenue generating services.

Loss of key management

Loss of key management resulting in a lack of necessary expertise or continuity to execute strategy.

Reliance on search engine natural listings

Reduction in gross margin through reduction in revenue derived from search engine optimisation activities.

Economic environment

Reduction in visitors and revenue from a recession as customers seek to reduce levels of discretionary expenditure.

Technology investment and product innovation

Failure to invest in new technologies or to focus on new and emerging opportunities that meet the changing demands and needs of customers.

Independent Review Report To Moneysupermarket.com Group PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Changes in Equity, Condensed Consolidated Cash Flow Statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Stuart Burdass

for and on behalf of KPMG Audit Plc

Chartered Accountants
St James' Square

Manchester, M2 6DS

3 August 2010

Condensed Consolidated Statement of Comprehensive Income

				6 months to	6 months to
				30 June	30 June
	Note			2010	2009
				£000	£000
Revenue	4			71,594	68,521
Cost of sales				(20,478)	(20,784)
Gross profit				51,116	47,737
Distribution expenses				(11,441)	(9,284)
Administrative expenses				(36,928)	(37,103)
Results from operating activities				2,747	1,350
Financial income				151	581
Financial expense				-	-
				_______	_______
Net finance income				151	581
Profit before income tax				2,898	1,931
Income tax expense	5			(924)	(1,244)
Profit for the period				1,974	687
				_______	_______
Other comprehensive income:
Foreign currency translation				12	(48)
Deferred tax on share-based payments				-	(49)
				_______	_______
Other comprehensive income for the period				12	(97)
				_______	_______
Total comprehensive income for the period				1,986	590
				_______	_______
Profit attributable to:
Equity holders of the Company				1,974	794
Non-controlling interest				-	(107)
				_______	_______
Profit for the period				1,974	687
				_______	_______
Total comprehensive income attributable to:
Equity holders of the Company				1,986	702
Non-controlling interest				-	(112)
				_______	_______
Total comprehensive income for the period				1,986	590
				_______	_______
Adjusted EBITDA:
Operating profit above Share based compensation relating to pre IPO options				2,747 403	1,350 2,576
Amortisation of intangibles Depreciation				12,537 2,390	12,600 2,032
				_______	_______
Adjusted EBITDA				18,077	18,588
				_______
Earnings per share:
Basic earnings per ordinary share (pence) Diluted earnings per ordinary share (pence)	6 6			0.4 0.4	0.2 0.2

Notes

Basis of Preparation

The adjusted results show the trading results for the 6 months ended 30 June 2009 and 30 June 2010.  The board regards an adjusted EBITDA figure as being the most meaningful profit measure for this period. The following adjustments have been made to the Condensed Consolidated Statement Of Comprehensive Income:

·      The acquisition of Moneysupermarket.com Financial Group Limited by the Company gave rise to £207.2m of intangible assets. These are to be written off over a period of 3-10 years with a charge of £25.2m per annum to be recorded in each of the first three years. This has been shown within administrative expenses as a charge of £12.6m and £12.5m respectively in the 2009 and 2010 Condensed Consolidated Statements Of Comprehensive Income.

·      Certain share option charges relating to Directors, senior management and other employees of the Group have been added back to calculate adjusted EBITDA.  Prior to the acquisition of Moneysupermarket.com Financial Group Limited by the Company, Moneysupermarket.com Financial Group Limited issued share options to employees on terms that will not be offered moving forward. In line with the intentions outlined in the prospectus issued in connection with the listing of Moneysupermarket.com on 31 July 2007, Simon Nixon entered into agreements on 25 February 2009 with Paul Doughty and others to provide an additional option incentive scheme. Options vested in full on 4 August 2009 and became exercisable from that date. There will be no further charges recorded in the Condensed Consolidated Statement Of Comprehensive Income after this date relating to this scheme. On Listing, the Company also issued 'free' shares to the value of £3,000 as a 'bonus' to each eligible employee as part of its Share Incentive Plan scheme.  On Listing, the Company also entered into an agreement with Gerald Corbett under which Gerald Corbett purchased 117,647 ordinary shares in the Company, and provided he completed 3 years service as Chairman of the Company from Listing and he retained those ordinary shares he purchased, he would be entitled to subscribe at nominal value for 235,294 ordinary shares in the Company.  The Company does not currently intend to make similar awards in the future.  It does however anticipate making conditional share awards under the terms of the Company's Long Term Incentive Plan (LTIP) in the future to key staff on commercial terms.  Conditional awards were made under the Company's Long Term Incentive Plan on 28 December 2007, 4 March 2008, 8 April 2009 and 7 April 2010.  A charge for these awards is included within the adjusted results for 2009 and 2010.

Condensed Consolidated Statement of Financial Position

		30 June	31 December	30 June
	Note	2010	2009	2009
		£000	£000	£000
Assets
Non-current assets
Property, plant and equipment		11,580	12,135	13,464
Intangible assets	8	185,916	198,453	211,053
Deferred tax asset		-	-	255
		_______
Total non-current assets		197,496	210,588	224,772
Current assets
Trade and other receivables		20,237	14,375	20,416
Prepayments		2,154	1,793	1,899
Cash and cash equivalents		28,345	53,805	75,642
		_______
Total current assets		50,736	69,973	97,957
		_______
Total assets		248,232	280,561	322,729
		_______
Liabilities
Non-current liabilities
Deferred tax liabilities		35,222	39,011	43,455
		______
Total non-current liabilities		35,222	39,011	43,455
Current liabilities
Trade and other payables		23,023	18,756	26,609
Current tax liabilities		2,540	2,126	2,709
		_______
Total current liabilities		25,563	20,882	29,318
		_______
Total liabilities		60,785	59,893	72,773
Equity
Share capital		102	102	101
Share premium		171,297	171,207	171,149
Retained earnings		(73,573)	(45,920)	(22,316)
Other reserves		89,621	95,279	101,022
		_______
Total equity attributable to equity holders of the Company		187,447	220,668	249,956
Non-controlling interest		-	-	-
		_______
Total equity		187,447	220,668	249,956
		_______
Total equity and liabilities		248,232	280,561	322,729
		_______

Condensed Consolidated Statement of Changes In Equity

for the period ended 30 June 2010

	Issued share capital	Share premium	Other reserves	Retained earnings	Reserve for own shares	Foreign currency translation reserve	Total
	£000	£000	£000	£000	£000	£000	£000
At 1st January 2009	101	171,047	106,737	(20,042)	-	3	257,846
Foreign currency translation	-	-	-	-	-	(48)	(48)
Deferred tax on share-based payments	-	-	-	(49)	-	-	(49)
Profit for the period	-	-	-	687	-	-	687
Total income and expense for the period	-	-	-	638	-	(48)	590
Equity dividends	-	-	-	(11,110)	-	-	(11,110)
Exercise of share options	-	102	-	-	-	-	102
Reserves transfer	-	-	(5,670)	5,670	-	-	-
Share-based payment	-	-	-	2,528	-	-	2,528
At 30 June 2009	101	171,149	101,067	(22,316)	-	(45)	249,956

At 1st July 2009	101	171,149	101,067	(22,316)	-	(45)	249,956
Foreign currency translation	-	-	-	-	-	(73)	(73)
Profit for the period	-	-	-	1,229	-	-	1,229
Total income and expense for the period	-	-	-	1,229	-	(73)	1,156
Equity dividends	-	-	-	(31,620)	-	-	(31,620)
Exercise of share options	1	58	-	-	-	-	59
Reserves transfer	-	-	(5,670)	5,670	-	-	-
Share-based payment	-	-	-	1,117	-	-	1,117
At 31 December 2009	102	171,207	95,397	(45,920)	-	(118)	220,668

At 1st January 2010	102	171,207	95,397	(45,920)	-	(118)	220,668
Foreign currency translation	-	-	-	-	-	12	12
Profit for the period	-	-	-	1,974	-	-	1,974
Total income and expense for the period	-	-	-	1,974	-	12	1,986
Equity dividends	-	-	-	(36,230)	-	-	(36,230)
Exercise of share options	-	90	-	-	-	-	90
Reserves transfer	-	-	(5,670)	5,670	-	-	-
Share-based payment	-	-	-	933	-	-	933
At 30 June 2010	102	171,297	89,727	(73,573)	-	(106)	187,447

Other reserves

The other reserves balance represents the merger and revaluation reserves generated upon the acquisition of Moneysupermarket.com Financial Group Limited by the Company.

Foreign currency translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

Reserve for own shares

The reserve for the Company's own shares comprises the cost of the Company shares held by the Group.  At 30 June 2010, the Group held 440,481 shares at a cost of 0.02 pence per share through a trust, for the benefit of the Group's employees.

Condensed Consolidated Statement of Cash Flows

for the period ended 30 June

				2010	2009
				£000	£000
Operating activities
Profit for the period				1,974	687
Adjustments to reconcile Group net profit to net cash flows:
Depreciation				2,390	2,032
Amortisation of intangible assets				12,537	12,600
Net finance income				(151)	(581)
Equity settled share-based payment transactions				933	2,528
Income tax charge				924	1,244
Changes in trade and other receivables				(6,223)	(4,182)
Changes in trade and other payables				4,267	5,899
Income tax paid				(4,299)	(5,675)
Net cash flow from operating activities				12,352	14,552
Investing activities
Interest received				151	581
Acquisition of property, plant and equipment				(1,835)	(1,900)
Net cash flow from investing activities				(1,684)	(1,319)
Financing activities
Proceeds from issue of share capital				90	102
Dividends paid				(36,230)	(11,110)
Net cash flow from financing activities				(36,140)	(11,008)
Net (decrease)/increase in cash and cash equivalents				(25,472)	2,225
Cash and cash equivalents at start 1 January				53,805	73,465
Effect of exchange rate fluctuations on cash held				12	(48)
				_______
Cash and cash equivalents at 30 June				28,345	75,642
				_______

Notes

1.   Reporting entity

Moneysupermarket.com Group PLC ('Company') is a company domiciled in the United Kingdom.  The condensed consolidated financial statements of the Company as at and for the six months ended 30 June 2010 comprise the Company and its subsidiaries ('Group'). 

The financial statements have been prepared on a going concern basis, which the Directors deem appropriate, given the Group's positive cash position and lack of debt.

The consolidated financial statements of the Group as at and for the year ended 31 December 2009 are available upon request from the Company's registered office at Moneysupermarket House, St David's Park, Ewloe, Chester, CH5 3UZ or online at www.moneysupermarket.com.

2.   Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.  They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2009.

The comparative figures for the year ended 31 December 2009 are not the Company's statutory accounts for that financial year.  Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies.  The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

These condensed consolidated interim financial statements were approved by the Board of Directors on 3 August 2010.

3.   Significant accounting policies

As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed set of financial statements has been prepared by the Group by applying the same accounting policies and significant judgements as were applied by the Group in its published consolidated financial statements as at and for the year ended 31 December 2009.

 

4.   Segmental information

	Money	Insure	Travel	Home	Other	Total
	£000	£000	£000	£000	£000	£000
Period ended 30 June 2009
Revenue
Segment revenues	18,585	37,143	9,478	2,414	901	68,521
Results
Operating expenses						(67,171)
Results from operating activities						1,350
Net finance income						581
Profit before tax						1,931
Income tax expense						(1,244)
Profit for the period						687

Assets
Unallocated assets						322,729

	Money	Insure	Travel	Home	Other	Total
	£000	£000	£000	£000	£000	£000
Period ended 30 June 2010
Revenue
Segment revenues	20,673	40,590	7,543	2,633	155	71,594
Results
Operating expenses						(68,847)
Results from operating activities						2,747
Net finance income						151
Profit before tax						2,898
Income tax expense						(924)
Profit for the period						1,974

Assets
Unallocated assets						248,232

In applying IFRS 8 - Operating Segments, the Group has disclosed four reportable segments, being Money, Insure, Travel and Home.  This disclosure correlates with the information which is presented to the Group's Chief Operating Decision Maker, the Company's Board, which reviews revenues by segment, but margin, operating costs and assets at a consolidated level.  Previously, under IAS 14, the Group reported Internet and Intermediary segments.  Of the Group revenue of £71.6m (2009: £68.5m) reported for the first six months of 2010, £71.5m (2009: £68.4m) was generated in the UK.

5.   Income tax

The Group's effective consolidated tax rate for the six months ended 30 June 2010 was 31.9% (2009: 64.5%).  This change in the effective tax rate was caused by the following factors:

·      During the period ended 30 June 2010, the Group incurred losses from its German operation, which it can not offset against profits generated elsewhere in the Group for corporation tax purposes, totalling £515,000, compared with £1,072,000 in the prior period.

·      The anticipated Schedule 23 deduction available from the exercise of share options during the period exceeded the share based payment charge for the period by £239,000, compared with an excess of share based payment charges over the Schedule 23 deduction of £1,207,000 in 2009.

6.   Earnings per share

Basic and diluted loss per share has been calculated on the following basis.

	2010	2009
Profit after taxation attributable to ordinary shareholders (£000)	1,974	794
Basic weighted average ordinary shares in issue (millions)	508.7	505.0
Dilutive effect of share based instruments (millions)	10.5	8.8
Diluted weighted average ordinary shares in issue (millions)	519.2	513.8
Basic earnings per ordinary share (pence)	0.4	0.2
	______	______
Diluted earnings per ordinary share (pence)	0.4	0.2
	______

7.   Dividends

		2010	2009
		£000	£000
Declared and paid during the period: Equity dividends on ordinary shares:
Final dividend for 2009: 2.2 pence per share (2008: 2.2 pence per share)		11,213	11,110
Special dividend for 2009: 4.91 pence per share		25,017	-
Proposed for approval (not recognised as a liability as at 30 June):
Equity dividends on ordinary shares:
Interim dividend for 2010: 1.3 pence per share (2009: 1.3 pence per share)		6,621	6,585

8.   Intangible fixed assets

		Market related	Customer relationship	Customer list	Technology related	Goodwill	Total
		£000	£000	£000	£000	£000	£000
Cost
At 1 January 2009		132,100	68,500	713	5,900	124,965	332,178
Additions		-	-	-	-	-	-
At 30 June 2009		132,100	68,500	713	5,900	124,965	332,178
Amortisation
At 1 January 2009		20,195	14,960	364	3,006	70,000	108,525
Charged in period		6,605	4,893	119	983	-	12,600
At 30 June 2009		26,800	19,853	483	3,989	70,000	121,125
Net book value
At 1 January 2009		111,905	53,540	349	2,894	54,965	223,653
At 30 June 2009		105,300	48,647	230	1,911	54,965	211,053
Cost
At 1 January 2010		132,100	68,500	713	5,900	124,965	332,178
Additions		-	-	-	-	-	-
At 30 June 2010		132,100	68,500	713	5,900	124,965	332,178
Amortisation
At 1 January 2010		33,405	24,746	602	4,972	70,000	133,725
Charged in period		6,605	4,893	111	928	-	12,537
At 30 June 2010		40,010	29,639	713	5,900	70,000	146,262
Net book value
At 1 January 2010		98,695	43,754	111	928	54,965	198,453
At 30 June 2010		92,090	38,861	-	-	54,965	185,916

 Impairment testing of goodwill

On an annual basis, or where an indication exists, the Group is required to assess its goodwill and intangible assets for impairment. In light of the ongoing recession, and absence of indicators of recovery in the credit markets and wider economic environment, the Group has performed an impairment review during the period.

The basis for the review is consistent with that used during the year to 2009 - with the book value of the goodwill, intangible and other non-current assets allocated between the Group's four cash generating units (CGUs), being the four operating segments identified under IFRS 8 as Insurance, Money, Travel and Home Services.  The recoverable amount of the assets is taken to be their value in use, as calculated by reference to the cash flows taken from the Group's latest forecasts.

The key assumptions used are as follows:

·      Cash flows for Year 1 represent management's best estimate of future cash flows as at 30 June 2010. Cash flows for subsequent years for all segments are consistent with those in Year 1 and assume no growth.  No reliable third party estimates of long term growth rates exist for the price comparison industry given it is a relatively new business model.

·      A pre-tax discount rate of 15% has been used in the forecast (2009: 15%) for all segments.  When there are clear indications that the economy has begun to recover, a lower discount rate may be more appropriate.

The analysis performed indicates that the recoverable amount of the assets allocated to all four segments exceeds their carrying value by in excess of 100%, and as such the assets are not impaired.  No reasonably possible change to a key assumption would result in an impairment.

Consistent with the approach taken during the year ended 31 December 2009, the Group has also performed an impairment review for the Group as a whole, with the Group treated as one group of CGUs, and a set of assumptions consistent with those set out above in relation to the individual operating segment calculations. The analysis performed calculates that the recoverable amount of the Group's assets exceeds their carrying value by £51m, and as such, no impairment was identified.  An increase of 4% in the discount rate, with all other assumptions held constant, would give a value in use for the Group's assets equal to their carrying value.  Similarly, a decrease in the annual cash flows of £7.5m, with all other assumptions held constant, would also give a value in use for the Group's assets equal to their carrying value. 

9.   Share-based payments

On 7 April 2010 further conditional awards were made over 4,315,539 shares to a number of Directors and employees under the Long Term Incentive Plan scheme.

The share option charge in the Condensed Statement of Comprehensive Income can be attributed to the following types of option:

	2010	2009
	£000	£000
Unapproved option scheme	136	1,012
Share Incentive Plan scheme (SIP)	219	202
Chairman's share award	48	61
Long Term Incentive Plan scheme (LTIP)	530	(48)
Simon Nixon scheme	-	1,301
	933	2,528
	_______

The following table indicates the changes in the number of each type of share option during the period:

	Unapproved	Chairman's Award	LTIP	Simon Nixon Scheme
At 1 January 2009	4,296,670	235,294	1,001,986	-
Options issued during the period	-	-	7,756,530	3,378,683
Options exercised during the period	(1,704,996)	-	-	-
Options forfeit during the period	(16,667)	-	(397,191)	-
	________
At 30 June 2009	2,575,007	235,294	8,361,325	3,378,683
	_
At 1 July 2009	2,575,007	235,294	8,361,325	3,378,683
Options issued during the period	-	-	500,000	-
Options exercised during the period	(971,666)	-	-	(2,793,911)
Options forfeit during the period	(96,670)	-	(828,620)	-
Options lapsed during the period	-	-	-	(584,772)
At 31 December 2009	1,506,671	235,294	8,032,705	-
At 1 January 2010	1,506,671	235,294	8,032,705	-
Options issued during the period	-	13,318	4,315,539	-
1.1.1          Options exercised during the period	(1,506,671)	(248,612)	-	-
1.1.2          Options forfeit during the period	-	-	(245,653)	-
At 30 June 2010	-	-	12,102,591	-

10.  Related party transactions

During the period there were no transactions, and at the period end there were no outstanding balances, relating to key management personnel and entities over which they have control or significant influence.

Simon Nixon, Paul Doughty, Michael Wemms and Gerald Corbett received dividends from the Group during the period totalling £19,226,299 in relation to the year ended 31 December 2009.

Forward looking statements

This report includes statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the Listing Rules and applicable law, the Company undertakes no obligation to update, revise or change any forward looking statements to reflect events or developments occurring after the date of this report.

 

END

 

 

IR UGURGRUPUGRW