Preliminary results for YE 31 December 2016

2 March 2017

Gocompare.com Group plc preliminary results for the year ended 31 December 2016

Delivery in line with guidance in 2016; well positioned to deliver profitable growth in 2017.

Financial highlights:

Business highlights:

· Saved customers over £1bn in 2016, up more than 30% (2015: £759m)2

· Customer interactions up 26% to 32.0m (2015: 25.5m)3

· New Board and strengthened executive team in place

· Successfully completed demerger from esure Group plc and admitted to the main market of the London Stock Exchange on 3 November 2016 (LON:GOCO)

· £85m loan facility provided by a group of four banks, with £75m drawn down at the year end

· Strategy progressing well, with strengthening of tech, marketing and commercial teams

· Leverage4 of 1.7x - down from 2.8x at the time of demerger

Sir Peter Wood, Chairman said: "The Group, under the leadership of Matthew and our executive team, performed well in 2016, with strong growth in revenue and adjusted operating profit.

I am excited about the opportunities that lie ahead. We will continue to drive shareholder value by placing our customers front and centre in all that we do, ensuring that Gocompare.com is the go-to place for price and product comparison."

Matthew Crummack, Chief Executive Officer said: "2016 was a transformational year in which we completed the demerger of Gocompare.com from esure Group plc and strengthened the team at the executive level, whilst delivering strong results. As we move forward into 2017, we are focused on continuing to build on our truly independent and unbiased services that help people everywhere save time and money.

"We have made strong, fast progress over the last six months. We have recruited some excellent talent, defined our strategy and restructured our tech, product and marketing teams. The Board confirms the guidance for the full year 2017 that was given at the time of the Iisting. Performance will skew towards the second half of the year as our program of business transformation takes full effect across our performance metrics. We also expect to deploy capital during 2017 on investments that will drive shareholder value over the medium term."

 For further information:

1. Adjusted operating profit represents operating profit, adjusted to exclude the costs incurred in relation to the demerger (listing costs and Foundation Award share based payment charges)

2. Customer savings measured by Car and Home insurance savings calculated by applying the average Consumer Intelligence reported savings per customer across the year

3. Customer interactions defined as (a) for products where the quote process begins on Gocompare.com, 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.com.

4. 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.

Chairman's statement

I am pleased to present Gocompare.com Group plc's financial results for 2016. The year marked the beginning of a significant new chapter for Gocompare.com as a public company in its own right.

Our demerger from esure Group plc, of which I still serve as founder and Chairman, saw Gocompare.com admitted to the Main Market of the London Stock Exchange on 3 November 2016, with the stock ticker 'GOCO'. 

Throughout the demerger process, the team at Gocompare.com remained entirely focused on the task of helping people find and switch to better deals. They did a great job, as you will see from the Group's strong financial results.

With an exceptional leadership team in place and the opportunity to set and invest in our own destiny, there is good reason to be excited about Gocompare.com's future.

Results

During 2016, Gocompare.com's Insurance and Strategic Initiatives segments both grew. We enhanced our approach to marketing and product development. We maintained good cash generation with leverage reducing from 2.8x at the time of the demerger to 1.7x at the year end. With this positive base, we ended the year in a position of strength on which we will build.

The Group achieved revenues of £142.1m, an increase of 19.5% year-on-year. Operating profit decreased from £23.1m to £21.9m although our adjusted operating profit, which excludes the costs associated with the listing and Foundation Award share based payment charges, increased by 29.9% from £23.1m to £30m.

The Board and leadership team

In June 2016, the month we announced the strategic review that led to the demerger of Gocompare.com from esure Group, Matthew Crummack was appointed as Chief Executive Officer of the Group. Matthew joined us with immense experience and a proven track record as a technology business leader. We are delighted that Matthew joined us in time to steer us through the demerger.

Joining Matthew and me on the Board of Gocompare.com Group plc are Nick Wrighton, Chief Financial Officer; Angela Seymour-Jackson, Deputy Chairman and Senior Independent Director, who chairs the Remuneration Committee and is a member of the Audit and Risk and Nomination Committees; Zillah Byng-Thorne, Non-Executive Director, Chair of the Audit and Risk Committee and member of the Remuneration and Nomination Committees; and Adrian Webb, Non-Executive Director and member of the Audit and Risk, Remuneration, and Nomination Committees. This is a team that gives me huge confidence and will offer support and experience as we shape the future of our Company.

I also want to thank Stuart Vann, Chief Executive Officer of esure Group, whose commitment and leadership both while esure was a major shareholder of Gocompare.com, and through the period of full ownership that started in March 2015, was pivotal in moving the Company and the brand forward.

Capital management and dividends

Gocompare.com is a highly cash-generative business. This cash will be deployed to meet operational and capital expenditure requirements, the repayment of debt, dividends and strategic investments.

Prior to listing, the Group agreed an £85m loan facility to fund a pre-completion dividend to esure Group and to cover the costs of the strategic review and demerger.

While there will be no final dividend for 2016, the Board has set a target dividend pay-out ratio of 20%-40% of profit after tax. This is in line with what was set out in the Prospectus.

The Board will look to invest surplus cash into strategic ideas and initiatives that will deliver shareholder value over the medium-term.

Regulation and governance

The Group is committed to observing the highest regulatory, ethical and corporate governance standards in all it does. The Board adheres to the UK Corporate Governance Code and its operating subsidiary, Gocompare.com Limited, is authorised and regulated by the Financial Conduct Authority ("FCA") for insurance mediation activity.

Through partnerships with carefully selected sector specialists, the company also operates in other regulated industries, such as broadband and communications services, domestic and business energy, banking products, and more. We ensure that the partners we work with to deliver these services to our customers comply with the requirements set out by the relevant regulators.

Thank you

Without exceptional employees, a business cannot hope to keep its customers happy or deliver value to its shareholders. I'm pleased to say that Gocompare.com's employees have energy and ingenuity in abundance. This strong base provides the right foundations for an exciting and prosperous future that will be shared by our customers, our Group and our shareholders.

On behalf of all the Board, I would like to stress that we are sincerely grateful to every member of the Gocompare.com team - a team that works tirelessly to save our customers time and money. Their enthusiastic focus has created a fantastic working environment at the Group's home in Newport, South Wales, and I know that each of them looks ahead with excitement and anticipation.

I also want to pass on our special thanks to our customers for trusting us to help them find the right insurance policies, banking products, energy tariffs and more. The Board, management team and all of Gocompare.com's employees are committed to finding new and better ways to save them more time and money, more often, and make their lives easier long into the future.

Sir Peter Wood, Chairman

Chief Executive Officer's statement

When I joined Gocompare.com as Chief Executive Officer in June 2016, I was shown a statistic that has stuck with me ever since - that so far that year we had saved our customers more than £30 per second on their car and home insurance policies. This is remarkable, and testament to the continued focus and hard work by the Gocompare.com team, reinforcing why we believe this consumer service is a genuine force for good.

We see Gocompare.com as a consumer champion, and we take our independence and totally unbiased approach to comparison very seriously. Our analysis shows that there are still material opportunities for UK consumers to save money every day on their personal and household bills. Gocompare.com's business model is one where revenues are largely generated for us when a consumer switches to a better deal, by providing new customers to our business partners and suppliers. This makes our approach honest and equitable - we help consumers find the right product for them, they save time and money, and we provide targeted business for our suppliers.

In 2016 we helped more people find more deals on more products, more efficiently than ever before, which is why we've been able to round off our tenth year by posting strong revenue growth.

Looking ahead - delivering on our strategy

We see a future for our business where Gocompare.com saves billions for people everywhere by simplifying financial choices. We want to challenge interests, disrupt markets and change behaviours. Our strategy to deliver against this ambition is a simple one:

· We are focused first on delivering strong operational leverage on our existing business. We are confident that we can strengthen and build on our position in insurance comparison, investing modestly in faster, continuous improvement of a multi-device customer experience.

· We are also targeting the strategic deployment of capital through venture-style investments into innovative technologies, products and talent. This will help us grow faster in the medium term, diversifying beyond our current comparison business into other products and services.

Importantly, Gocompare.com benefits from having a hard-earned, well-established and enviable level of brand awareness. This has helped cement our position as one of the leading providers of price and product comparison in insurance, and we believe that we can leverage this to enter and grow into other product areas.

Through a reinvigorated marketing campaign, we have been able to grow core insurance revenue in a tough, highly competitive landscape. Interactions are up 20% year-on-year, from 22.5m to 27.1m, which has seen revenues leap 17.4% to £133.7m from £113.9m in 2015. While the lion's share of our insurance revenue comes from car and home insurance switching, only 23.3% of motorists and 7.4% of households in the UK switch their insurance through a price and product comparison website each year, so we believe significant growth opportunities still exist in these areas and we are well placed to take our fair share.

We have also made significant inroads into non-insurance product comparison areas and have seen growth from a small base, with interactions increasing by 66% year-on-year, from 3.0m to 4.9m, resulting in revenue growth of 68%, from £5.0m to £8.4m.

It's not the big who beat the small, but the fast who beat the slow

We strengthened the senior team at Gocompare.com, and have brought together strong sector and professional experience and diverse backgrounds, including in technology start-ups, global brands and companies whose market disruption has led to huge improvements in customers' lives.

Specifically, we have welcomed Faisal Galaria as Chief Strategy and Investments Officer; Richard Harris as Chief Customer Acquisition and Retention Officer; Jackson Hull as Chief Technology Officer; and Nick Edwards as Chief of Staff, General Counsel and Company Secretary. The experience and leadership they provide, coupled with our existing talented team who build, deliver and maintain our industry-leading services, exemplified by Lee Griffin our Chief Operating Officer, will ensure that we can focus on translating the company's disruptive pedigree into a growth story.

We are entrepreneurs at heart, and take pride in solving tough consumer problems. Speed of thought and action are core values, alongside building trust and showing humility and humour.

These values helped us to shake up the insurance market when Gocompare.com launched in 2006, gaining plaudits from industry bodies like the British Insurance Brokers' Association ("BIBA") and seeing us change the way that people shop for, and buy, insurance forever and for the better.

By being the best channel for consumers to find good deals across a wide range of markets, we also become the most valuable source of new business to our insurance, banking, home communications and utilities partners. This will make Gocompare.com synonymous with comparison, value and sustainable growth.

Similarly, our emphasis on attracting, retaining and developing the best talent focuses on making Gocompare.com an employer of choice for the brightest, most ambitious and creative minds. I'd like to see our people prosper, creating the 'Silicon Valleys' in South Wales.

Outlook

We have made strong, fast progress over the last six months. We have recruited some excellent talent, defined our strategy and restructured our tech, product and marketing teams. The Board confirms the guidance for the full year 2017 that was given at the time of the Iisting. Performance will skew towards the second half of the year as our program of business transformation takes full effect across our performance metrics. We also expect to deploy capital during 2017 on investments that will drive shareholder value over the medium term.

Summary

By helping people take control of their finances, in 2016 we have helped our customers save over £1 billion on car and home insurance alone. This is impressive but we are determined to do more.

We'll do this through fast, continuous innovation that drives sustainable growth and financial leverage in our core business. This growth can help fund our ambitions through investments into innovation that creates real value for all our stakeholders over the medium term.

We are focused on executing our plan, and I look forward to sharing this journey with you.

Matthew Crummack, CEO

Financial Review

Highlights

The Group made good progress in 2016 with revenue up 20% to £142.1m and adjusted operating profit up 30% to £30.0m compared to the same period last year. Operating profit was £21.9m compared to £23.1m as a result of costs associated with the listing.

When reviewing performance the Directors use a number of adjusted measures including adjusted operating profit and adjusted EBITDA, in order to remove the impact of non-trading items and better reflect the Group's underlying performance. These are reconciled below as necessary.

As part of the demerger from esure Group plc the Group raised an £85m debt facility of which £75m was drawn down on 1 November 2016. The facility was primarily used to fund a pre-completion dividend of £73.3m to esure Group plc. As at 31 December 2016, the Group had net debt of £54.7m and headroom against its banking covenants.

The Directors have not proposed a final dividend for 2016, which is in line with what was set out in the Prospectus at the time of the demerger. The Group maintains a target dividend pay-out ratio of 20%-40% of post-tax profits.

Revenue

The Insurance segment saw growth in 2016 with revenue up 17% to £133.7m. Growth was partly driven by market factors, with increases in car insurance premiums resulting in more consumers using price comparison websites to switch provider. Revenue was also positively impacted by the continued success of the Group's Gio Compario advertising campaign as well as an increase in both the quantum and effectiveness of digital marketing spend.

The Strategic Initiatives segment also saw growth in 2016 with revenue up 68% to £8.4m as the Group began to explore opportunities to grow non-insurance products. Growth was particularly strong in the first half of the year as revenues from Money products benefitted from focused TV advertising and improvements in the customer journey.

Marketing costs and marketing margin

Marketing costs comprising cost of sales and distribution costs have increased in total by £12.7m to £87.7m in 2016. The increase in marketing costs is largely through online digital marketing spend for both Insurance and certain Strategic Initiatives products as the Group looks to profitably grow revenue. This has been successful, with the percentage increase in total marketing costs being lower than the percentage increase in revenue, translating into an improvement in marketing margin (calculated as the difference between revenue and marketing expenditure divided by revenue) from 36.9% in 2015 to 38.3% in 2016.

Administrative expenses

Administrative expenses include £8.0m of one-off costs in relation to the demerger and separate listing of the Group. Also included is a share based payment charge of £0.1m in relation to the Foundation Awards that were granted following the demerger. A further £2.1m of costs were incurred in relation to raising the debt facility, which have been set against the borrowings and will be amortised over the life of this facility. Excluding these adjusting items, Administrative expenses have increased by £3.6m, largely driven by the cost of recruiting and remunerating the new leadership team and Board, and other plc related costs.

Adjusted operating profit, Adjusted EBITDA, and Profit before tax

Adjusted operating profit, calculated as operating profit for the year after adding back the £8.1m of costs incurred in relation to the demerger and Foundation Awards, increased by 30% to £30.0m.

Adjusted EBITDA for the year, calculated as Adjusted operating profit for the year after adding back depreciation and amortisation, increased by 30% to £31.6m.

The Group has a light infrastructure and as such has a depreciation charge of £0.4m (2015: £0.4m). The majority of the Group's spend on IT software relates to iterations of the website and customer journey, made on a frequent basis. They are not considered to have a useful life beyond 12 months and as such the costs are not capitalised with amortisation at £1.2m (2015: £0.8m).

The Group incurred net finance costs of £0.3m during the period compared to £0.2m of net finance income in 2015. The Group drew down £75m of debt on 1 November 2016 and has incurred interest charges since this date. The Group had no borrowings in 2015 or in 2016 prior to 1 November but generated finance income on its cash balances.

Profit before tax of £21.6m is £1.7m lower compared to the same period last year. This reflects the impact of the £8.1m of expenses incurred in relation to the demerger and the £0.5m increase in net finance costs more than offsetting the improvement in Adjusted operating profit.

Income tax expense

The Group's tax charge of £5.8m represents an effective income tax rate of 26.9%. This is higher than the average prevailing tax rate of 20.0% due to the effect of disallowable expenses incurred in relation to the demerger.

Earnings per share

Earnings per share for 2016 is 3.8pence compared to 4.6pence for 2015. This reduction is as a result of the one-off costs in 2016 associated with the demerger and listing. Adjusted earnings per share, which excludes these adjusting items, is 5.7pence, an increase of 1.1pence (24%) on 2015 and better reflects the earnings generated by the underlying core business.

Cash and leverage

The Group continued to deliver strong operating cash flows during 2016 and at the year end had cash of £18.4m leaving a net debt position of £54.7m. The cash position benefitted from a timing difference with £5.1m of fees that were incurred in relation to the demerger not being paid until January 2017. This aside, the cash position at the year end is healthy and after allowing for working capital of £4.0m leaves in excess of £9.0m available for potential investments.

The leverage at 31 December was 1.7x Adjusted EBITDA, a notable reduction on 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 investments in opportunities that will drive shareholder value over the medium term as well as for paying dividends in line with the dividend policy.

Dividends

The Group paid interim dividends of £12.5m (equivalent to 62.5pence per share) in June 2016 and £73.3m (equivalent to 17.6pence per share) in November 2016 to esure Group. Dividends per share disclosed are 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 as set out in note 20, which has the effect of showing a relatively lower dividend per share in November.

Nick Wrighton, CFO

Full year results

The financial information set out below has been taken from the consolidated financial statements of Gocompare.com Group plc for the year ended 31 December 2016 which were approved by the Board of Directors on 1 March 2017. The financial information does not constitute statutory accounts within the meaning of sections 435(1) and (2) of the Companies Act 2006. Those financial statements have not yet been delivered to the Registrar.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2016

Consolidated Statement of Financial Position

As at 31 December 2016

Matthew Crummack Nick Wrighton

Director Director

Consolidated Statement of Changes in Equity

For the year ended 31 December 2016

Consolidated Statement of Cash Flows

For the year ended 31 December 2016

Notes to the financial statements

For the year ended 31 December 2016

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.

2. Summary of significant accounting policies

Basis of preparation

These financial statements present the Gocompare.com Group plc consolidated financial statements for the year ended 31 December 2016, comprising the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and related notes, as well as comparatives for the year ended 31 December 2015.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention, except for certain financial assets that are measured at fair value.

The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.

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 £0.05m are shown by 0.0, whereas a dash (-) represents that no balance exists.

Going concern

The financial statements have been prepared on a going concern basis. In considering the appropriateness of this assumption, the Directors' have assessed the Group's forecasts and projections, taking account of reasonably possible changes in trading performance and cash flows. Having assessed the principal risks and the other matters discussed in connection with the robust assessment as set out in the viability statement, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the consolidated financial statements. The assessment of the Group's prospects and viability has considered the three-year period to 31 December 2019.

Basis of consolidation

Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Subsidiary companies are consolidated using the acquisition method.

Inter-company transactions, balances and unrealised gains/losses on transactions between group companies are eliminated.

A new company, Gocompare.com Finance Limited, was incorporated on 11 June 2016. It is a direct subsidiary of Gocompare.com Group plc and the parent company of Gocompare.com Limited, the Group's trading subsidiary.

Revenue

Revenue represents amounts receivable for insurance and other product introductions, including click through fees. The Group recognises this revenue when a policy is sold or in limited cases when a customer clicks through to the partner website. Revenue is measured at the fair value of the consideration received or receivable, net of reported cancellations during the 14-day cooling off period.

Cost of sales, distribution and administrative expenses

Cost of sales comprise all costs which are directly attributable to marketing of a specific product.

Distribution costs comprise all other marketing costs incurred which cannot be attributed to a specific product. Costs associated with the production of adverts are recognised in the Consolidated Statement of Comprehensive Income once the advert is available to the Group in a format ready for use, having been approved for airing or display. Costs associated with the broadcasting of adverts are expensed over the period in which the advert is aired or displayed.

Administrative expenses comprise all other staff, systems and remaining costs incurred.

Taxation

Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities on the taxable income for the year. The tax rates and tax laws used to compute the amount are those enacted or substantively enacted by the reporting date. Current tax assets and liabilities also include adjustments in respect of tax expected to be payable or recoverable in respect of previous periods.

Current tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other comprehensive income as appropriate.

Deferred tax

Deferred tax is provided in full using the balance sheet liability method, providing for temporary differences arising between the carrying amount of assets and liabilities for accounting purposes, and the amounts used for taxation purposes. It is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is recovered, using tax rates enacted or substantially enacted by the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Deferred tax is recognised in profit or loss except to the extent it relates to a business combination, in which case the deferred tax is included as part of the assets and liabilities assumed for the purposes of calculating goodwill. Deferred tax relating to items recognised outside the income statement is recognised either in other comprehensive income or directly in equity as appropriate.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Intangible assets

Purchased software and licenses are initially recorded at historical cost and subsequently amortised over their useful life which is typically up to three years. Amortisation is calculated on a straight line basis and these assets are carried at cost less accumulated amortisation and any impairment charges. The carrying value is reviewed at every reporting date for evidence of impairment and the value being written down if any impairment exists.

Costs associated with maintaining computer software programmes and incremental development of the existing website are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable, unique software products or transformation of website capabilities are recognised as intangible assets when the criteria required by IAS38 are met. This means that it is technically feasible to complete the product or capability, that there are demonstrable economic benefits to the Group and that the Group has sufficient resources in order to complete the development.

The cost of internally generated software and web site costs comprise directly attributable costs which are related to that product or capability. From the point the intangible asset comes into use, it is then amortised over its expected useful life on a straight line basis, which is typically up to three years. The intangible asset is reviewed for impairment whenever events or changes in circumstances indicate that the recoverable amount may not be recoverable. An impairment charge is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Other development costs which do not meet the capitalisation criteria in IAS38 are recognised as an expense as incurred.

Business combinations

The Group applies the acquisition method of accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair value of assets transferred by the Group, the liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquired subsidiary's financial information prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair values. Contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration is recognised in accordance with IAS 39 in profit or loss.

Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the fair value of consideration transferred, over the Group's share of the acquisition-date fair values of identifiable net assets. After initial recognition, goodwill is measured at cost less accumulated impairment losses. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately.

Property, plant and equipment

Property, plant and equipment comprise fixtures, fittings and equipment (including computer hardware). Replacement or major inspection costs are capitalised when incurred if it is possible that future economic benefits associated with the item will flow to the entity and the costs can be measured reliably.

These assets are stated at cost less depreciation and accumulated impairment. Depreciation of an asset begins when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation is calculated using the straight-line method to write off the cost less residual values of the assets over their economic lives. This has been set between three and ten years.

Residual values, useful lives and method of depreciation are reviewed and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Consolidated Statement of Comprehensive Income in the year in which the asset is derecognised.

Impairment of property, plant and equipment

Carrying values are reviewed at each reporting date to determine whether there are any indications of impairment. If any such indications exist, the asset's recoverable amount is estimated and compared to the carrying value. The recoverable amount is the higher of the fair value of the asset, less costs to sell and the asset's value in use. Impairment losses are recognised through the Consolidated Statement of Comprehensive Income. Impairment may be reversed if conditions subsequently improve.

Financial assets

Classification

Financial assets falling within the scope of IAS 39 are designated as 'loans and receivables'. The Group determines the classification of its financial assets at initial recognition. During the years ended 31 December 2016 and 31 December 2015 the Group did not classify any financial assets 'at fair value through profit or loss', 'available-for-sale' or 'held to maturity'.

The Group's financial assets as at 31 December 2016 and 31 December 2015 include trade and other receivables and cash at bank which were classified as loans and receivables.

Initial recognition of financial assets

The Group's financial assets are initially recognised at fair value, plus any directly attributable transaction costs. If the Group determines that the fair value of a financial asset on initial recognition differs from its transaction price, but the fair value measurement is not evidenced by a valuation technique that uses only data from observable markets, then the 'day-one gain' is deferred and is subsequently recognised as investment income only to the extent that it arises from a change in factor (including time) that a market participant would consider in setting a price.

Subsequent measurement

Loans and receivables are measured at amortised cost less accumulated impairment losses using the effective interest method.

Impairment of financial assets

The Group assesses at each balance sheet date whether any financial assets held at amortised cost are impaired. Financial assets are impaired where there is evidence that one or more events occurring after the initial recognition of the asset may lead to a reduction in the estimated future cash flows arising from the asset. Impairment losses on financial assets classified as loans and receivables are calculated as the difference between the carrying value and the present value of estimated future cash flows discounted at the asset's original effective interest rate. Impairment losses and any reversals of impairments are recognised through the Consolidated Statement of Comprehensive Income. Objective evidence of impairment may include default on cash flows from the asset and reporting financial difficulty of the issuer or counterparty.

Derecognition of financial assets

A financial asset is derecognised when the rights to receive cash flows from that asset have expired or when the Group transfers substantially all the risks and rewards of ownership of the financial assets.

Financial liabilities

Classification

Financial liabilities falling within the scope of IAS 39 are classified as 'other financial liabilities'. The Group determines the classification of its financial liabilities at initial recognition.

The Group's financial liabilities at 31 December 2016 and 31 December 2015 include borrowings and trade and other payables.

Initial recognition

Other financial liabilities are measured initially at fair value less directly attributable transaction costs.

Subsequent measurement

After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the Consolidated Statement of Comprehensive Income when the liabilities are derecognised.

Amortised cost is calculated by taking into account any fees or costs that are an integral part of effective interest rate, transaction costs and all other premiums and discounts. The amortisation is included in finance costs in the Statement of Comprehensive Income.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification, is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the Consolidated Statement of Comprehensive Income.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Consolidated Statement of Financial Position if, and only if, the Group has a currently enforceable legal right to offset the recognised amounts and it intends to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. Income and expenses are not offset in the Consolidated Statement of Comprehensive Income unless required or permitted by any accounting standard or interpretation.

Cash and cash equivalents

Cash and cash equivalents includes cash at bank and in hand.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of the expenditure required to settle a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Consolidated Statement of Comprehensive Income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Employee benefits

Pensions

The Group contributes to a defined contribution scheme for its employees. The contributions payable to this scheme are charged to the income statement in the accounting period to which they relate.

Bonus arrangements

The Group provides an annual bonus arrangement for employees. The levels of bonus paid is dependent on both the performance of the business and each individual's performance review.

Share based payments

The Group operates a number of equity-settled, share based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group.

Equity-settled share-based payments to employees are measured at the grant date at the fair value of the equity instruments (excluding the effect of non-market vesting conditions but including the effect of market vesting conditions). Fair value is not subsequently remeasured.

The fair value of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity, based on the best estimate of the number of awards which will ultimately vest unconditionally with employees. The estimate of the number of awards expected to vest (excluding the effect of market vesting conditions) is revised at each reporting date, with any consequential changes to the charge recognised in profit and loss.

Where equity-settled share-based payments are modified, any incremental fair value is expensed on a straight-line basis over the revised vesting period.

Share Capital

Shares are classified as equity when there is no contractual obligation to transfer cash or other assets to holders of the financial instruments.

Leases

Company as a lessee - operating leases

Leases which do not transfer to the Group substantially all the risks and benefits incidental to ownership of the leased items are classified as operating leases. Operating lease payments are recognised as an expense in the Consolidated Statement of Comprehensive Income on a straight-line basis over the lease term. Contingent rentals are recognised as an expense in the period in which they are incurred.

Finance costs

Finance costs comprise of interest paid which is recognised in the income statement as it accrues and is calculated by using the effective interest rate method. Accrued interest is included within the carrying value of the interest bearing financial liability.

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 year on year 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 listing costs and Foundation Award share based payment charges,

- Adjusted EBITDA: defined as Adjusted Operating profit after adding back depreciation and amortisation,

- Adjusted basic EPS: defined as Profit for the year, excluding listing costs and Foundation Award share based payment charges (adjusted for tax) divided by the weighted average number of shares in issue for the year.

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.

Standards, amendments and interpretations in issue but not yet effective

A number of new standards, amendments to standards and interpretations will be effective for annual periods beginning after 1 January 2017 and have not been applied in preparing these financial statements. The adoption of IFRS16 is not expected to have a material impact on the Group's profit and loss, although it will require recognition of the leased asset and lease liability in the Statement of Financial Position. The adoption of the remaining changes to standards are not expected to have a material impact on the Group financial results or disclosures.

3. Critical accounting judgements and estimates

The preparation of these financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates; however the financial statements presented are based on conditions that existed at the balance sheet date.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Key sources of estimation uncertainty and critical judgements in applying the Group's accounting policies

The key assumptions concerning the future, and other key sources of estimation uncertainty at each balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

Revenue recognition

The majority of the Group's revenue is derived from customers completing transactions with product providers (Partners) and revenue is recognised at this point. The Group accrues revenue based on available data of transactions made through its Partners. Any amounts estimated are based on underlying metrics of customer interactions which is subsequently validated through sales data submissions made by the Partners. In addition, customers have the right to cancel their purchase of products during a 14-day cooling off period, for which an estimate of the deduction to revenue is made for likely cancellations based on historical run rates for the various products.

Goodwill

The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in note 2. The recoverable amounts of cash generating units have been determined based on value in use calculations which require the use of estimates.

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. They are reported on the same basis as disclosed in the Consolidated Statement of Financial Position.

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 accounting policies of the reportable segments are the same as the Group's accounting policies disclosed in Note 2. The Group is considered to have one service being that of providing an internet based product and price comparison website. All sales were made to external Customers (sales to the Group's former ultimate controlling party are shown in note 26) in the current and prior year. The segments disclosed comprise Insurance, which includes all general insurance products, the core of the Group's business and secondly Strategic Initiatives which primarily includes money, energy, home services, life and protection insurance products.

Year ended 31 December 2016

Year ended 31 December 2015

5. Operating profit

Operating profit is stated after charging:

Auditors' remuneration

6. Adjusted operating profit

The following transactions occurred during the year which have been added back to operating profit in arriving at adjusted operating profit:

The Group incurred professional fees during the year in relation to its listing. This is a one off event which resulted in non-recurring expenses of £8.0m being charged to the Consolidated Statement of Comprehensive Income. A further £2.1m was incurred which related to the raising of the debt facility and has been set against borrowings in the Statement of Financial Position.

In addition to the professional fees incurred, 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.

In relation to the Foundation Awards for the year to 31 December 2016, a share based payment charge of £0.1m has been recognised in the Consolidated Statement of Comprehensive Income. See note 22 for further details of the awards made.

7. Employee benefit expense

Staff costs, including Directors' remuneration, were as follows:

The average monthly number of employees, including Directors, during the year was:

8. Net finance costs

9. Taxation

Analysis of the tax charge

The tax charge on the profit before income tax for the year was as follows:

The tax rate used for the calculations is the corporate tax rate of 20.0% (2015: 20.25%) payable by the corporate entities in the UK on taxable profits under tax law in that jurisdiction. The rates used are those that apply to the year the tax charge or credit is expected to materialise.

The expense for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows:

The Budget on 8 July 2015 announced changes in the main UK corporation tax rate. The rate (currently 20%) will reduce to 19% from 1 April 2017 and to 18% from 1 April 2020. The reduction in tax rates was included in the 2015-2016 Finance Act which was substantively enacted on 26 October 2015. The Budget on 16 March 2016 announced further changes in the main UK corporation tax rate. The effective rate of 18% from 1 April 2020 was to be further reduced to 17%. This further reduction in tax rates was included in the 2016 Finance Act which was substantively enacted on 6 September 2016.

10. 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 year.

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. These include the maximum number of shares which may vest as a result of the share awards made under the Foundation Awards (see note 22 for further details).

c) Adjusted basic earnings per share

11. Intangible fixed assets