Half Yearly Report

RNS Number : 5319I
Moneysupermarket.com Group PLC
26 July 2012
 



26 July 2012

 

MoneySupermarket.com Group PLC interim results for the six months to 30 June 2012

 

Strong results and cash generation

 

 

MoneySupermarket.com Group PLC ("MoneySupermarket.com" or the "Company"), the UK's leading price comparison website, announces its interim results for the 6 months to 30 June 2012. 

 

Financial highlights

Six Months Ended June 2012

Six Months Ended June 2011

Change

Group revenue

£102.2m

£91.7m

11%

Adjusted revenue (1)

£102.2m

£88.8m

15%

Adjusted gross profit (1)

£73.3m

£63.4m

16%

Adjusted EBITDA (1)

£28.7m

£23.0m

25%

Statutory profit after tax

£8.8m

£8.8m

-

Cash balance

£36.7m

£32.2m

14%

Interim dividend for the period

1.8p

1.5p

20%

Special dividend for the period

-

3.93p

n/a

 

 

 

Financial highlights

 

·      Adjusted revenue increased by 15% to £102.2m (2011: £88.8m).

 

·      Adjusted EBITDA increased by 25% to £28.7m (2011: £23.0m).

 

·      Adjusted gross margin improved to 71.7% (2011: 71.4%).

 

·      Cash balances of £36.7m (2011:£32.2m) at 30 June. The Group continues to be highly cash generative, and converted 106% of EBITDA to cash.

 

·     Interim dividend increased by 20% to 1.8p per share.

 

 

Operational highlights

 

·      Market-leading position and share maintained in competitive marketplace.

 

·      Continued structural growth in our online markets and targeted investment in technology and brand building helping to improve conversion rates.

 

·      Marketing investment +8% with adjusted revenues +15%:

New TV campaign introduced £1,000 household savings message.

 

·      Digital investment is already benefiting the business:

Internal team of over 50 people continues to improve SEO (unpaid 'natural' search). SEO revenue +29%.

 

·      Proposed acquisition of MoneySavingExpert.com (MSE) for up to £87m approved by shareholders subject to OFT approval:

Trusted MSE website, Forum and Newsletter (received by 5m users) performing well post announcement of acquisition.

 

 

 

Outlook

 

Trading in July has been in line with expectations with revenues approximately 10% ahead of the same period last year. The Board remains confident in the prospects for the full year.

 

 

Peter Plumb, MoneySupermarket.com Chief Executive Officer, said:

 

"We've maintained our strong momentum in the first half of 2012.  We're on track to save customers over £1 billion this year.  More households are reacting to the uncertain economic outlook by seeking savings on a range of products and services, and MoneySupermarket helps them do just that.  We're one of the easiest ways for a family to save £1,000 on their household bills.

 

"The 15% rise in revenues and 25% increase in profits were achieved because we continue to invest in the MoneySupermarket brand, in cutting edge digital marketing and technology, and in striving to be the best shop for consumers. We are continuing to recruit talented digital marketers.

 

"We are in a structurally growing market but we will only continue to succeed if we carry on giving customers and product providers a better and broader service than they can get elsewhere.  That way we can save households money, build the business and generate strong returns for our shareholders.

 

"The proposed purchase of MoneySavingExpert.com will add to what we offer consumers.  It is among the most trusted brands in consumer finance. Our two brands - while continuing to operate independently - will give us a greater ability to help more customers and will accelerate progress towards our goal of helping every consumer make the most of their money.''

 

(1)    See Notes - Basis of Preparation in 'Financial and Business Review'.

 

 

Results presentation

 

There will be a presentation for investors and analysts at UBS, 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:  0207 379 5151

 

William Clutterbuck, Maitland

Tel: 020 7379 5151

 

Financial and Business Review

 

The Group presents below an extract of the Consolidated Statement of Comprehensive Income for the six months ended 30 June 2012 and 30 June 2011 along with a reconciliation to adjusted EBITDA. Revenue for the six months ended 30 June 2012 was £102.2m (2011: £91.7m) which generated a reported operating profit of £11.5m (2011: £12.4m). The Directors believe that the presentation of the adjusted EBITDA measure allows 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 2012

 

 

6 months

ended

30 June

2012

6 months

ended

30 June

2011

 

£000

Revenue

102,236

91,739

Cost of sales

(28,919)

Gross profit

73,317

66,369

Distribution expenses

(16,900)

(16,949)

Administrative expenses

(44,960)

Profit from operating activities

11,457

Reconciliation to adjusted EBITDA:

 

 

Profit from operating activities

Amortisation of intangible assets

Depreciation

11,457

12,589

1,790

EBITDA

25,836

26,214

 



Adjustments



Fees related to MSE acquisition (1)

VAT credit (2)

2,716

-

-

(3,195)

Deferred consideration expensed (3)

116

-

Adjusted EBITDA

28,668

23,019

Adjusted earnings per ordinary share:

 

 

- basic (p)

3.9

3.1

- diluted (p)

3.8

Normal earnings per ordinary share:

 

 

- basic (p)

1.7

1.7

- diluted (p)

1.7

 

 

 

 

 

Notes

 

Basis of Preparation

 

The results show the trading results for the six months ended 30 June 2012 and 30 June 2011. The following adjustments

have been made in arriving at adjusted EBITDA:

 

 

1          Acquisition of MoneySavingExpert.com

 

·          During the period the Group reached agreement with Martin Lewis to buy the complete trade and assets of MoneySavingExpert.com and certain of his sole trader business. The Group incurred fees in connection with the transaction which have been added back to statutory profit. The acquisition is conditional upon receiving clearance from the Office of Fair Trading.

 

2          VAT Credit

 

·          The Group received written notification in June 2011 that it had been successful in challenging the VAT treatment of the supply of certain of its lead services. Following a ruling received in March 2008 from HMRC the Group had treated the supply of its lead services as a standard rated supply for VAT purposes rather than as an exempt supply that the Group believed to be correct. The amount deducted from statutory profit of £3.2m in 2011 represents the amount that was attributable to prior periods.

 

3          Local Daily Deals Deferred Consideration

 

·          On 31 August 2011 the Group acquired a 51% shareholding in Local Daily Deals Limited (LDD). The Group has recognised a charge in its Consolidated Statement of Comprehensive Income in the period of £0.1m, for deferred consideration relating to the employment of certain individuals, within administrative expenses.

 

 

Reference is made in the Overview and Financial Highlights sections to adjusted revenues, adjusted cost base, adjusted distribution and administration expenses. These measures represent the revenue generated and costs charged to the Consolidated Statement of Comprehensive Income, less the intangible amortisation, costs incurred in the acquisition of certain assets and the trade of Martin Lewis and MoneySavingExpert.com, the impact of the VAT settlement referred to above and costs recognised in respect of deferred consideration relating to LDD.

 

 

 

 

Overview

 

We present a strong set of financial results for the six months ended 30 June 2012. Adjusted revenue for the six months was £102.2m (2011: £88.8m), up 15%, generating adjusted EBITDA of £28.7m (2011: £23.0m), up 25%.

 

During the first half of the year the Group has seen good growth in its main markets of Money and Insurance. Consumer demand for price comparison remains strong with visitor numbers 19% ahead of the same period last year while provider appetite shows no signs of diminishing.

 

The Group has continued to invest in its brand. Distribution costs are flat in the period against a comparator period which included the sponsorship of 'Britain's Got Talent'. The Group has continued to feature its range of products as a key message in its adverting campaigns, and this has in part helped grow the Money vertical in the first half of the year. The Group is already benefiting from the investment it made in 2011 in its data acquisition capabilities. In the second half the Group intends to further invest in its web front end and its data systems to improve both user experience in what customers see and importantly how the Group uses and organises its data to surface relevant deals and offers to its customers.

 

 

Financial Performance

 

Adjusted revenue increased by 15% to £102.2m (2011: £88.8m) and adjusted EBITDA increased by 25% to £28.7m (2011: £23.0m). The Group saw total revenue growth in its Money and Insurance verticals of 18% whilst revenues in the Home Services vertical remained flat against a tough comparator period which saw significant price rises in the domestic energy market. Travel revenues fell in what remains a challenging market. The Group maintained its strong market share in financial services against its key competitor set, measured by Experian Hitwise.

 

Group adjusted gross margins at 71.7% improved marginally over last year. The Group maintained its proportion of direct to site revenue at 66% of total revenue (2011: 66%), whilst paid search represented 24% of revenue in the first half of 2012 (2011: 22%).

 

The adjusted administrative and distribution cost base increased by 9% from £42.4m to £46.4m. Distribution expenses were flat at £16.9m measured against a comparator period which included the sponsorship of Britain's Got Talent. Adjusted administrative costs increased by £4m (16%) to £29.5m in the first half of 2012. Adjusted staff costs (including contract resource) were £2.9m higher at £16.5m. The Group has invested in its digital marketing capabilities building a team to maintain and build upon its market leading expertise in this area. Staff numbers increased from 419 to 448 from June 2011 to June 2012.

 

Other costs, including irrecoverable VAT, increased by £1.4m.

 

Adjusted EBITDA margins increased from 26% to 28% against the same period last year.

 

 

The Group operates its internet business across four vertical markets. These are outlined in more detail below:

 

 

Adjusted revenue

 

6 months to 30 June 2012

6 months to 30 June 2011

 

£000

%

£000

%

Money

32,223

32

27,048

30

Insurance

58,859

58

50,323

57

Travel

7,074

7

7,631

9

Home Services

3,646

3

3,644

4

Other

434

-

123

0

Total

102,236

100

88,769

100

 

 

 

 

Key Performance Indicators

 

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 performance of each of the internet verticals is outlined 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

2012

6 months to 30 June

2011

Change

Visitors (000)

21,957

18,050

22%

Transactions (000)

12,200

9,364

30%

Revenue (£000) - click based revenue

30,283

24,768

22%

Revenue (£000) - other

1,940

2,280

-15%

Revenue (£000) - total

32,223

27,048

19%

RPV

£1.47

£1.50

-2%

RPT

£2.48

£2.65

-6%

 

Trading in the Money vertical was strong relative to the same period last year. Total revenue increased by 19% from £27.0m to £32.2m and click based revenue by 22% from £24.8m to £30.3m. Visitors were 22% higher helped by increased efficiency in online marketing and by an effective offline campaign, which focussed on the depth and breadth of the Group's offering and featured a number of money products directly.

 

The vertical saw growth across its credit business and more generally from other banking products particularly savings, which performed very strongly. Revenues from credit products defined as revenues from secured and unsecured loans, credit cards, debt solutions and mortgages excluding impression based advertising were 8% ahead of the same period last year. Credit card revenues, which represent the largest channel within the credit segment, were flat against an overall market that declined as consumers continue to pay down debt.

 

The change in sales mix away from credit products towards other banking products reduced the RPV marginally in the first half of the year relative to the same period last year

 

Other revenue, which includes revenue from leads, commission based sales through our advisory business MCAT for mortgages and loans, and advertising revenue, fell by £0.3m. The Group has continued to focus upon improving its core click based offering encouraging consumers to click through and transact directly with providers rather than through its lead based business.

 

 

 

 

 

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

2012

6 months to 30 June

2011

Change

Visitors (000)

16,727

14,592

15%

Transactions (000)

8,169

8,062

1%

Revenue (£000) - click based revenue

51,466

46,402

11%

Revenue (£000) - other

7,393

3,921

89%

Revenue (£000) - total

58,859

50,323

17%

RPV

£3.52

£3.45

2%

RPT

£6.30

£5.76

9%

 

Revenues in the Insurance vertical increased by 17% from £50.3m to £58.9m. Click based revenue increased by 11% from £46.4m to £51.5m.

 

Revenues increased in each of the four major lines of business, being motor, home, travel and life insurance, with motor continuing to perform strongly.

 

Visitors increased by 15% over the period driven by the online marketing efficiencies referred to earlier and the new television campaign referred to above.

 

Other revenue increased by £3.5m from the continued success of the telephone assisted life insurance channel, which offers consumers offline support in completing often complex application forms.

 

 

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

2011

6 months to 30 June

2011

Change

Visitors (000)

22,600

23,188

-3%

Transactions (000)

11,597

13,328

-13%

Revenue (£000) - click based revenue

6,561

6,964

-6%

Revenue (£000) - other

513

667

-23%

Revenue (£000) - total

7,074

7,631

-7%

RPV

£0.31

£0.33

-5%

RPT

£0.57

£0.52

8%

 

Revenue in the Travel vertical decreased by 7% from £7.6m to £7.1m. Click based revenue decreased by 6% from £7.0m to £6.6m.

 

The Group's package holidays channel continued to grow following continued investment and website optimisation. Car hire revenues held up well, linked in part to the success of the package holidays channel. However, flights and hotels more typically associated with discretionary expenditure and weekend travel continued to decline as these markets continued to weaken.

 

 

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

2012

6 months to 30 June

2011

Change

Visitors (000)

13,954

11,722

19%

Transactions (000)

4,868

4,088

19%

Revenue (£000) - click based revenue

3,644

3,644

0%

Revenue (£000) - other

2

0

-

Revenue (£000) - total

3,646

3,644

0%

RPV

£0.26

£0.31

-16%

RPT

£0.75

£0.89

-16%

 

Revenue in Home Services was flat at £3.6m. Visitors increased by 19%.

 

Revenues from utility switching, which account for the majority of revenues within the Home Services vertical, were lower than the same period last year. Revenues in the first half of 2011 and in particular the second quarter of 2011 were buoyed by all of the major providers raising domestic energy prices in short succession. Pricing in the first half of 2012 has been stable and this has reduced the number of customers seeking to switch suppliers. Mobile and Broadband revenues however, have grown over the same period last year. The change in sales mix has lowered both RPV and RPT in the Home Services vertical.

 

 

 

VAT

 

In the first half of 2011 the Group reached agreement with HMRC that a number of its income streams had been classified incorrectly by HMRC as standard rated supplies rather than exempt. The Group recognised a one off credit of £3.5m in the first half of 2011 within its statutory numbers. Of this amount the Group recognised a credit of £0.3m in its adjusted numbers reflecting the estimated benefit of the change in treatment in the first half of 2011.

 

In July 2012, the Group has received formal approval from HM Revenue & Customs for the use of a new VAT recovery method. Whilst the new method has been approved, the Group has not yet formally quantified the amount of VAT which it expects to claim for, nor has this amount been agreed with HM Revenue & Customs. Management estimate the net recovery at approximately £7m after fees. As this potential recovery was not considered to be virtually certain at 30 June 2012, it has not yet been reflected in the financial statements.

On an on-going basis the Group estimates that, if successful, the Group at current levels of spend would reduce its level of irrecoverable VAT by approximately £2m per annum.

 

 

 

Investment in HD Decisions

 

On 25 March 2011 the Group invested £1m in acquiring a 25% stake in HD Decisions Limited. HD provides credit decision support technology, which allows consumers to better understand the probability of being approved for a credit product before making a formal application for credit. This improves the user's experience on the Group's websites by matching consumers with credit products that they are eligible for and increases the number of relevant applications for individual providers which improves conversion. Importantly a credit footprint is not left on the consumer's profile at the point of initial enquiry. Furthermore providers are able to reduce the cost of credit searches at the application stage if consumers proceed to apply only for those credit products that are suited to their particular circumstances. The software is currently deployed to a portion of the Group's credit card channel customers and will be rolled out later in the year to its loan channels.

 

 

 

Proposed Acquisition of MoneySavingExpert.com

 

On 1 June 2012 the Group agreed to acquire the trade and certain assets of MoneySavingExpert.com and a sole trader business from Martin Lewis for a total consideration of up to £87m including deferred consideration of up to £27m. The initial consideration of £60m will be settled by an upfront cash payment of £35m and £25m equity represented by 22.1m shares in the Group. The deferred consideration is payable against the achievement of certain non-financial metrics and at the Board's discretion.

 

The MoneySavingExpert website offers free online content, which MoneySavingExpert has researched including in the areas of credit cards and loans, shopping, deals and vouchers, utilities and phones, banking and saving, travel and motoring, insurance, mortgages and homes, and income and family. MoneySavingExpert's offering includes a range of online tools, researched articles in respect of specific products, personal finance guides, weekly newsletter emails which are sent to subscribers, and online forums. Martin Lewis and the MoneySavingExpert website also provide information and promote topical consumer focused issues such as financial education in schools and reclaiming payment protection insurance.

 

The business will be run separately for a period of at least three years according to an editorial code to ensure that MoneySavingExpert remains independent. The Board believes that the acquisition will help the combined Group reach a wider range of consumers, increase the proportion of revenues which are derived from direct to site sources and contribute significantly to the Group's goal of helping every household make the most of their money.

 

Completion is conditional upon shareholder approval, which was received on 5 July 2012, and obtaining certain clearances from the competition authorities, which are expected to be received early in the fourth quarter of 2012.

 

 

 

Cash Balance and Dividend

 

As at 30 June 2012 the Group had a cash balance of £36.7m (2011: £32.2m). The Group continued to strengthen its cash position throughout the period after payment of dividends of£16.9m in the first six months of the year. This included the distribution to LTIP holders. Having reviewed the cash required by the business and the performance of the Group,the Board has decided to increase its interim dividend by 20% to 1.8p per ordinary share.

The ex-dividend date is 15 August 2012, with a record date of 17 August 2012 and a payment date of 14 September 2012. 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 2012 were 1.7p (2011: 1.7p). Adjusted basic earnings per ordinary share increased from 3.1p to 3.9p per share. The adjusted earnings per ordinary share are based on profit before tax after adding back intangible amortisation relating to the acquisitions of Moneysupermarket.com Financial Group Limited and Financial Services Net Limited, costs relating to the acquisition of the trade and assets of MoneySavingExpert, and adjusting for the impact of the VAT settlement referred to above and costs recognised in respect of deferred consideration relating to LDD. An effective tax rate of 24.5% (2011: 26.5%) has been applied to calculate adjusted profit after tax.

 

 

 

Outlook

 

Trading in July has been in line with expectations with revenues approximately 10% ahead of the same period last year. The Board remains confident in the prospects for the full year.

 

 

 

 

 

 

 



 

 

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, Financial Services

Michael Wemms

Senior Independent Non-Executive Director

Rob Rowley

Non-Executive Director

Bruce Carnegie-Brown

Non-Executive Director

 

 

 

25 July 2012



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 investments in new products and services or geographies fails to make a return.

 

Financial services and other markets regulation

 

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.

 

Economic environment

 

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

 

Operational risks

 

Competitive environment

 

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

 

Brand perception and reputation

 

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, such as the loss or misuse of customer personal data.

 

Business continuity, capacity and functionality of IT and systems

 

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.

 

 

 

 



 

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 2012 which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity and consolidated statement of cash flows 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 34 Interim 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 2012 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

25 July 2012



Condensed Consolidated Statement of Comprehensive Income

 





6 months to

6 months to





30 June

30 June


Note



2012

2011





£000

£000







Revenue

4



102,236

91,739

Cost of sales




(28,919)

(25,370)





              

              

Gross profit




73,317

66,369

Distribution expenses




(16,900)

(16,949)

Administrative expenses




(44,960)

(37,034)





              

              

Results from operating activities




11,457

12,386

Financial income




121

145

Financial expense




-

-





_______

_______

Net finance income




121

145





              

              

Share of profit after tax from associate




66

-





              

              

Profit before income tax




11,644

12,531

Income tax expense

5



(2,809)

(3,724)





              

              

Profit for the period




8,835

8,807





_______

_______

Other comprehensive income:






Foreign currency translation




(5)

8

Deferred tax on share-based payments




441

284





_______

_______

Other comprehensive income for the period




436

292





_______

_______

Total comprehensive income for the period




9,271

9,099





_______

_______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to adjusted EBITDA:






Operating profit




11,457

12,386

Amortisation of intangibles

Depreciation




12,589

1,790

11,872

1,956





_______

_______

Normal EBITDA




25,836

26,214

Acquisition costs relating to MoneySavingExpert(1)

VAT credit (2)

Local Daily Deals Limited deferred consideration(3)




2,716

-

116

-

(3,195)

-





_______

_______

Adjusted EBITDA




28,668

23,019





_______

             

Earnings per share:






Basic earnings per ordinary share (pence)

Diluted earnings per ordinary share (pence)

 

6

6



1.7

1.7

 

1.7

1.7

 

Basis of Preparation

The adjusted results show the trading results for the 6 months ended 30 June 2011 and 30 June 2012.  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:

 

1       Acquisition of MoneySavingExpert.com

 

·          During the period the Group reached agreement with Martin Lewis to buy the complete trade and assets of MoneySavingExpert.com and certain of his sole trader business. The Group incurred fees in connection with the transaction which have been added back to statutory profit. The acquisition is conditional upon receiving clearance from the Office of Fair Trading.

 

2       VAT Credit

 

·          The Group received written notification in June 2011 that it had been successful in challenging the VAT treatment of the supply of certain of its lead services. Following a ruling received in March 2008 from HMRC the Group had treated the supply of its lead services as a standard rated supply for VAT purposes rather than as an exempt supply that the Group believed to be correct. The amount deducted from statutory profit of £3.2m in 2011 represents the amount that was attributable to prior periods.

 

3       Local Daily Deals Deferred Consideration

 

·          On 31 August 2011 the Group acquired a 51% shareholding in Local Daily Deals Limited (LDD). The Group has recognised a charge in its Consolidated Statement of Comprehensive Income in the period of £0.1m, for deferred consideration relating to the employment of certain individuals, within administrative expenses.

Condensed Consolidated Statement of Financial Position

 



30 June

31 December

30 June


Note

2012

2011

2011



£000

£000

£000

Assets





Non-current assets





Property, plant and equipment


10,407

10,952

12,539

Intangible assets

8

148,778

160,634

170,649

Investments in equity accounted associates


1,066

1,000

1,000



_______

              

              

Total non-current assets


160,251

172,586

184,188

 

Current assets





Trade and other receivables


22,706

15,974

23,809

Prepayments


2,115

1,896

2,724

Cash and cash equivalents


36,680

35,005

32,194



_______

              

              

Total current assets


61,501

52,875

58,727



_______

              

              

Total assets


221,752

225,461

242,915



_______

              

              

Liabilities





Non-current liabilities





Deferred tax liabilities


19,935

23,251

28,781



_____

              

              

Total non-current liabilities


19,935

23,251

28,781






Current liabilities





Trade and other payables


36,392

28,898

24,677

Current tax liabilities


5,087

6,750

4,731



_______

              

              

Total current liabilities


41,479

35,648

29,408



_______

              

              

Total liabilities


61,414

58,899

58,189






Equity





Share capital


103

102

102

Share premium


171,297

171,297

171,297

Retained earnings


(80,016)

(78,970)

(65,988)

Other reserves


68,954

74,133

79,315



_______

              

              

Total equity attributable to equity holders of the Company


160,338

166,562

184,726

Non-controlling interest


-

-

-



_______

              

              

Total equity


160,338

166,562

184,726



_______

              

              

Total equity and liabilities


221,752

225,461

242,915



_______

              

              



Condensed Consolidated Statement of Changes In Equity

for the period ended 30 June 2012


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 2011

102

171,297

84,582

(68,239)

-

(101)

187,641

Foreign currency translation

-

-

-

-

-

8

8

Deferred tax recognised on share-based payments

-

-

-

284

-

-

284

Profit for the period

-

-

-

8,807

-

-

8,807

Total income and expense for the period

-

-

-

9,091

-

8

9,099

Equity dividends

-

-

-

(12,885)

-

-

(12,885)

Reserves transfer

-

-

(5,174)

5,174

-

-

-

Share-based payment

-

-

-

871

-

-

871

At 30 June 2011

102

171,297

79,408

(65,988)

-

(93)

187,726

 

At 1st July 2011

102

171,297

79,408

(65,988)

-

(93)

187,726

Foreign currency translation

-

-

-

-

-

(8)

(8)

Deferred tax recognised on share-based payments

-

-

-

187

-

-

187

Profit for the period

-

-

-

7,981

-

-

7,981

Total income and expense for the period

-

-

-

8,168

-

(8)

8,160

Equity dividends

-

-

-

(27,653)

-

-

(27,653)

Reserves transfer

-

-

(5,174)

5,174

-

-

-

Share-based payment

-

-

-

1,329

-

-

1,329

At 31 December 2011

102

171,297

74,234

(78,970)

-

(101)

166,562

 

At 1st January 2012

102

171,297

74,234

(78,970)

-

(101)

166,562

Foreign currency translation

-

-

-

-

-

(5)

(5)

Deferred tax recognised on share-based payments

-

-

-

706

-

-

706

Profit for the period

-

-

-

8,835

-

-

8,835

Total income and expense for the period

-

-

-

9,541

-

(5)

9,536

Share options exercised

1

-

-

-

-

-

1

Distribution in relation to LTIP

-

-

-

(1,435)

-

-

(1,435)

Equity dividends

-

-

-

(15,431)

-

-

(15,431)

Reserves transfer

-

-

(5,174)

5,174

-

-

-

Share-based payment

-

-

-

1,105

-

-

1,105

At 30 June 2012

103

171,297

69,060

(80,016)

-

(106)

160,338

 

 

 

 

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 2012, the Group held 217,630 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 2012

 





2012

2011





£000

£000

Operating activities






Profit for the period




8,835

8,807

Adjustments to reconcile Group net profit to net cash flows:






Depreciation




1,790

1,956

Amortisation of intangible assets




12,589

11,872

Net finance income




(121)

(145)

Loss on disposal of property, plant and equipment




3

-

Share of profit after tax from associate




(66)

-

Equity settled share-based payment transactions




1,105

871

Income tax charge




2,809

3,724

Effects of foreign exchange differences




(5)

-

Changes in trade and other receivables




(6,895)

(7,893)

Changes in trade and other payables




7,495

(560)

Income tax paid




(7,082)

(5,529)





              

              

Net cash flow from operating activities




20,457

13,103





              

              

Investing activities






Interest received




64

154

Acquisition of minority interest




-

(1,000)

Acquisition of property, plant and equipment




(1,248)

(3,771)

Acquisition of intangible assets




(733)

-





              

              

Net cash flow used in investing activities




(1,917)

(4,617)





              

              







Financing activities






Proceeds from issue of share capital




1

-

Dividends paid




(15,431)

(12,885)

Distribution in relation to LTIP




(1,435)

-





              

              

Net cash flow used in financing activities




(16,865)

(12,885)





              

              







Net increase/(decrease) in cash and cash equivalents




1,675

(4,399)

Cash and cash equivalents at start 1 January




35,005

36,593





_______

              

Cash and cash equivalents at 30 June




36,680

32,194





-______

              

 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 2012 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 2011 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

This condensed set of consolidated interim financial statements has 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 2011. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.

 

The comparative figures for the year ended 31 December 2011 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 25 July 2012.

 

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 presentation that were applied in the preparation of the Group's published consolidated financial statements as at and for the year ended 31 December 2011.



 

4.   Segmental information

 


Money

Insure

Travel

Home

Other

Total


£000

£000

£000

£000

£000

£000

Period ended 30 June 2011







Revenue







Segment revenues

27,048

50,323

7,631

3,644

3,093

91,739


             

             


             

             

Results







Operating expenses






(79,353)







              

Results from operating activities






12,386

Net finance income






145







              

Profit before tax






12,531

Income tax expense






(3,724)







              

Profit for the period






8,807







              

 

Assets







Unallocated assets






242,915







              

               


Money

Insure

Travel

Home

Other

Total


£000

£000

£000

£000

£000

£000

Period ended 30 June 2012







Revenue







Segment revenues

32,233

58,859

7,074

3,646

424

102,236


             

             


             

             


Results







Operating expenses






(90,779)







              

Results from operating activities






11,457

Net finance income






121

Share of profit after tax from associate






66







              

Profit before tax






11,644

Income tax expense






(2,809)







              

Profit for the period






8,835







              

 

Assets







Unallocated assets






221,752







              

 

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.  All of the Group revenue reported for the first six months of 2012 was generated in the UK (2011: all Group revenue). Included within Other revenue in the prior period is £3.0m of additional revenue relating to prior periods which the Group recognised in relation to the settlement of a VAT dispute concerning its leads business.  The full impact of this settlement is described in Note 10.

 

5.   Income tax

The Group's effective consolidated tax rate for the six months ended 30 June 2012 is 24.3% (2011: 29.7%).  This change in the effective tax rate was caused primarily by the following:

·      The reduction in the enacted tax rate from 26% to 24%, and in the effective standard rate of corporation tax from 26.5% to 24.5%.

·      In 2012, the 2009 LTIP scheme vested, resulting in a Schedule 23 deduction to corporation tax. In the prior period, no share options vested and therefore no such deduction was made.

 

6.   Earnings per share

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





2012

2011




Profit after taxation attributable to ordinary shareholders (£000)

8,835

8,807


              

              

Basic weighted average ordinary shares in issue (millions)

511.3

509.3

Dilutive effect of share based instruments (millions)

9.7

12.6

Diluted weighted average ordinary shares in issue (millions)

521.0

521.9


              

              

Basic earnings per ordinary share (pence)

1.7

1.7


_______

              

Diluted earnings per ordinary share (pence)

1.7

1.7


_______

              

 

7.   Dividends



2012

2011



£000

£000





Declared and paid during the period:

Equity dividends on ordinary shares:




Final dividend for 2011: 3.03 pence per share (2010: 2.53 pence per share)


15,431

12,885

Special dividend for 2011: 3.93 pence per share


-

20,000





Proposed for approval (not recognised as a liability as at 30 June):




Equity dividends on ordinary shares:




Interim dividend for 2012: 1.8 pence per share (2011: 1.5 pence per share)


9,270

7,639

 

 

 

 

 


_______

_______

8.   Intangible fixed assets



Market related

Customer relationship

Customer list

 

Technology related

Goodwill

Total



£000

£000

£000

£000

£000

£000









Cost








At 1 January 2011


136,943

69,291

1,162

5,900

127,164

340,460

Revaluation


(16)

(3)

(1)

-

-

(20)



              

              

              

              

              

              

At 30 June 2011


136,927

69,288

1,161

5,900

127,164

340,440



              

              

              

              

              

              

Amortisation








At 1 January 2011


46,717

34,556

746

5,900

70,000

157,919

Charged in period


6,848

4,949

75

-

-

11,872



              

              

              

              

              

              

At 30 June 2011


53,565

39,505

821

5,900

70,000

169,791



              

              

              

              

              

              

Net book value








At 1 January 2011


90,226

34,735

416

-

57,164

182,541

At 30 June 2011


83,362

29,783

340

-

57,164

170,649



              

              

              

              

              

              

















Cost








At 1 January 2012


136,927

69,288

1,160

9,800

127,779

344,954

Additions


-

-

-

733

-

733



              

              

              

              

              

              

At 30 June 2012


136,927

69,288

1,160

10,533

127,779

345,687



              

              

              

              

              

              

Amortisation








At 1 January 2012


60,411

44,455

896

6,359

72,199

184,320

Charged in period


6,847

4,949

75

718

-

12,589



              

              

              

              

              

              

At 30 June 2012


67,258

49,404

971

7,077

72,199

196,909



              

              

              

              

              

              

Net book value








At 1 January 2012


76,516

24,833

264

3,441

55,580

160,634

At 30 June 2012


69,669

19,884

189

3,456

55,580

148,778



              

              

              

              

              

              

 

 

 

 

 

 

 

 

9.   Share-based payments

On 22 June 2012 further conditional awards were made over 2,878,872 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:

 


2012

2011


£000

£000




Long Term Incentive Plan scheme (LTIP)

1,071

871

Sharesave scheme

34

-


              

              


1,105

871


_______

              

 

The following table indicates the changes in the number of share options during the period:

 


LTIP



At 1 January 2011

10,978,314

Options issued during the period

2,630,535

1.1.1          Options exercised during the period

-

1.1.2          Options lapsed during the period

(649,601)

1.1.3          Options forfeit during the period

(336,613)


                  

At 30 June 2011

12,622,635


                  



At 1 July 2011

12,622,635

Options issued during the period

-

Options exercised during the period

-

Options forfeit during the period

(701,787)

Options lapsed during the period

-


                  

At 31 December 2011

11,920,848


                  



At 1 January 2012

11,920,848

Options issued during the period

1,919,248

1.1.4          Options exercised during the period

(5,599,551)

1.1.5          Options lapsed during the period

(339,328)

1.1.6          Options forfeit during the period

(276,182)


                  

At 30 June 2012

7,625,035


                  

 

The Sharesave scheme which was established in 2011 has continued to operate in the first half of the year. The exercise price for the 2012 Sharesave scheme is expected to be fixed in September 2012.

 

10.  Settlement of VAT dispute

During the prior period the Group received written notification that it had been successful in challenging the VAT treatment of the supply of certain of its leads services. Following a ruling received from HMRC in March 2008 the Group had treated the supply of its leads services as a standard rated supply for VAT purposes rather than as an exempt supply that the Group believed to be correct. Consequently the Group recorded additional revenues of £3.7m in the first half of the prior year, together with a credit of £0.2m to administrative costs. The adjusted first half results reflected the estimated impact of the change in VAT treatment on the first half results being a £0.3m credit to profit, the largest element of which is an additional £0.7m of revenues. The Group received the cash benefit during the second half of the year.

Since 30 June 2012, the Group has received formal approval from HM Revenue & Customs for the use of a new VAT recovery method. Whilst the new method has been approved, the Group has not yet formally quantified the amount of VAT which it expects to claim for, nor has this amount been agreed with HM Revenue & Customs. Management estimate the net recovery at approximately £7m after fees. As this potential recovery was not considered to be virtually certain at 30 June 2012, it has not yet been reflected in the financial statements.

 

11.  Related party transactions

The Company is the ultimate parent entity of the Group. Intercompany transactions with wholly owned subsidiaries have been excluded from this note, as per the exemption offered in IAS 24.

 

The aggregate value of transactions and outstanding balances relating to entities which were not wholly-owned subsidiaries at the balance sheet date were as follows:

 


Transaction value

6 months to June 2012

Transaction value

6 months to June 2011

Balance outstanding

as at

30 June 2012

Balance outstanding

as at

30 June 2011


£000

£000

£000

£000

Local Daily Deals Limited

154

-

599

-

HD Decisions Limited

(450)

(326)

(90)

-

 

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, Bruce Carnegie-Brown and Gerald Corbett received dividends from the Group during the period totalling £8,161,251 in relation to the year ended 31 December 2011.

 

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.

 


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