TIDMGOCO
RNS Number : 6659M
Gocompare.com Group plc
01 August 2017
Gocompare.com Group plc - Interim results for the 6 months ended
30 June 2017
1 August 2017
Disciplined delivery of strong financial results while making
good progress on a material transformation program.
Financial highlights and KPIs:
H1-2017 H1-2016 YOY
-------------------------- -------- -------- ---------
Revenue (GBPm) 75.8 72.8 +4.1%
-------------------------- -------- -------- ---------
Adjusted Operating
Profit(1) (GBPm) 17.5 14.4 +21.5%
-------------------------- -------- -------- ---------
Profit before income
tax (GBPm) 14.7 14.5 +1.7%
-------------------------- -------- -------- ---------
Marketing Margin
(%) 39.6% 34.5% +5.1%pts
-------------------------- -------- -------- ---------
Average revenue
per interaction(2)
(GBP) GBP4.43 GBP4.31 +2.8%
-------------------------- -------- -------- ---------
Adjusted basic EPS
(pence) 3.2 2.8 +14.3%
-------------------------- -------- -------- ---------
Basic EPS (pence) 2.8 2.8 +2.6%
-------------------------- -------- -------- ---------
Customer interactions(3)
(m) 17.1 16.9 +1.3%
-------------------------- -------- -------- ---------
Number of partners(4) 312 326 -4.3%
-------------------------- -------- -------- ---------
Savings made by
customers(5) (GBPm) 620 490 +27%
-------------------------- -------- -------- ---------
Business highlights:
-- Increased agility in the business, accelerated delivery of updates to the site.
-- Invested in talent, strengthening key capabilities in Tech, Product and Marketing
-- Exclusive partnership agreement signed with Haymarket Media Group.
-- First strategic investment, acquiring minority shareholding in Mortgage Gym Limited.
-- Leverage(6) of 1.5x - down from 1.7x at 31 December 2016 and 2.8x at the time of demerger.
-- Interim dividend declared of 0.7 pence per share.
Sir Peter Wood, Chairman, said: "The executive team under
Matthew's leadership has made great progress in building on
GoCompare's strong foundations and its continuing evolution into a
leading tech business.
"I am delighted with the increase in adjusted operating profit
and strong cash generation. Our maiden interim dividend of 0.7pence
per share balances cash returns to shareholders with our ability to
fund potential strategic investments.
"GoCompare is well positioned to continue to drive shareholder
value by remaining focused on providing an independent, unbiased
and fair service that helps customers save time and money"
Matthew Crummack, Chief Executive Officer, said: "We have
delivered material improvements to our core business following
organisational and operational transformations early in the year
and I am particularly pleased with the integration and performance
of our existing talent, alongside new talent recruited in
Newport.
"As well as progressing the core business we have continued to
develop our strategy and our investment in Mortgage Gym is an
exciting opportunity to work with an innovative business that is
well aligned to our mission of helping people everywhere save time
and money."
Outlook
The Board remains confident about meeting its expectations for
the full year 2017.
For further information:
Nick Wrighton Anders Nilsson
Chief Financial Officer, Head of PR and outreach,
GoCompare GoCompare
t: 01633 655 051 t: 01633 654 054
e: IR@gocompare.com e: anders.nilsson@gocompare.com
Chris Barrie / Grant
Ringshaw / Jos Bieneman
Citigate Dewe Rogerson
t: 0207 638 9571
e: gocompare@citigatedr.co.uk
Notes:
1. Adjusted operating profit represents operating profit,
adjusted to exclude the costs of the Foundation Award share based
payment charges.
2. Average revenue per interaction defined as Revenue for the
period divided by Customer interactions.
3. Customer interactions defined as (a) for products where the
quote process begins on GoCompare, as each unique instance of
activity within any half hour period in which a Customer initiates
such a quote process, although they do not necessarily complete a
purchase, and (b) for the remainder of the Group's products, each
instance in which a Customer clicks through to a Partner website
from GoCompare
4. Number of core partner brands we have actively worked with in the 12 month period.
5. Customer savings measured by Car and Home insurance savings
calculated by applying the average Consumer Intelligence reported
savings per customer across the year.
6. Leverage is calculated as net debt divided by Adjusted
EBITDA. Adjusted EBITDA is defined as Adjusted operating profit
after adding back depreciation and amortisation charges.
Cautionary statements
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
assumptions and are subject to a number of known and unknown risks
and uncertainties that may cause actual results, performance or
achievements of the Group or industry results to differ materially
from any future events, results, performance or achievements
expressed or implied by such forward-looking statements. Persons
receiving this announcement should not place undue reliance on any
forward-looking statements. Unless otherwise required by applicable
law, regulation or accounting standard, GoCompare disclaims any
obligation or undertaking to update or revise any forward-looking
statements, whether as a result of new information, future
developments or otherwise.
Business Review
The 2017 first half performance saw a disciplined delivery of
strong financial results, while the company has undergone a
material transformation program. Even while the competitive
environment continued to be robust, the team generated a 22%
increase in adjusted operating profit, with controlled revenue
growth of 4% and strong cash generation reducing leverage from 1.7x
to 1.5x. While growth was stronger within the strategic initiatives
segment (+15% YoY), insurance-related comparison (+3.5% YoY) still
drives the majority of our revenues and operating profit, so much
of our commercial focus was on this controlled growth.
Outside of day to day trading, the collective focus of the
organisation has been to address the underlying capability of
growing revenue and improving marketing margin via increases in
conversion alongside investment into profitable marketing channels.
This was the essence of our H1 transformation project, and we
believe we have made good progress.
Saving consumers time and money is a compelling opportunity
During H1 we helped consumers save GBP620m on car and home
insurance (up 27% on H1 16) but believe there is a compelling
opportunity to help consumers save even more. Earlier this year we
introduced "botheration" as a term summarising the significant
barriers that face UK consumers as they look to reduce the
financial burden of often non-discretionary everyday household and
personal finance expenditure. We see that a combination of
complexity and apathy leads to infrequent switching at best, and in
many cases to no switching at all.
To understand more about the underlying causes and impacts, we
commissioned independent research with leading research companies
and academics. For example, Populus reaffirmed our own analysis
that circa 1 in 5 of UK consumers had never switched any of car
insurance, home insurance or energy, and that an opportunity to
save over GBP2bn exists for this set of consumers alone.
The bewildering complexity for consumers in the relationship
with their providers in many of these categories is a material
barrier to switching. Combining this complexity with apathy, which
can be further explained by behavioural science, drives further
inertia.
We are therefore focusing our people, resources and capital on
improvement and innovation that can help address complexity and
apathy.
Our transformation work is yielding early results
The focus of our transformation work in H1 was to re-introduce
to the company the speed, spirit and agility of a start-up,
focusing principally on our product development and software
engineering teams.
In practical terms this means that we have already accelerated
our software release cycle from one site release per quarter in H1
2016 to many times per week by the end of H1 2017, a process of
improvement that we expect to continue. We achieved this through a
modest addition of talent to our existing team, alongside a major
shift to culture and working practices but without increasing our
capital expenditure. Importantly, we expect this improving
capability to allow us to make increasingly frequent and meaningful
innovations and simplifications to the customer journey, thereby
increasing conversion and improving marketing efficiency.
We focused commercial and marketing resources on building a
disciplined, data-driven trading environment. We further in-sourced
marketing competence away from agency relationships and
contractors, only retaining relationships with valuable partners in
specialist areas. Both these efforts allowed us to increase
customer volumes across H1 from relatively efficient direct to
consumer channels. This positively impacts marketing margin, a
trend we expect to continue.
New business development complements this activity, with us
winning our first new major partnership with Haymarket Publishing
Group, who recently announced renewed focus and investment on their
automotive assets, Piston Heads, Autocar and What Car. GoCompare
has already implemented in-journey insurance information and quotes
to Haymarket customers, and we expect this journey to improve
across H2.
We were also delighted to announce our first external
investment, in line with our strategy of investing into relevant or
adjacent entrepreneurial ventures which are trying to solve big
consumer problems. We have agreed a minority capital investment
into, and commercial partnership with, Mortgage Gym - an exciting
fintech start-up which is targeting a major simplification to the
UK mortgage sector. They are creating a unique blend of a fast and
simplified user experience, a set of tools to empower IFAs and a
deep integration with Experian.
We remain confident of meeting our expectations for the full
year 2017, and are excited about the changes that we have made and
continue to make to our business. We shall maintain strong focus on
the development of our people, who remain at the heart of
everything we do. We believe that the creation of a strong, diverse
culture will ultimately prove to be a competitive advantage and
provide a strong base for the future.
Matthew Crummack
Chief Executive Officer
Financial Review
Revenue increased by 4.1% to GBP75.8m and adjusted operating
profit increased by 21.5% to GBP17.5m compared to the same period
last year.
The Directors have declared an interim dividend of 0.7 pence per
share, which represents a pay-out ratio of approximately 22% of
profit after tax after adding back the share based payment charge
net of tax for the Foundation Awards.
Revenue
H1 17 H1 16 Movement Movement
GBPm GBPm GBPm %
-------------- ------ ------ --------- ---------
Insurance 70.9 68.5 2.4 3.5
-------------- ------ ------ --------- ---------
Strategic
Initiatives 4.9 4.3 0.6 15.0
-------------- ------ ------ --------- ---------
Total 75.8 72.8 3.0 4.1
-------------- ------ ------ --------- ---------
The Insurance segment saw growth in H1 17 with revenue up 3.5%
to GBP70.9m. Growth was driven by a combination of higher
interactions, higher income per sale and improved conversion.
The Strategic Initiatives segment also saw growth in H1 17 with
revenue up 15% to GBP4.9m. Within this segment there was strong
growth in Protection but a reduction in revenue generated from
Money products.
Marketing costs and marketing margin
H1 17 H1 16 Movement Movement
GBPm GBPm GBPm %
----------------- ------ ------ --------- ---------
Cost of sales 24.0 22.1 1.9 8.6
----------------- ------ ------ --------- ---------
Distribution
costs 21.8 25.6 (3.8) (14.8)
----------------- ------ ------ --------- ---------
Total marketing
spend 45.8 47.7 (1.9) (4.0)
----------------- ------ ------ --------- ---------
Marketing
margin 39.6% 34.5% +5.1%pts
----------- ------ ------ ---------
Total marketing spend in H1 17 of GBP45.8m is GBP1.9m lower than
spend in H1 16. The reduction in marketing spend is largely due to
lower distribution costs and in particular lower broadcast spend on
TV and other media. Spend on broadcast is typically higher in
periods where new TV advertising creatives are launched and this is
reflected in the lower H1 17 spend where there has not been a new
creative versus H1 16 where there was. Spend on cost of sales is
GBP1.9m higher in H1 17 than H1 16 and this reflects an increase in
on-line pay per click.
The combination of higher revenue and lower marketing spend has
resulted in an improvement in marketing margin (calculated as the
difference between revenue and marketing expenditure divided by
revenue) from 34.5% in H1 16 to 39.6% in H1 17.
Administrative expenses
Administrative expenses excluding adjusting items, depreciation
and amortisation of GBP11.9m are GBP2.0m higher than in H1 16. This
increase is mainly attributable to an increase in staff costs which
reflects the increased headcount across the Tech, Product and
Marketing teams as well as the costs of the strengthened leadership
team and Board which have been incurred following the Group's
demerger from esure Group plc in November 2016.
Adjusted operating profit, Adjusted EBITDA, and Profit before
tax
H1 17 H1 16 Movement Movement
-------------------------------
GBPm GBPm GBPm %
------------------------------- ------- ------- --------- ---------
Revenue 75.8 72.8 3.0 4.1
------------------------------- ------- ------- --------- ---------
Total marketing spend (45.8) (47.7) 1.9 (4.0)
------------------------------- ------- ------- --------- ---------
Administrative expenses
excluding adjusting
items, depreciation
and amortisation (11.9) (9.9) (2.0) 20.2
------------------------------- ------- ------- --------- ---------
Adjusted EBITDA 18.1 15.2 2.9 19.1
------------------------------- ------- ------- --------- ---------
Depreciation and amortisation (0.6) (0.8) 0.2 (25.0)
------------------------------- ------- ------- --------- ---------
Adjusted operating
profit 17.5 14.4 3.1 21.5
------------------------------- ------- ------- --------- ---------
Foundation Award share
based payment charge (1.7) - (1.7) 100.0
------------------------------- ------- ------- --------- ---------
Operating profit 15.8 14.4 1.4 9.7
------------------------------- ------- ------- --------- ---------
Net finance costs (1.1) 0.1 (1.2)
------------------------------- ------- ------- --------- ---------
Profit before tax 14.7 14.5 0.2 1.7
------------------------------- ------- ------- --------- ---------
Adjusted operating profit, calculated as operating profit for
the period after adding back the GBP1.7m share based payment charge
in relation to the Foundation Awards, increased by 21.5% to
GBP17.5m.
Adjusted EBITDA for the period, calculated as Adjusted operating
profit for the period after adding back depreciation and
amortisation, increased by 19.1% to GBP18.1m.
The Group has a light infrastructure and continues to have
relatively low capital expenditure. The charge for depreciation and
amortisation for H1 17 of GBP0.6m is broadly similar to H1 16.
The Group incurred net finance costs of GBP1.1m during H1 17
compared to GBP0.1m of net finance income in H1 16. The Group drew
down GBP75m of debt on 1 November 2016 and has incurred interest
charges since this date. The Group had no borrowings in 2016 prior
to 1 November but generated finance income on its cash
balances.
Profit before tax for H1 17 of GBP14.7m is GBP0.2m higher
compared to the same period last year. This reflects the
improvement in Adjusted operating profit being largely offset by
the increase in net finance costs and the share based payment
charge relating to the Foundation Awards.
Income tax expense
The Group's tax charge of GBP2.8m is based on an expected
effective income tax rate for the year to December 2017 of 19.25%
(H1 16: 20.0%).
Earnings per share
H1 17 H1 16 Movement
(pence (pence (pence
per share) per share) per share)
------------------------- ------------- ------------- -------------
Basic earnings per
share 2.8 2.8 0.0
------------------------- ------------- ------------- -------------
Adjusted basic earnings
per share 3.2 2.8 0.4
------------------------- ------------- ------------- -------------
Basic earnings per share for H1 17 is 2.8pence which is in line
with the 2.8pence delivered in H1 16. Adjusted earnings per share,
which excludes the impact of the adjusting items noted above (net
of tax), is 3.2p, an increase of 0.4pence (14%) on H1 16 and better
reflects the earnings generated by the underlying core
business.
Cash and leverage
The Group delivered a positive operating cash flow during H1 17
of GBP7.7m. This was negatively impacted by a timing difference,
with GBP5.1m of fees relating to the demerger in 2016 being paid in
January 2017. The underlying operating cash flow in H1 17 was
GBP12.8m. Net cash used in investing activities of GBP1.8m includes
the GBP1.0m that was paid for the investment in Mortgage Gym
Limited.
The total increase in cash and cash equivalents during the
period was GBP4.8m and the total cash and cash equivalents at the
end of the period was GBP23.2m. After allowing for working capital
requirements and the cost of the interim dividend, surplus cash at
the end of the period is approximately GBP16m.
H1 17 H1 16
GBPm GBPm
--------------------------------------- ------ -------
Net cash generated from operating
activities 7.7 16.8
--------------------------------------- ------ -------
Net cash used in investing activities (1.8) (0.7)
--------------------------------------- ------ -------
Proceeds from issuance of ordinary - -
shares
--------------------------------------- ------ -------
Interest paid (1.1) -
--------------------------------------- ------ -------
Dividends paid to owners of
the parent - (12.5)
--------------------------------------- ------ -------
Net cash used in financing activities (1.1) (12.5)
--------------------------------------- ------ -------
Net increase in cash and cash
equivalents 4.8 3.6
--------------------------------------- ------ -------
Cash and cash equivalents at
beginning of year 18.4 4.3
--------------------------------------- ------ -------
Cash and cash equivalents at
end of period 23.2 7.9
--------------------------------------- ------ -------
Borrowings at the 30 June 2017 were GBP73.2m, which after
allowing for cash and cash equivalents of GBP23.2m results in net
debt of GBP50.0m. The net debt is GBP4.7m lower than at 31 December
2016. Adjusted EBITDA for the 12 months to 30 June 2017 of GBP34.5m
is GBP2.9m higher than in the 12 months to 31 December 2016. The
combination of the reduction in net debt and the increase in
Adjusted EBITDA results in the leverage falling to 1.5x compared to
1.7x at 31 December. The leverage is significantly lower than the
2.8x at the time of the demerger and well within the banking
covenants.
The Board does not target a specific leverage ratio but instead
looks to optimise the capital structure of the Group ensuring that
cash is available for investment in opportunities that will drive
shareholder value over the medium term as well as for paying
dividends in line with the dividend policy.
H1 17 FY 16
GBPm GBPm
--------------------------- ------- -------
Borrowings (73.2) (73.1)
--------------------------- ------- -------
Cash and cash equivalents 23.2 18.4
--------------------------- ------- -------
Net debt (50.0) (54.7)
--------------------------- ------- -------
Adjusted EBITDA (rolling
12 months) 34.5 31.6
--------------------------- ------- -------
Leverage 1.5 1.7
--------------------------- ------- -------
Dividends
The Board has declared an interim dividend of 0.7 pence per
share. The dividend is equivalent to a pay-out ratio of
approximately 22% of profit after tax after adding back the share
based payment charge net of tax for the Foundation Awards, which is
at the lower end of the Group's target pay-out ratio of 20%-40%.
The pay-out ratio balances cash returns to shareholders with our
ability to fund potential strategic investments.
The ex-dividend date is 14 September 2017, with a record date of
15 September 2017 and a payment date of 6 October 2017.
Principal risks and uncertainties
The principal risks and uncertainties faced by the Group are
unchanged from those disclosed in the 2016 Annual Report (pages 20
to 22) which is available to view at www.gocomparegroup.com. These
cover certain key areas of risk which have been summarised
below.
Risk Nature of risk Mitigation and management
area
---------------- ------------------------------- ---------------------------------------------------------------
Competitive The Group operates in
environment a highly competitive * Experienced and capable customer acquisition team.
market and changes from
new or existing competitors
may have a significant * Comprehensive mix of marketing activities to drive
impact on market share, efficient and cost-effective customer acquisition.
revenue and profit.
* Continual investment developing other verticals to
diversify revenue streams.
---------------- ------------------------------- ---------------------------------------------------------------
Brand The Group is reliant
performance on customer awareness * Ongoing review of the advertising approach, including
and appreciation of performance and customer perception.
the GoCompare brand,
deterioration of which
may lead to lower market * Branding relaunch in July 2017 across all media
share, revenue and profit. channels with refreshed content.
---------------- ------------------------------- ---------------------------------------------------------------
Technology The Group is reliant
and cyber on high-performing comparison * Continual investment in and response to developments
solutions delivered in cyber risk management including cyber threat
through online interaction monitoring systems.
with its customers.
Inability to develop
or adapt to technological * Regular review and testing of business and service
changes could impact continuity capabilities.
the number of customers
using the Group's services.
Inability to protect
against cyber related
incidents could impact
the availability of
this online service
and potential loss of
data.
---------------- ------------------------------- ---------------------------------------------------------------
Legal The Group operates in
and regulatory a number of regulated * Ongoing dialogue and contact with regulatory bodies.
markets and is also
subject to competition
and data protection * Established in-house Legal and Compliance resource
laws. Failure to comply with access to specialist advice, as required.
with existing or adapt
to changes in regulatory
requirements may have
a fundamental impact
on the Group's business
model and financial
performance.
---------------- ------------------------------- ---------------------------------------------------------------
Financial The Group is exposed
to a number of financial * Regular monitoring and management of debtors to
risks; principally credit ensure prompt payment.
risk, liquidity risk
and interest rate risk.
Failure to manage financial * Cash flow forecasting and headroom monitoring to
risks appropriately manage availability of cash, debt repayment and
could lead to an adverse covenant compliance.
impact on the Group's
financial performance,
availability of cash
or breach of banking
covenants.
---------------- ------------------------------- ---------------------------------------------------------------
Economic The Group's revenue
conditions is derived from provision * Ongoing review of wider market conditions and
of product and price indicators.
comparison services
in the UK. A contraction
in the economy, changes * Flexible approach to cost base.
to fiscal policy or
developments in the
process for the UK to * Diversification of revenue streams to adapt to future
leave the EU, may lead changes and development of scalable solutions in
to worsening economic emerging markets.
conditions and performance
of the Group. In a time
of economic uncertainty
and rising costs, consumers
are more likely to consider
switching through a
price comparison website
to achieve better deals.
---------------- ------------------------------- ---------------------------------------------------------------
The Board ensures that measures are in place to provide
independent and objective identification and management of risks
through the Audit and Risk Committee. The Committee is responsible
for reviewing the effectiveness of internal control and assurance
through the reports from internal audit, compliance and risk
functions.
Statement of Directors' Responsibilities
The Directors' confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- An indication of the important events that have occurred
during the first six months 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 financial
year; and
-- Material related party transactions in the first six months
and any material changes in the related party transactions
described in the last annual report.
The Directors of Gocompare.com Group plc are listed in the
Gocompare.com Group plc Annual Report for 31 December 2016. There
have been no changes since the publication of that Annual Report to
the date of this interim report.
Matthew Crummack, Nick Wrighton,
Chief Executive Officer Chief Financial Officer
INDEPENT REVIEW REPORT TO GOCOMPARE.COM GROUP PLC
Conclusion
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 2017 which comprises Consolidated
Statement of Comprehensive Income, Consolidated Statement of
Financial Position, Consolidated Statement of Changes in Equity,
Consolidated Statement of Cash Flows and the related explanatory
notes.
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 2017 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
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. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) 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.
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 FCA.
As disclosed in note 1, the annual financial statements of the
company are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 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.
The purpose of our review work and to whom we owe our
responsibilities
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 DTR of the UK FCA. 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.
Timothy Butchart
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
Canary Wharf
London
E14 5GL
31 July 2017
Condensed consolidated interim financial statements
Gocompare.com Group plc
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 June 2017
6 months 6 months
to to
30 June 30 June
2017 2016
GBPm GBPm
Note
Revenue 4 75.8 72.8
Cost of
sales (24.0) (22.1)
Gross profit 51.8 50.7
Distribution
costs (21.8) (25.6)
Administrative
expenses (14.2) (10.7)
--------- ---------
Operating
profit 15.8 14.4
Analysed
as:
Adjusted operating
profit 5 17.5 14.4
Foundation Award share-based
payment charges (1.7) -
Operating
profit 15.8 14.4
------------------------------- ----- --------- ---------
Finance
income 0.0 0.1
Finance
costs (1.1) -
--------- ---------
(1.1) 0.1
Profit before
income tax 14.7 14.5
Income tax expense 6 (2.8) (2.9)
Profit for the
period 11.9 11.6
--------- ---------
Other comprehensive
income - -
Total comprehensive income
for the period 11.9 11.6
--------- ---------
Earnings per
share (pence) 7
Basic earnings
per share 2.8 2.8
Diluted earnings
per share 2.7 2.8
Notes 1 to 14 are an integral part of these condensed
consolidated interim financial statements
Gocompare.com Group plc
Condensed Consolidated Statement of Financial Position
As at 30 June 2017
30 June 31 December 30 June
2017 2016 2016
GBPm GBPm GBPm
Non-current
assets
Goodwill 2.5 2.5 2.5
Intangible
assets 0.5 0.5 0.9
Tangible
assets 1.6 1.3 1.3
Investment 1.0 - -
Deferred tax
asset 1.0 0.3 0.1
-------- ------------ --------
6.6 4.6 4.8
Current
assets
Trade and other
receivables 23.7 16.7 19.3
Cash and cash
equivalents 23.2 18.4 7.9
-------- ------------ --------
46.9 35.1 27.2
Total assets 53.5 39.7 32.0
-------- ------------ --------
Non-current
liabilities
Borrowings 63.6 63.4 -
Provisions for liabilities
and charges 1.0 1.0 0.9
-------- ------------
64.6 64.4 0.9
Current liabilities
Trade and other
payables 20.4 21.3 17.9
Current income tax
liabilities 3.2 2.9 2.9
Borrowings 9.6 9.7 -
-------- ------------
33.2 33.9 20.8
Total liabilities 97.8 98.3 21.7
-------- ------------ --------
Equity attributable to
owners of the parent
Ordinary
shares 0.1 0.1 0.0
Share premium 2.7 2.7 2.7
Retained earnings (47.1) (61.4) 7.6
------------
Total equity (44.3) (58.6) 10.3
-------- ------------ --------
Total equity and
liabilities 53.5 39.7 32.0
-------- ------------ --------
Notes 1 to 14 are an integral part of these condensed
consolidated interim financial statements
Gocompare.com Group plc
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 June 2017
Share Share Profit Total
and
capital premium loss equity
account
GBPm GBPm GBPm GBPm
At 1 January
2016 0.0 2.7 8.5 11.2
Profit for
the period - - 11.6 11.6
Other comprehensive
income for the period - - - -
-------- -------- -------
Total comprehensive income
for the period - - 11.6 11.6
Transactions with
owners
Dividends paid - - (12.5) (12.5)
Total transactions with
owners - - (12.5) (12.5)
-------- -------- -------- -------
At 30 June
2016 0.0 2.7 7.6 10.3
-------- -------- -------- -------
At 1 July 2016 0.0 2.7 7.6 10.3
Profit for
the period - - 4.2 4.2
Other comprehensive
income for the period - - - -
-------- -------- -------
Total comprehensive income
for the period - - 4.2 4.2
Transactions with
owners
Dividends paid - - (73.3) (73.3)
Share based payments - - 0.1 0.1
Proceeds from shares
issued 0.1 - - 0.1
-------- --------
Total transactions with
owners 0.1 - (73.2) (73.1)
-------- -------- -------- -------
At 31 December
2016 0.1 2.7 (61.4) (58.6)
-------- -------- -------- -------
At 1 January
2017 0.1 2.7 (61.4) (58.6)
Profit for
the period - - 11.9 11.9
Other comprehensive
income for the period - - - -
-------- -------- -------
Total comprehensive income
for the period - - 11.9 11.9
Transactions with
owners
Dividends paid - - - -
Share based payments - - 2.0 2.0
Tax on share based
payments - - 0.4 0.4
Proceeds from shares
issued 0.0 - (0.0) -
-------- --------
Total transactions with
owners 0.0 - 2.4 2.4
-------- -------- -------- -------
At 30 June
2017 0.1 2.7 (47.1) (44.3)
-------- -------- -------- -------
Notes 1 to 14 are an integral part of these condensed
consolidated interim financial statements
Gocompare.com Group plc
Condensed Consolidated Statement of Cash Flows
For the period ended 30 June 2017
6 months 6 months
to to
30 June 30 June
2017 2016
GBPm GBPm
Cash flows from operating
activities
Profit for the
period before
tax 14.7 14.5
Adjustments
for:
Depreciation of property,
plant and equipment 0.2 0.2
Amortisation of intangible
assets 0.3 0.6
Impairment of
tangible assets 0.1 -
Share based payment
charge 2.0 -
Net finance
costs 1.1 (0.1)
Changes in working
capital:
Increase in trade
and other receivables (6.9) (3.6)
(Decrease) / increase in
trade and other payables (0.9) 7.0
Income tax
paid (2.9) (1.8)
---------
Net cash generated from
operating activities 7.7 16.8
Cash flows from investing
activities
Purchase of property, plant
and equipment (0.6) (0.1)
Purchase of intangible
assets (0.2) (0.7)
Interest
received 0.0 0.1
Purchase of equity
investment (1.0) -
---------
Net cash used in investing
activities (1.8) (0.7)
Cash flows from financing
activities
Proceeds from issuance
of ordinary shares - -
Interest
paid (1.1) -
Dividends paid to
owners of the parent - (12.5)
---------
Net cash used in financing
activities (1.1) (12.5)
Net increase in cash and cash
equivalents 4.8 3.6
Cash and cash equivalents
at beginning of period 18.4 4.3
---------
Cash and cash equivalents
at end of period 23.2 7.9
Notes 1 to 14 are an integral part of these condensed
consolidated interim financial statements
Gocompare.com Group plc
Notes to the financial statements
For the period ended 30 June 2017
1. General information
Gocompare.com Group plc ("the Company") and its subsidiaries
(together, "the Group") provide an internet based price comparison
website for financial and non-financial products.
The company is a public limited company, which is listed on the
London Stock Exchange and is incorporated in England and Wales. Its
registered office is Imperial House, Imperial Way, Newport, NP10
8UH.
All of the Company's subsidiaries are located in the United
Kingdom.
These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31
December 2016 were approved by the Board of Directors on 1 March
2017 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 (2) and (3) of the Companies Act 2006. These
condensed interim financial statements have been reviewed, not
audited.
2. Summary of significant accounting policies
These condensed interim financial statements for the six months
ended 30 June 2017 have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS34, 'Interim financial reporting', as adopted
by the European Union. The condensed interim financial statements
should be read in conjunction with the annual financial statements
for the year ended 31 December 2016, which have been prepared in
accordance with IFRSs as adopted by the European Union.
The accounting policies adopted are consistent with those
applied to the consolidated financial statements for the year ended
31 December 2016. In addition to those accounting policies, a
policy for investments in equity instruments is provided as this is
a new accounting item for the current financial period.
The financial statements have been presented in Sterling and
rounded to the nearest hundred thousand. Throughout these financial
statements any amounts which are less than GBP0.05m are shown by
0.0, whereas a dash (-) represents that no balance exists.
New accounting standards and interpretations
A number of new standards, amendments to standards and
interpretations will be applicable to the consolidated financial
statements in future years. The adoption of these standards are not
expected to have a material impact on the Group financial results
or disclosures.
Financial assets - investments in equity instruments
Investments in equity instruments are classified as available
for sale financial assets and are initially recognised at fair
value with transaction costs expensed as incurred. Investments are
subsequently recognised at fair value with changes in the value of
the investment recognised in Other Comprehensive Income.
Dividend income is recognised in profit and loss when the
dividend is received.
Going concern
The Group meets its day to day working capital requirements
through it bank facilities and cash balances held. In considering
the appropriateness of the going concern assumption, the Directors'
have taken into account the Group's forecasts, projections and
reasonably possible changes in trading performance and cash flows.
After making enquiries, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for at least twelve months from the date of approval of
the financial statements. Having reassessed the principal risks,
the directors considered it appropriate to adopt the going concern
basis of accounting in preparing its condensed interim financial
statements.
Gocompare.com Group plc
Notes to the financial statements
For the period ended 30 June 2017
2. Summary of significant accounting policies (continued)
Use of non-GAAP performance measures
In the analysis of the Group's results, certain financial
performance measures are presented which may be prepared on a
non-GAAP basis. The Board believes that these measures provide a
useful analysis, allow comparability of performance and present
results in a way that is consistent with how information is
reported internally.
The key non-GAAP measures presented by the Group are:
- Adjusted Operating profit: defined as Operating profit after
adding back adjusting items
- Adjusted EBITDA: defined as Adjusted Operating profit after
adding back depreciation and amortisation
- Adjusted basic EPS: defined as Profit for the period,
excluding exceptional items (adjusted for tax) divided by the
weighted average number of shares in issue for the period.
Adjusted EBITDA is a measure which is used in calculating one of
the Group's financial covenants on its borrowings as well as a
factor in determining the coupon rate. Adjusted Operating profit is
one of the factors used in assessing performance to determine
remuneration for the Executive Directors and Senior Management.
3. Critical accounting judgements and estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
are consistent with those that applied to the consolidated
financial statements for the year ended 31 December 2016.
4. Segment information
Information reported to the Board (the Chief Operating Decision
Maker) for the purposes of the assessment of segment performance is
focused on the types of products customers have purchased. The
Chief Operating Decision Maker, does not review profit and loss
items below cost of sales nor the assets and liabilities of the
Group by reportable segments and therefore they are reported on an
aggregated basis for the Group.
The Group's reportable segments under IFRS 8 are as follows:
-- Insurance Customers and activities ("Insurance"); and
-- Strategic Initiative Customers and activities ("Strategic
Initiatives").
The identification and disclosure of the Group's segments is
unchanged from that detailed in the consolidated financial
statements of the Group for the year ended 31 December 2016.
Gocompare.com Group plc
Notes to the financial statements
For the period ended 30 June 2017
4. Segment information (continued)
Period ended 30 June 2017
Insurance Strategic Total
initiatives
GBPm GBPm GBPm
Revenue 70.9 4.9 75.8
Cost of
sales (21.2) (2.8) (24.0)
---------- ------------ -------
Gross profit 49.7 2.1 51.8
Period ended
30 June 2016
Insurance Strategic Total
initiatives
GBPm GBPm GBPm
Revenue 68.5 4.3 72.8
Cost of
sales (18.8) (3.3) (22.1)
---------- ------------ -------
Gross profit 49.7 1.0 50.7
5. Adjusted operating profit
The following transactions occurred during the year which have
been added back to operating profit in arriving at adjusted
operating profit:
6 months 6 months
to to
30 June 30 June
2017 2016
GBPm GBPm
Foundation Award share-based 1.7 -
payment charge
--------- ---------
1.7 -
In November 2016, the Group issued a number of Foundation Awards
in the form of free shares to the Executive Directors and Senior
Management. These were awarded as a result of the Group's
successful listing and will vest after 2 years subject to the
achievement of certain stretching performance criteria.
The Awards have been treated as an adjusting item by the Group
in arriving at adjusted operating profit, by virtue of their
association with the listing, the quantum of shares and individual
size of the Awards made in addition to the fact that they vest over
a shorter 2 year period. Furthermore, the Foundation Awards are
non-recurring (although accounting charges will follow until they
vest) and the Directors do not, therefore, consider these Awards to
be part of the ongoing trading performance of the business.
6. Taxation
Income tax expense is recognised based on management's estimate
of the weighted average annual income tax rate expected for the
full financial year. The estimated average annual tax rate used for
the year to 31 December 2017 is 19.25%. The estimated tax rate used
for the six months ended 30 June 2016 was 20.0%.
Gocompare.com Group plc
Notes to the financial statements
For the period ended 30 June 2017
7. Earnings per share
a) Basic
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the company by the weighted
average number of ordinary shares in issue during the period.
6 months 6 months
to to
30 June 30 June
2017 2016
Profit from continuing operations
attributable to owners of the
parent (GBPm) 11.9 11.6
--------- ---------
Weighted average number of ordinary
shares in issue (m) 418.3 418.3
Earnings per share
(pence per share) 2.8 2.8
b) Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
6 months 6 months
to to
30 June 30 June
2017 2016
Profit from continuing operations
attributable to owners of the
parent (GBPm) 11.9 11.6
--------- ---------
Weighted average number of ordinary
shares in issue (m) 418.3 418.3
Adjustment for share 15.2 -
options (m)
Weighted average number of ordinary
shares for dilutive earnings per
share (m) 433.5 418.3
Dilutive earnings per share
(pence per share) 2.7 2.8
c) Adjusted basic
6 months 6 months
to to
30 June 30 June
2017 2016
Profit from continuing operations
attributable to owners of the parent
(GBPm) 11.9 11.6
--------- ---------
Adjustment for Foundation Awards 1.3 -
charge, net of tax (GBPm)
Adjusted profit from continuing
operations attributable to owners
of the parent (GBPm) 13.2 11.6
Weighted average number of ordinary
shares in issue (m) 418.3 418.3
Adjusted earnings per share
(pence per share) 3.2 2.8
Gocompare.com Group plc
Notes to the financial statements
For the period ended 30 June 2017
8. Financial instruments
The following table sets out the financial assets and financial
liabilities of the Group at the period end. The carrying amounts of
the Group's financial instruments are considered to be a reasonable
approximation of their fair value and therefore no separate
disclosure of fair values is given.
6 months 6 months
to to
30 June 30 June
2017 2016
Financial GBPm GBPm
assets
Investments in equity
instruments 1.0 -
Trade and other
receivables 17.9 16.1
Cash and cash
equivalents 23.2 7.9
42.1 24.0
Financial
liabilities:
Trade and other
payables (16.8) (14.1)
Borrowings (73.2) -
(90.0) (14.1)
9. Financial risk management
The Group's activities expose it to a variety of financial
risks: credit risk, liquidity risk, interest rate risk.
The condensed interim financial statements do not include all
financial risk management information and disclosures required in
the annual financial statements; they should be read in conjunction
with the Group's annual financial statements as at 31 December
2016.
10. Investments in equity instruments
On 30 June 2017 the Group acquired a minority shareholding in
Mortgage Gym Limited for consideration of GBP1.0m.
6 months 6 months
to to
30 June 30 June
2017 2016
GBPm GBPm
Investment in equity
instrument 1.0 -
--------- ---------
The investment is classified as an available for sale financial
asset, is held at fair value and is unquoted. Its fair value is
classified as level 3 within the IFRS7 fair value hierarchy, as the
inputs for its fair value are not based on observable market data.
At period end, fair value has been determined based on the
consideration paid, as the completion date is the same as the
reporting date and this is deemed to represent fair value of the
investment.
Gocompare.com Group plc
Notes to the financial statements
For the period ended 30 June 2017
11. Share based payments
The Group has a number of equity-settled, share-based
compensation plans. Following admission of the Group to the London
Stock Exchange, arrangements have been put in place for employee
incentives in Gocompare.com Group plc shares. These include the
Executive Foundation Awards and the 2017 Performance Share Plan
('PSP'), as well as the Free Share Awards, Partnership and Matching
shares issued under the all-employee Share Incentive Plan
("SIP").
The share-based payment charge recognised in the Statement of
Comprehensive Income is attributed to each of the schemes as
shown:
6 months 6 months
to to
30 June 30 June
2017 2016
GBPm GBPm
Foundation
Awards 1.7 -
2017 PSP 0.3 -
Free Share
Awards 0.0 -
Partnership
Shares 0.0 -
Save As You Earn
Shares 0.0 -
--------- ---------
2.0 -
The following table shows the number of share options awarded,
exercised and outstanding at the period end. There were no share
options outstanding at 30 June 2016 as the schemes have only been
active since November 2016 following the Group's admission to the
London Stock Exchange.
Foundation 2017 Free Total
Awards PSP Share Awards
Awards Awards
000s of shares
-----------------------------------------
At 30 June
2016 - - - -
Awards granted
during the period 13,600 - 343 13,943
Awards exercised during
the period - - - -
Awards forfeited
during the period - - - -
At 31 December
2016 13,600 - 343 13,943
Awards granted
during the period - 3,502 - 3,502
Awards exercised during
the period - - - -
Awards forfeited
during the period (143) (26) (24) (193)
At 30 June 2017 13,457 3,476 319 17,252
Gocompare.com Group plc
Notes to the financial statements
For the period ended 30 June 2017
11. Share based payments (continued)
The Group has awarded an equity settled Performance Share Plan
(the '2017 PSP') to the Executive Directors and Senior Management.
The 2017 PSP Awards were granted on 29 March 2017, save for one
award which was granted on 5 April 2017. The awards are subject to
an EPS growth performance condition, for which the fair value of
the awards was estimated using a Black-Scholes valuation model, and
a total shareholder return ('TSR') condition, which has been valued
using a Monte-Carlo simulation.
The inputs into the model were:
2017-2019
PSP Awards
--------------
Number of options
granted 3,502,446
Valuation method
- TSR Monte-Carlo
Valuation method
- EPS Black-Scholes
Share price at grant
- 29 March 2017 GBP0.92
Share price at grant
- 5 April 2017 GBP0.93
Exercise GBPnil
price
Volatility
% p.a. 34.0%
Dividend yield
% p.a. nil
Risk-free
rate % 1.10%
Expected 3yrs
life
Fair value per
share - TSR GBP0.54
Fair value per GBP0.92
share - EPS
--------------
Details of the other equity-settled, share-based compensation
plans are set out in the Gocompare.com Group plc Annual Report
2016.
Scheme limits
The rules of the various Plans described above provide that, in
any 10 year rolling period, not more than 10 per cent. of the
Company's issued ordinary share capital may be issued under the
combined Plans and under any other employee share plan adopted by
the Company. In addition, the rules of the Performance Share Plan
and the Deferred Bonus Plan provide that, in any 10 year rolling
period, not more than 5 per cent. of the Company's issued ordinary
share capital may be issued under these two schemes (and any other
discretionary employee share plan adopted by the Company).
Gocompare.com Shares transferred out of treasury under the Plans
will count towards these limits for so long as this is required
under institutional shareholder guidelines. Gocompare.com Shares
issued or to be issued pursuant to awards granted before Admission
or in relation to the Foundation Awards (described above) will not
count towards these limits. In addition, awards which are
relinquished or lapse will be disregarded for the purposes of these
limits.
Gocompare.com Group plc
Notes to the financial statements
For the period ended 30 June 2017
12. Dividends
6 months 12 months 6 months
to to to
30 June 31 December 30 June
2017 2016 2016
GBPm GBPm GBPm
Dividends
paid - 85.8 12.5
----------- ------------ ---------
In November 2016, a dividend of GBP73.3m was paid, equivalent to
17.6 pence per share.
In June 2016, a dividend of GBP12.5m was paid, equivalent to
62.5 pence per share.
The Directors have recommended an interim dividend for 2017 of
GBP2.9m, equivalent to 0.7 pence per share.
Dividends per share are disclosed based on the number of shares
in issue at the point they were declared and paid. Gocompare.com
Group plc issued a number of shares during 2016 which has the
effect of showing a relatively lower dividend per share for the
November 2016 and 2017 interim dividends.
13. Contingent liabilities
The Group had no contingent liabilities at the period end (30
June 2016: GBPnil).
14. Related parties
Intercompany transactions between entities that are members of
the Group at year end and have been eliminated on consolidation are
not disclosed, as per the exemption available in IAS24.
Key management includes the executive and non-executive
directors of Gocompare.com Group plc.
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, other than the
share option arrangements as set out in Note 11. A number of share
options have been granted to key management and other senior
management, none of which have yet vested. No dividends were paid
by the Company in the period.
During the period, the Group had the following related party
transactions with related entities:
The Group paid fees of GBP40,000 (6 months to 30 June 2016:
GBPnil) to WOne International Services Limited, a company in which
one of the Directors of the Group has a beneficial interest. The
arrangement was made under normal commercial terms with
consideration settled in cash. The amount outstanding at the period
end was GBPnil (30 June 2016: GBPnil).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAEXFDFAXEAF
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August 01, 2017 02:01 ET (06:01 GMT)
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