Moneysupermarket.Com Regulatory News (MONY)

This announcement contains inside information. 3 August 2016

Moneysupermarket.com Group PLC interim results for the six months to 30 June 2016

* Adjusted Operating Profit (AOP) represents Operating Profit adjusted for the amortisation of acquisition-related intangible assets and the contingent payable in September 2015 in relation to the acquisition of MoneySavingExpert.com. Reconciliation of AOP is on page 3. The adjusted earnings per ordinary share is based on profit before tax after adding back intangible amortisation related to acquisitions, costs related to the contingent consideration payable for MoneySavingExpert.com in 2015 and the profit on disposal of HD Decisions in 2014.

** Net cash as at 31 June 2015 reflected the contingent sum payable in September 2015 in relation to the acquisition of MoneySavingExpert.com (£20.6m was paid).

· Group Revenues up 10% led by Money and Home Services, momentum returning in Insurance.

· Adjusted Operating Profit up 6% reflecting increased investment in marketing.

· Interim dividend up 8%, continuing our progressive dividend policy.

· Technology investment of £10.4m in the third year of our investment programme. Innovative new products include the MoneySuperMarket mobile app and MoneySavingExpert's credit club.

Peter Plumb, Chief Executive Officer of MoneySuperMarket.com Group, said:

"First half trading up 10% is another good start for Moneysupermarket Group. Millions of households used us to save money on household bills so far this year, and we have a growing number of innovative new products that help more people save in more ways.

"Saving customers money becomes even more relevant in these uncertain times after the EU referendum."

Outlook

The Group delivered single digit growth in July with insurance outperforming. The Board remains confident of delivering its expectations for the year.

Management change

Moneysupermarket.com Group PLC (Moneysupermarket' or the 'Group') announces that Chief Executive Peter Plumb has indicated to the Board his intention to step down as Chief Executive of the Group. This will happen on or before the Group's AGM in May 2017, to ensure smooth succession planning.

Results presentation

There will be a presentation for investors and analysts at Herbert Smith Freehills, Exchange House, Primrose Street, London, EC2A 2EG at 9.30am this morning. The presentation will be streamed live. Visit: http://corporate.moneysupermarket.com/ to register and listen.For further information, contact:

Matthew Price, Chief Financial Officer

Tel: 0207 379 5151

William Clutterbuck, Maitland

Tel: 0207 379 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 2016 and 30 June 2015 along with a reconciliation to adjusted operating profit. The Directors believe that the presentation of the Adjusted Operating Profit measure gives users of the financial information a better understanding of the underlying performance of the business.

Extract of Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2016

Basis of Preparation

The results show the trading results for the six months ended 30 June 2016 and 30 June 2015. The following adjustments

have been made in arriving at adjusted operating profit:

1 Amortisation of acquisition related Intangible Assets

The acquisition of Moneysupermarket.com Financial Group Limited by the Company prior to Listing in 2007 gave rise to £207.2m of intangible assets, excluding goodwill. These are being written off over a period of 3-10 years with a charge of £6.6m expensed in the first half of 2016 (2015: £6.6m). The acquisition of the trade and certain assets of MoneySavingExpert.com and a sole trader business from Martin Lewis (together 'MoneySavingExpert.com') on 21 September 2012 by the Group gave rise to £12.9m of intangible assets, excluding goodwill. These are being written off over a period of 3-10 years with a charge of £0.6m expensed in the first half of 2016 (2015: £0.8m).

2 Contingent payable in relation to the acquisition of MoneySavingExpert.com

In the six months to end June 2015 the Group recognised an administrative expense of £5.0m relating to deferred remuneration which was linked to continued employment. No charge appears in the current period as the total deferred remuneration (£20.6m) was paid in the second half of 2015.

Reference is made in the Finance and Business Review to adjusted administration expenses and cost base. These measures represent the costs charged to the Consolidated Statement of Comprehensive Income, less intangible amortisation relating to acquisitions and costs relating to the contingent payable for MoneySavingExpert.com.

During the first half of 2016 Group revenues grew by 10%, with MoneySuperMarket.com business revenues up 12%. Growth was particularly strong in Home Services and Money with momentum steadily returning to Insurance.

TravelSupermarket.com revenues were down by 19% for the half year. As first highlighted in March, challenges in the holiday market remain and remedial work is likely to continue through 2016.

Revenue in MoneySavingExpert.com was 32% ahead of last year. Growth was driven by credit cards and utilities, which benefited from attractive products and the success of the collective switches and Cheap Energy Club.

The Group's technology development continued with spend of £10.4m. This investment, as part of a three-year programme, focuses on three areas - developing our data asset, building a new aggregation engine, and upgrading our customer experience and journey. The investment allows for greater flexibility and scalability across our different channels and any future channels. Customers will find it easier to use our sites and benefit from greater personalisation of services, which is especially important for the growing number of people who use smartphones.

Group gross margins fell from 79.9% to 76.4% as a result of planned marketing spend and our successful MoneySavingExpert collective switch model. In line with the guidance already given we anticipate spending an incremental £5 million in online marketing for the full year. MoneySavingExpert offers cashback to its club customers which helps build a direct relationship with club members. This cashback increased by 49% to £7.9m in 2016.

Distribution costs were 11% higher than 2015, primarily due to increased TV spend. The Group continued the 'You're So MoneySuperMarket' campaign on television supported by radio and print campaigns, with the use of the high profile 'Epic Dance Off' in the second quarter.

Adjusted administrative costs increased by 1% from £45.0m to £45.6m in 2016. Staff costs (including contract resource) were 2% lower at £24.7m including lower share based payment charges. Other administrative costs are broadly consistent against the same period last year.

Adjusted Operating Profit margins decreased from 35.3% to 34.1% against the same period last year.

Group KPIs

The Directors use Key Performance Indicators ('KPIs') to assess the performance of the business against the Group's strategy. Our strategy is to build on our core business of helping customers to find the right product by investing in our technology, customer data and tools. This enables us to build deeper relationships, and deliver more value to both customers and providers. The three strategic priorities are: be the best site, earn customer loyalty and be the preferred partner for our providers. The KPIs measure our progress against these priorities.

Best site. Be the easiest way for customers to find providers and products.

In the first half of this year we invested £10.4m in our technology. The rollout of our new technology is delivering an improved customer experience and we relaunched our mobile app to make saving even easier on a smartphone.

Average monthly unique visitors for the Group were 24 million. Excluding TravelSupermarket from the measure, where we are working hard to improve our site, average monthly unique users increased 700,000. This demonstrates the enhancements in usability for MoneySuperMarket and MoneySavingExpert, as well as success in ensuring the sites offer great ways for customers to save money.

Earn customer loyalty. Be the destination brand for users and customers

We added nearly three million more customer profiles to 'MyProfile' which allows customers to keep their data up to date. This allows us to understand our customers even better and make it easier for customers to save money with us. Savings made by customers increased by 13% to £0.9 billion demonstrating the value we deliver to our customers.

We continue to focus on ensuring that customers can use our services more easily across channels and through multiple devices, with mobile becoming increasingly prevalent. Our efforts to earn customer loyalty are reflected in the 3% improvement in our Net Promotor Score to 45%. (4% excluding TravelSupermarket).

Preferred partner. Be the best way for providers to acquire customers

We continue to work closely with our providers to help them reach the right customers with the most appropriate products.

We use our data tools, analytics and position as the only major independent price comparison website to develop relationships with providers and secure market leading exclusive products for customers. Providers understand the value we bring which is why we continue to increase the number of providers represented on our sites.

The marketing margin reduced 4%, which was due to the planned increase in marketing spend and the MoneySavingExpert cashback to its club customers. The cashback builds loyalty with our club customers and improves our customer proposition.

Trading performance

The Group operates across a number of businesses and product markets.

1 In the above table revenues in MoneySuperMarket.com arising from traffic from MoneySavingExpert.com have been shown in both MoneySuperMarket.com and MoneySavingExpert.com to present the revenues from MoneySuperMarket.com on a consistent basis and to show the contribution of the MoneySavingExpert.com business to the Group. Intercompany revenues have been eliminated as shown above.

Money

The Money vertical offers customers the ability to search for and compare products including credit cards, current accounts, mortgages, loans, debt solutions, savings accounts and business finance. It also includes elements of the Group's leads business.

Revenue in the Money vertical increased by 18% from £35.5m to £41.7m.

Revenue growth was particularly strong in current accounts in the first quarter, as a result of increased switching and compelling provider incentives. Revenue from credit cards also showed strong growth throughout the period, led by Balance Transfer cards.

The Government's 'Funding for Lending' scheme which enables financial institutions to borrow from the Bank of England at very attractive rates is continuing until January 2018. This has meant deposit rates available to customers remain low which has reduced their propensity to switch products.

Insurance

The Insurance vertical offers customers the ability to search for and compare insurance products including breakdown, dental, home, life, medical, motor, pet and travel insurance.

Revenues in the Insurance vertical increased by 2% from £73.6m to £75.3m, with an improving momentum throughout the half from the performance in quarter four of 2015.

Having gone live on the new platform towards the end of 2015, we are now able to focus on improvements to customer journeys and changes can now be made far more quickly as a result of this technology investment.

Home Services

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

Revenue in the Home Services vertical increased by 43% from £17.6m to £25.1m.

Revenues from utility switching, which account for the majority of revenues within the Home Services vertical, continued to grow strongly as a result of exclusive energy offers and attractive fixed term tariffs.

TravelSupermarket.com

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

Revenue in TravelSupermarket.com fell by 19% from £13.7m to £11.1m.

The business deteriorated due to a combination of poor market conditions and lower visitor numbers. Work is underway to improve the customer journey and the app has been launched delivering an improved customer service on a mobile.

MoneySavingExpert.com

MoneySavingExpert is one of the UK's biggest consumer finance websites and is dedicated to cutting consumers' costs and fighting their corner by means of journalism, great tools and a large community.

MoneySavingExpert.com generated revenue of £19.3m (2015: £14.6m) for the Group, of which £15.0m (2015: £11.1m) related to revenues also recognised within MoneySuperMarket.com, generated from traffic referred to it by MoneySavingExpert. It contributed £14.4m (2015: £10.5m) to Group Adjusted Operating Profit in the first half of the year.

Trading trends have been consistent with those seen by MoneySuperMarket.com with strong utility and credit growth. MoneySavingExpert.com clubs and collective switches continue to be very popular and the service continues to innovate. 

Cash Balance and Dividend

As of 30 June 2016 the Group had net cash of £10.7m (2015: £22.8m including a contingent sum of £20.6M that was payable in respect of the acquisition of MoneySavingExpert.com). 

Having reviewed the cash required by the business and the performance of the Group, the Board has decided to increase its interim dividend by 8% to 2.75p per ordinary share.

The ex-dividend date is 18 August 2016, with a record date of 19 August 2016 and a payment date of 16 September 2016. 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 2016 were 6.9p (2015: 5.5p). Adjusted basic earnings per ordinary share increased from 7.3p to 7.8p per share. The adjusted earnings per ordinary share is based on profit before tax after adding back intangible amortisation related to acquisitions, costs related to the contingent payable for MoneySavingExpert.com in 2015 and the profit on disposal of HD Decisions in 2014. The tax rate of 20% (2015: 20.25%) has been applied to calculate adjusted profit after tax.

Principal Risks and Uncertainties

The Group faces a number of risks and uncertainties that might have an adverse impact on its operations, performance or future prospects. The Board has identified the principal risks and uncertainties most likely to affect the successful operation of the business in the second half of the year. The principal risks are considered largely unchanged from those outlined in the 2015 financial statements which were competition, changing consumer behaviour, brand strength, product offering, customer trust, relevance to partners, economic uncertainty and regulation.

In 2016, the implications of the EU Referendum for the Group represents a development of our Economic Uncertainty risk, as following the vote to leave the EU on 23 June 2016, uncertainty in the political and economic environment could in future reduce consumer demand or cause providers to reduce product range or tighten acceptance criteria for customers seeking to obtain credit. This could reduce competition between providers and choice for consumers.

The diversity of the Group across a portfolio of brands and channels offers inherent protection for the Group from cyclical economic changes. We continue to invest in new tools to allow consumers to search and products most suited to their needs. Our commercial teams are focused on building stronger relationships with providers to understand their plans following the EU referendum vote. In addition we maintain strong control of the cost base so that the Group is an efficient acquisition route for providers, so that we are able to provide choice to consumers and solutions to the needs of providers.

More information on the principal risks and uncertainties together with an explanation of the Group's approach to risk management is set out in the Annual Report and Accounts for the year ended 31 December 2015 on pages 26 to 31, a copy of which is available on the Group's corporate website http://corporate.moneysupermarket.com/.

Directors' responsibility statement 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 or her 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.

2 August 2016

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 2016 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 Conduct Authority ("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.

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 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 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Stuart Crispfor and on behalf of KPMG LLPChartered Accountants15 Canada Square

London, E14 5GL

2 August 2016 

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

for the period ended 30 June 2016

The other reserves balance represents the merger and revaluation reserves generated upon the acquisition of Moneysupermarket.com Financial Group Limited by the Company, as discussed below, and a capital redemption reserve for £19,000 arising from the acquisition of 95,294,118 deferred shares of 0.02p by the Company from Simon Nixon.

Upon the acquisition of Moneysupermarket.com Financial Group Limited, a merger reserve of £60,750,000 for 15% of the fair value of assets acquired, a merger reserve of £16,923,000 for 45% of the book value transferred from a company under common control, and a revaluation reserve of £65,345,000 representing 45% of the fair value of the intangible assets transferred from a company under common control, were recognised. Amounts have been transferred from these reserves to retained earnings as the goodwill and other intangibles balances which related to this acquisition have been impaired and amortised.

The reserve for the Company's own shares comprises the cost of the Company shares held by the Group. At 30 June 2016, the Group held 390,914 shares at a cost of 0.02 pence per share through a Share Incentive Plan trust, for the benefit of the Group's employees.

The Group also held 830,247 shares through an Employee Benefit Trust acquired during the year at a cost of 313.12p per share for the benefit of employees benefitting in the various Long Term Incentive Plan schemes.

Consolidated Statement of Cash Flows

for the period ended 30 June 2016

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 2016 comprises the Company and its subsidiaries ('Group').

Having reassessed the principal risks, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

The consolidated financial statements of the Group as at and for the year ended 31 December 2015 are available upon request from the Company's registered office at Moneysupermarket House, St. David's Park, Ewloe, Chester, CH5 3UZ or online at http://corporate.moneysupermarket.com/.

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 2015. 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 2015 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor 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 2 August 2016.

2. Significant accounting policies

As required by the Disclosure and Transparency Rules of the Financial Conduct 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 2015

3. Acquisitions

MoneySavingExpert.com

On 21 September 2012, the Group acquired certain trade and assets from Martin Lewis and his company MoneySavingExpert.com. Additional amounts of up to £27.0m became payable on the third anniversary of the completion of the acquisition. The amount payable depended in part upon the achievement of a number of non-financial performance measures specified in the purchase agreement and was, in part, at the discretion of the Company's Board, subject to the continued employment of Martin Lewis.

The arrangement to pay these additional amounts has been accounted for separate to the business combination as remuneration as their payment was linked to the continued employment of Martin Lewis.

The benefit payable has been charged to the Consolidated Statement of Comprehensive Income over the period in which services have been provided (the earnout period) as an employment expense. Management estimated the benefit payable by assessing, amongst other things, the performance of the acquired business since acquisition, against the measures specified in the purchase agreement. The final payment of £20.6m was paid in November 2015 and therefore no charges have been included in the Consolidated Statement of Comprehensive Income in the period ended 30 June 2016. In the period ended 30 June 2015, £5.0m was charged to the Consolidated Statement of Comprehensive Income as an employment expense, and £0.4m was recognised as an expense within net finance costs, being the unwinding of the discount rate applied.

At 30 June 2016, no amount is accrued within current liabilities (2015: £20.8m).

4. Segmental information

In applying IFRS 8 - Operating Segments, the Group discloses five reportable segments. The basis of segmentation is unchanged from that detailed in the consolidated financial statements of the group for the year ended 31 December 2015. 

5. Taxation

The Group's effective consolidated tax rate for the six months ended 30 June 2016 is 19.5% (2015: 20.2%). The effective tax rate is broadly in line with the applicable corporation tax rate of 20%, which has decreased from 20.25% in the prior year, following a reduction in the enacted rate. In both periods, the effective rate has been broadly in line with the applicable corporation tax rate for the year.

6. Earnings per share

Basic and diluted earnings per share have been calculated as follows.

7. Dividends

8. Intangible fixed assets

9. Share-based payments

On 21 March 2016 conditional awards were made over 988,543 shares to a number of Directors and employees under the Long Term Incentive Plan scheme.

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

The following table indicates the changes in the number of share options during the period. The number of awards in the table represents the number awarded, of which, in respect of awards granted in 2014 and prior to that, up to 150% could vest:

10. 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.

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, other than the Long Term Incentive Plan awards noted in the table above. On 21 March 2016, 1,085,784 awards vested under the 2013 Long Term Incentive Plan following 98% achievement of the maximum performance criteria. On 21 March 2016, under the 2016 Long Term Incentive Plan, conditional awards were made over 988,543 shares.

Bruce Carnegie-Brown, Robin Freestone, Sally James, Peter Plumb and Matthew Price received dividends from the Group totalling £80,639 during the period ended 30 June 2016.

11. Commitments and contingencies

Along with most companies of our size, the Group is a defendant in a small number of disputes incidental to its operations and from time to time is under regulatory scrutiny.

As a leading website operator, the Group occasionally experiences operational issues as a result of technological oversights that in some instances can lead to customer detriment, dispute and potentially cash outflows. In the first half of 2016, the Group is addressing one such issue but does not expect it to have a significant impact. The Group has a Professional Indemnity Insurance Policy in order to mitigate liabilities arising out of events such as this.

In aggregate, the commitments and contingencies outlined above are not expected to have a material adverse effect on the Group.

Alternative performance measures

The Group uses a number of alternative (non-Generally Accepted Accounting Practice ("non-GAAP")) financial measures which are not defined within IFRS. The Directors use these measures in order to assess the underlying operational performance of the Group and, as such, these measures are important and should be considered alongside the IFRS measures. The adjustments are separately disclosed and are usually items that are significant in size or non-recurring in nature. Alternative performance measures used within these statements are accompanied with a reference to the relevant GAAP measure and the adjustments made.

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.