Prelims 11 Pres
Prelims 11 Pres
Prelims 11 Pres
28 February 2012
Finance Update
Paul Doughty Chief Financial Officer
Significant investment in brand and technology Offline marketing expenditure (TV, radio and print) (inc Britains Got Talent) +8m (+43%) Technology refresh (Capital expenditure) 4m
3.4m one off credit from resolution of VAT issue 0.5m ongoing benefit per annum
* **
Excludes pre-IPO share based compensation charges (in prior period), depreciation, amortisation of intangibles, costs relating to the acquisitions of Financial Services Net Limited and Local Daily Deals Limited, and VAT recovery relating to prior periods. Slide 32 contains a reconciliation of adjusted EBITDA to statutory operating profit.
Adjusted EBITDA
Significant top line growth largely driven by media spend
21.2m 1.1m
(2.9m)
49.5m 41.0m
Gross Profit 22.3m Cost Base (13.8m)
2010
Volume
Margin
Staff costs
Media
Irrec VAT
Other admin
2011
100%
11 22
12
21
Travel
37.8
Home Services/Other
SEM
67
67
DTS
Money - credit
102.7
84.5
Insurance
0%
0.0
2011
2010
7
2011
2010
Insurance 2011
Strong and consistent revenue growth
Revenues increased 21% against last year
H2 revenues 20% ahead of same period last year Growth across major product lines Other revenues 4.9m (89%) ahead of same period last year
Life insurance change of model
H1 2011 Insurance Visitors ('m) Transactions ('m) Click Revenue (m) Other Revenue (m) Total Revenue (m) RPV RPT 14.6 8.1 46.4 3.9 50.3 3.45 5.76
Money 2011
Growth in both credit and non credit product revenues
Revenue increased 19% over 2010
Growth in both credit and other banking products Provider budgets and availability of product Recovery in loans market
H1 2011 Money Visitors ('m) Transactions ('m) Click Revenue (m) Other Revenue (m) Total Revenue (m) RPV RPT 18.1 9.4 24.8 2.2 27.0 1.50 2.64
H1 2011 Home Services Visitors ('m) Transactions ('m) Click Revenue (m) Other Revenue (m) Total Revenue (m) RPV RPT 11.7 4.1 3.6 3.6 0.31 0.89
10
Travel 2011
End markets remain challenging
Visitors up 7% on 2010
Impact of TV advertising particularly in Q1
H1 2011 Travel Visitors ('m) Transactions ('m) Click Revenue (m) Other Revenue (m) Total Revenue (m) RPV RPT 23.2 13.3 7.0 0.7 7.6 0.33 0.52
Marketing investment
Continued switch from online to offline; Efficiency maintained
FY 2009 m % Online Offline Total Visitors (m) Rev per visitor () Cost per visitor () Margin per visitor () Margin per visitor % 42.4 15.6 58.0 120.5 1.13 0.48 0.65 58% 73% 27%
FY 2010 m % 43.2 19.0 62.2 119.2 1.25 0.52 0.73 58% 69% 31%
FY 2011 m % 50.5 27.0 77.5 130.2 1.37 0.60 0.78 57% 65% 35%
Cash
Cash generation remains a key strength of the business
Cash balances of 35.0m at 31 December 2011 59.5m of cash generated before capex, tax and dividend payments
Over 100% of EBITDA converted to cash
2010 final dividend of 12.9m paid in May; interim dividend of 7.7m and special dividend of 20m paid in September
5.4m 24.2m
2.2m
0.2m
21.8m
3.8m
36.6m (40.5m)
35.0m
Deprec'n
Amortis'n
Interest Income
Capex
Tax
Dividends
13
Dividends
Final dividend increased by 20%
Dividend p/share
2011
Interim Final Total Dividend Declared Special Dividend TOTAL (p) 1.5 3.03 4.53 3.93 8.46
2010
1.3 2.53 3.83 3.83
2009
1.3 2.2 3.5 9.84 13.34
Dates
Ex Div Date 28 March 2012 Payment Date 27 April 2012
14
Summary
Strong trading results
15
Business Update
Peter Plumb Chief Executive Officer
16
Agenda
2011 Review: strong year of growth Market: trends and insights 2012 Plans: where we are going Q1 trading trends
17
EBITDA of 49.5M
*Prime Channels are Motor Insurance, Home Insurance, Travel Insurance, Savings, Loans, Credit Cards and Energy
18
19
Exclusive deals
Money
Insurance
Energy
Credit
Savings
2011
Source: internal data
20
2010
2011
2010
Paid search
22% 26% 33% 19%
Partners
PR
Content
Digital 50.5M
23% 31% 25%
31%
21%
Q1
Q2
Q3
Q4
25%
27%
23%
21
Jan 2011
Product Average Policy Average MSM Saving
Jan 2012
Product Average Policy Average MSM Saving
Car Insurance
Average Cheapest Premium
1,150
289.47*
1,109
375.09*
Home Insurance
Average Cheapest Premium
175
127.28*
181
126.37*
Credit Cards
0% BT Duration
17 Months
248.26
24 Months
234.50
Savings
Easy Access
2.9%
49.03
3.13%
42.18 Jan
Loans
10k over 5 years
7.3%
138.40
6.0%
218.20
Energy
Average Household Bill
1,093
197.01
1,251
180.99
22
Source: Management Information and Consumer intelligence January 2011 & January 2012
Channel
Mkt Policies
Motor Insurance
Home Insurance Travel Insurance Savings Credit Cards Loans Energy
24M
18M 20M 63M 33M 5M 31M
10.3M (43%)
4.3M (24%) 11.4M (57%) 9.3M (15%) 4.5M (14%) 1.0M (20%) 5.7M (18%)
8.2M
2.0M
8.95%
10.7%
17.9%
7.5% Flat
23
24
25
27
Outlook
Jan and Feb trading in line with Boards expectations
Internet revenues:
Group revenue: current trading +15%
Money and insurance showing good growth
Providers
Strong product pipeline for 2012
Customers
BOE estimates UK Households will be 1000 worse off A great time to save on household bills
Profitability
Investment to continue: systems, brand and skills
29
30
Adjusted EBITDA
Reconciliation from statutory revenue and operating profit to adjusted EBITDA
H1 2011
Revenues Internet Intermediary Total Gross Profit Margin % Administrative costs Distribution Costs Operating Profit Operating Profit Profit Share and Pre IPO Share Amortisation of intangibles Depreciation VAT Recovery Acquis'n related costs Adjusted EBITDA Margin %
H2 2011
FY 2011
FY 2010
Var.
Var.%
H2 2010
91.6 0.1 91.7 66.4 72% (37.0) (16.9) 12.4 12.4 11.9 2.0 (3.2) 23.0 25%
89.3 89.3 64.5 72% (40.1) (12.9) 11.6 11.6 12.3 1.8 0.1 0.5 26.4 30%
180.9 0.1 181.0 130.9 72% (77.1) (29.8) 24.0 24.0 24.2 3.8 (3.1) 0.5 49.5 27%
148.9 0.0 148.9 106.1 71% (73.8) (21.6) 10.7 10.7 0.6 24.2 4.9 0.7 41.0 28%
32.0 0.0 32.0 24.8 (3.3) (8.2) 13.3 13.3 (0.6) 0.0 (1.0) (3.1) (0.2) 8.5
21% 79% 22% 23% 5% 38% (123)% (123)% (100)% 0% (21)% n/a n/a 21%
77.3 0.0 77.3 55.0 71% (36.7) (10.3) 8.0 8.0 0.2 11.7 2.5 0.7 22.9 30%
31
H2 2011 m
FY 2011 m
FY 2010 m
Variance
Variance %
H2 2010 m
13.3 0.0 2.0 4.7 5.5 25.5 15.3 1.6 16.9 25.5 -0.1 42.3
16.7 0.0 1.8 4.4 4.5 27.4 11.7 1.2 12.9 25.0 -0.2 37.7
30.0 0.0 3.8 9.1 10.0 52.9 27.0 2.8 29.8 50.5 -0.3 80.0
24.7 2.4 4.9 7.1 9.4 48.4 18.9 2.7 21.6 43.3 -0.5 64.4
5.3 -2.4 -1.1 2.0 0.6 4.6 8.1 0.1 8.2 7.2 0.2 15.6
12.5 0.7 2.5 3.9 4.6 24.2 8.9 1.4 10.3 22.5 -0.2 32.6
* Represents the costs of third party development resource only. Other third party resource costs are included within Staff Costs. (1) Excluding amortisation of intangibles, goodwill impairment, pre-IPO option ** Represents the release of creditor balances within the intermediary which are more than 6 years old. charges, and option chargesbusiness relating to the Simon Nixon scheme
(2) Includes cost of sales
32
VAT
A number of the groups services are on the borderline of being a marketing service or an intermediary service Marketing service standard rated for VAT purposes Intermediary service exempt rated for VAT purposes
HMRC raised an assessment on the Groups PAA leads business for 2.2m in March 2008 covering the period from March 2005 arguing that the supply of leads was a marketing service and should be standard rated. The Group had previously VAT accounted for leads as an exempt rated supply but had made provision in its accounts in the event that HMRC ruled that this was not the case From March 2008 onwards the Group VAT accounted for leads as a standard rated supply
MS challenged ruling and HMRC conceded the position in Q2 2011 Impact as follows:
Acquisitions
FSN valuation reassessed; LDD acquired for initial 1m
FSN: During 2010, the Group acquired 100% of FSN for 4.4m of upfront consideration, and 2.6m of contingent consideration (including 200k relating to amounts withheld dependent on the outcome of discussions with HMRC, and an additional 2.4m, being managements best estimate of how much of the maximum of 4m of additional consideration which was expected to become payable). At acquisition, the Group identified 6.1m of intangible assets within the business, and 2.2m of goodwill, representing the anticipated incremental value which the group expected to generate by applying the existing skills and expertise within the groups workforce to the acquired business. During 2011, based on trading to date, and the most recent forecasts, the Group has reduced its assessment of the amount of contingent consideration that it expects to become payable, to 0.2m, with a resulting credit to the Income Statement for 2.2m. As a result, the Group has performed an impairment review of the identified assets, and found the goodwill to be impaired by its full value. The Group has therefore also recognised a corresponding impairment charge for 2.2m to the Income Statement in the period. LDD: During the period the Group acquired 51% of Local Daily Deals Limited (LDD) for an upfront consideration of 1m, paid in cash. In addition, management have accounted for contingent consideration of 790k, being the fair value of their best estimate of how much of the additional payment of up to 10m that they expect to be paid on the third anniversary of the acquisition. Since this element of consideration is dependent on continued employment, it is accounted for as a staff cost through P&L over the three year period.
34
LDD acquisition accounting: Carrying value of net assets Fair value adjustments Goodwill Fair value of acquired assets Representing: Upfront consideration
December 2011 m Intangible assets Other non-current assets Net current assets Long term liabilities Net assets 160.6 12.0 17.2 (23.3) 166.5 187.1
Intangible assets include 55m of goodwill and 96.5m of other intangibles associated with the acquisition of MSFG, 6.1m of other intangibles associated with the acquisition of FSN, 0.6m of goodwill associated with the acquisition of LDD, and 3.4m of internally generated intangible assets. Net current assets includes cash of 35.0m as at the end of December 2011. The long term liability represents the net deferred tax liability relating to the tax amortisation benefit of the intangibles assets recognised upon the acquisition of MSFG.
35
Accounting information
Share options
All pre-IPO options have now vested or lapsed Post-IPO
8.3m LTIPs options issued in April 2009 which vest in 2012 with an exercise price of nil 4.3m LTIP options issued in April 2010 which vest in 2013 with an exercise price of nil 2.6m LTIP options issued in March 2011 which vest in 2014 with an exercise price of nil Post IPO options are included as a charge against adjusted EBITDA
Charge (m) Pre IPO options / SIPs Simon Nixon Scheme Post IPO LTIPs
2011 2.2
2012 1.2
2013 0.7
36
36
Accounting information
Tax
Tax charge of 7.5m giving effective rate of 31%
Higher than statutory tax rate for 2011 of 26.5% Prior year adjustments to current and deferred tax 0.2m of tax losses in Germany for which no deferred tax credit is recognised, consistent with prior periods
37
KPIs by vertical
H1 2011 Money Visitors ('m) Transactions ('m) Revenue (m) - Click-based Revenue (m) - Total RPV RPT Insurance Visitors ('m) Transactions ('m) Revenue (m) - Click-based Revenue (m) - Total RPV RPT Travel Visitors ('m) Transactions ('m) Revenue (m) - Click-based Revenue (m) - Total RPV RPT Home Services Visitors ('m) Transactions ('m) Revenue (m) - Click-based Revenue (m) - Total RPV RPT 18.1 9.4 24.8 27.0 1.50 2.65 14.6 8.1 46.4 50.3 3.45 5.76 23.2 13.3 7.0 7.6 0.33 0.52 11.7 4.1 3.6 3.6 0.31 0.89
H2 2011 17.2 9.4 23.5 25.6 1.49 2.51 14.0 7.6 45.8 52.4 3.75 6.01 17.5 8.6 5.2 5.7 0.32 0.61 14.0 4.4 5.6 5.6 0.40 1.27
FY 2011 35.2 18.7 48.3 52.6 1.49 2.57 28.6 15.7 92.2 102.7 3.60 5.88 40.7 21.9 12.2 13.3 0.33 0.56 25.7 8.5 9.2 9.2 0.36 1.08
FY 2010 31.8 13.6 39.2 44.0 1.39 2.89 25.5 14.1 79.0 84.5 3.32 5.61 37.9 22.1 12.5 13.9 0.37 0.57 24.0 7.5 6.0 6.2 0.26 0.80
Var 11% 38% 23% 19% 7% (11)% 12% 11% 17% 21% 8% 5% 7% (1)% (3)% (14)% (11)% (2)% 7% 14% 53% 48% 38% 35%
H2 2010 14.5 7.1 21.3 23.3 1.61 3.01 12.9 7.0 41.5 43.9 3.41 5.94 17.9 9.6 5.7 6.4 0.36 0.59 13.1 4.0 3.6 3.6 0.27 0.90
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KPIs UK Internet
2011 Visitors ('m) Transactions ('m) Click Revenue (m) Other Revenue (m) Total Revenue (m) RPV RPT 130.2 64.8 162.2 15.5 177.7 1.36 2.50
Note - core Moneysupermarket only - Excludes FSN and LDD, and the revenue impact from VAT recovery. 39