3rd Mar 2015 11:19
LONDON (Alliance News) - Moneysupermarket.com Group PLC on Tuesday reported a big rise in pretax profit for 2014 as swelling revenue significant outpaced an increase in costs, and said trading has started well in 2015 although it may suffer in the second quarter against tough comparatives.
The FTSE 250-listed price comparison site operator said its pretax profit for the year to the end of December was GBP66 million, up from GBP43.1 million a year earlier. Revenue increased to GBP248.1 million from GBP225.6 million a year earlier, outpacing only a slight uptick in its cost of sales to GBP52.4 million from GBP50.2 million.
Moneysupermarket added trading in the first two months of 2015 has been strong, though it warned it will be up against tougher comparatives in the second quarter. It maintained its expectations for the full year, however.
The company lifted its final dividend for the year to 5.69 pence per share from 5.12 pence in 2013, bringing its total dividend for the year up to 8 pence per share from 7.28 pence a year earlier.
"We invested over GBP16 million in our websites and systems and will do the same in 2015 to ensure we lead the market as the easiest and best way for families to save money on their household bills," said Chief Executive Officer Peter Plumb.
The company said its Money vertical, which offers consumers price comparison services on personal finance products, saw its total revenue rise 13%, despite a 2% fall in visitor numbers, as revenue per visitor increased by 16%. The majority of the revenue was derived from credit products, the company said.
Moneysupermarket said revenue in its Money vertical rose 22% in the second half against 6% growth in the first. Its non-credit product business, particularly savings product revenue, has been hit by the Funding for Lending scheme launched by the UK Government. The scheme allows financial institutions to borrow from the Bank of England at attractive rates, meaning lenders do not need to compete for retail deposits.
Insurance revenue increased 8% on the back of a 3% rise in visitors. As in the Money division, the company said revenue growth accelerated in the second half, increasing 13% against a 4% rise in the first half. Motor insurance premiums increased in the second half following a period of decline, it said, but home insurance premiums continued to decline.
Travelsupermarket.com revenue rose 28% in the year, boosted by the seasonally stronger first half and increased marketing activity.
MoneySavingExpert.com revenue increased 17%, with trading conditions in line with the main Moneysupermarket.com business. Utilities revenue for MoneySavingExpert.com continued to be driven by its Cheap Energy Club switching service.
Still, Moneysupermarket shares were down 5.4% to 252.88 pence on Tuesday, one of the worst performers in the FTSE 250 on the day.
Brokers said the results were in line with expectations, but were mixed on the prospects for the company.
Investec, which retained a Buy rating on the stock but put its price target under review, said it remains a buyer on Moneysupermarket on the basis of platform and data investment, a focus on customer retention and cross-selling and sales diversification beyond just its insurance vertical.
It put its price target under review due to its view that increased regulation and scrutiny are risks, but it argues this could also provide an opportunity for a "well invested, well run player" like Moneysupermarket.
But Numis kept a Sell rating and a 200 pence price target on the company, noting that while the results were in line with expectations, there was no comment on the House of Commons energy and climate change committee' report on the former industry practice of not displaying non-commission paying deals to customers by default.
Numis warned ahead of the results on Monday that the report creates significant uncertainty. "This is of some concern in our view, because the report makes no further recommendation of exactly how much the compensation should be and how many consumers are likely to be affected," Numis said.
The broker said it is disappointed Moneysupermarket did not mention the Commons report, suggesting that it believes the issue has the scope to become for price comparison sites what PPI has become for banks.
By Sam Unsted; [email protected]; @SamUAtAlliance
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