|Esure circular for General Meeting re proposed Gocompare.com demerger - HTTP://www.esuregroup.com/~/media/Files/E/Esure-V2/Strategic%20review%20of%20Gocompare/esure%20Group%20plc%20-%20Class%201%20Circular%20-%2011%20October%202016.pdf
16) What will be the impact of the Demerger on esure’s dividends? (pg19)
Following the Demerger, the Board does not intend to amend the current esure dividend policy, which targets a base dividend of 50 per cent. of underlying profit after tax in addition to a further special dividend, if the esure Group has sufficient capital and distributable reserves, after allowing for an appropriate buffer and future growth. However, the Gocompare.com Group currently contributes to the underlying profit after tax of the esure Group and following the Demerger, the esure Group will no longer receive this contribution. The fees associated with the Demerger will not impact the esure Group’s 2016 final dividend and will be adjusted for in the esure Group’s 2016 underlying profit after tax.|
|Gocompare.com prospectus - HTTP://www.gocomparegroup.com/~/media/Files/G/GoCompare/admission-materials/gocompare-com-prospectus-11october2016.pdf
C.7 DIVIDEND POLICY
The Directors intend to adopt a dividend policy which will reflect the Group’s aim of generating value for Shareholders while ensuring that it retains sufficient capital to fund planned growth in its core business as
well as both strategic and financial investments.
Assuming that sufficient distributable reserves are available at the time and subject to any regulatory capital requirements, the Directors initially intend to target a dividend of between 20 and 40 per cent. of the Group’s annual reported profits after tax adjusted for any exceptional items.
Subject to capital not being required to fund organic growth, strategic investments and acquisitions in the medium term, the Directors intend to return any excess capital to Shareholders over time in the form of
The Directors are not intending to pay a final dividend for the financial year ending 31 December 2016 given the short period between Admission and the start of the financial year.
Going forward, it is envisaged that interim dividends will be paid in October of the relevant financial year and final dividends in May of the following financial year in approximately even proportions.
The Group may revise its dividend policy from time to time.|
|It certainly was a very large investment. Martin Hughes has previously made a lot of money backing certain companies but he has also made mistakes too - e.g. Healthcare Locums. Therefore you can't always assume that he gets it right, although in this case I don't think his confidence is misplaced.|
|That was a pretty big lump Tosca Funds took on the 20th...over 20m shares / 5% of the company.|
|Gocompare.com on road to stock market
The multimillionaire founder of esure hailed Gocompare.com as his “best investment ever” as the insurer said that it would spin out the price comparison website in a stock market listing that could value the business at as much as £500m. Esure told the market yesterday that after a strategic review it had concluded that separating the companies was the best option for both and would make it easier for Gocompare.com to bring in leading technology industry managers.
Shareholders in esure will be given new shares in Gocompare on a pro rata basis, meaning that Sir Peter Wood, who owns just under a 31% stake in esure, will be the biggest shareholder in Gocompare when it lists in London. The flotation of Gocompare is expected to take place before the end of the year and the website is expected to attract an independent valuation of between £400m and £500m. Esure said the costs of separating out the price comparison site would come to £19m.
Complete article: http://www.thetimes.co.uk/edition/business/gocompare-com-on-road-to-stock-market-x6jphqdqr|
|Thanks for that, Masurenguy. I enjoy these sum of the parts plays, though did jump into this one a tad early and have only just got back to level pegging. Do you have any views on the relative attraction of the companies? My initial thoughts are to sell off my Gocompare shares if it's as well received as it's supposed to be, leaving the rump insurer for future dividend income...|
|RNS Number: 6197J
esure Group plc
13 September 2016
Proposed demerger of Gocompare.com
Rationale for the Demerger:
On 7 June 2016, the Board of esure announced a strategic review of Gocompare.com. As part of this strategic review, the Board has evaluated options to maximise the potential of both businesses and has concluded that the Demerger is the preferred option. The Board believes that the Demerger has the potential to deliver enhanced business growth and performance over time, and therefore shareholder value, by:
-- Creating two separately listed and focused groups, a leading UK provider of motor and home insurance and a leading UK price and product comparison website;
-- Improving Gocompare.com's ability to attract and retain technology focused senior managers, who would join a stand-alone entrepreneurial digital technology business;
-- Allowing the separate esure and Gocompare.com management teams to focus on pursuing their strategies independently;
-- Enhancing the ability of esure and Gocompare.com to align senior management incentives with the performance of the standalone business rather than the combined Group; and
-- Optimising esure and Gocompare.com for the relevant regulatory environments within which they operate and enabling each group to operate with an appropriate capital structure.
It is intended that Gocompare.com will be a premium listed company on the London Stock Exchange and that, on listing, the shares of Gocompare.com will be distributed to esure shareholders through an interim pro-rata dividend in specie. Costs arising from the Demerger are anticipated to be ca. GBP19m.
Prior to the completion of the Demerger, it is intended that Gocompare.com will draw down on a new GBP75m debt facility and pay esure a cash dividend in the region of GBP63m. The cash dividend will cover the fees associated with the Demerger incurred by esure and provide additional headroom above the Group's solvency capital requirements ("SCR").
The esure Board has considered the risk appetite of the Group as part of the exceptional Own Risk and Solvency Assessment process under Solvency II. In light of the new Group composition, the esure Board believe an appropriate level of capital coverage of its SCR to be in the region of 130-150%. The capital surplus above the SCR provides sufficient headroom to absorb adverse capital events and should enable the Group to continue to meet its regulatory capital requirements which are unchanged post the Demerger. It is expected that the Group will initially operate in the middle to upper end of the range, providing flexibility to fund further profitable growth.
Following the Demerger, the Board does not intend to amend the current esure dividend policy, which targets a base dividend of 50% of underlying profit after tax and in addition a further special dividend, if the Group has sufficient capital and distributable reserves, after allowing for an appropriate buffer and future growth. The fees associated with the Demerger will not impact the Group's 2016 final dividend and will be adjusted for in the Group's 2016 underlying profit after tax.
Further details in relation to the proposed Demerger will be provided in shareholder documentation which is expected to be posted to shareholders on or around 11 October 2016. The Gocompare.com management team will provide an analyst and investor briefing to present their plans for the Gocompare.com business in more detail. The briefing will take place on the day shareholder documentation is posted to shareholders. The proposed Demerger is conditional on esure shareholder approval as well as relevant regulatory approvals, and subject to those approvals, is expected to occur in Q4 2016.|
|Could be a very big payday for Peter Wood and the major shareholders when Go Compare is finally either separately floated or otherwise disposed of via a trade sale.
Peter Wood 128,609,655
Stuart Vann 2,095,042
Darren Ogden 1,210,498
Peter Ward 236,187
María Dancausa 43,725
Martin Pike 40,000
Major Institutional Shareholders
Norges Bank 29,435,051
Standard Lifed 20,759,424
Invesco Limited 20,507,884
FMR LLC 19,438,190
Kames Capital 10,005,314|
|Go Compare contributed £14.5M pre-tax profit in H1 of 2016 and should more than double that in the full year. Deducting tax should leave at least £25M post tax profit , which might make Go worth £350M on an IPO or trade sale.
Not sure of the book value but it will not be more than 2 X the £95M paid for the 50% share last year
So there could be a gain of £150M or possibly more , which is significant with ESURE valued at £1100M.
May even be enough to restore the dividend cut!!
Just my rough calculations DYOR.|
|Date Broker New target Recomm.
8 Aug Beaufort... N/A Hold
8 Aug JP Morgan... 340.00 Overweight
8 Aug Deutsche Bank 285.00 Hold
5 Aug Shore Capital N/A Sell
5 Aug Peel Hunt 275.00 Hold
1 Aug Peel Hunt 275.00 Hold
1 Aug Citigroup 305.00 Buy
28 Jul JP Morgan... 330.00 Overweight
28 Jul Deutsche Bank 267.00 Hold
21 Jul Barclays... 337.00 Overweight|
|I sold out of these some time ago (at less than todays sp) as I was concerned about the rising COR - seems to have been borne out a bit in these results. Rising premiums look good going forward though the drop in the payout is not particularly confidence inspiring.
I'll continue to watch.|
|Profit down 2% and dividend cut by 29%. Flotation or trade sale of Go Compare still under review.
-- Gross written premiums up 16.3% to £320.4m (1H 2015: £275.5m)
-- In-force policies up 3.7% to 2.076m in the first half of 2016 (FY 2015: 2.001m, 1H 2015: 1.995m)
-- Combined operating ratio 3.4ppts higher at 99.2% (1H 2015: 95.8%) largely driven by adverse weather events in the first half of 2016
-- Underlying profit before tax(1) down 1.9% to £45.6m (1H 2015: £46.5m) impacted by adverse weather events in the first half of 2016
-- Interim dividend per share of 3.0p (1H 2015: 4.2p), reflecting the Board's decision to retain capital to fund growth
-- Solvency II Group coverage ratio of 126% (FY 2015: 123%), post dividend; and
Solvency II Solo coverage ratio of 136% (FY 2015: 138%)
-- Gocompare(2) revenue up 22.3% to £72.9m; operating profit up 9.0% to £14.5m (1H 2015: Revenue of £59.6m; operating profit of £13.3m)
Sir Peter Wood, Chairman of esure Group plc, said: "The management team is delivering on its strategic objective to grow both our insurance and price comparison businesses. On 7 June, we announced a strategic review of Gocompare.com to ensure we continue to focus on maximising shareholder value and the review is ongoing. We remain well capitalised under Solvency II and I am pleased to declare a dividend of 3.0 pence per share reflecting the Board's decision to retain capital as we look to take advantage of favourable motor market conditions."
Stuart Vann, Chief Executive Officer of esure Group plc, said: "We are reporting strong growth figures, with customer numbers and premiums up across the board. Motor premium growth of 18% is particularly strong, driven by a combination of our underwriting and rating initiatives as we look to capitalise on growth opportunities in a favourable market. It is also pleasing to be reporting an underlying profit before tax of £45.6m, despite the adverse weather events in the first half of the year. In Gocompare.com we have delivered excellent revenue growth of 22% and continue to drive the business forward through improved marketing, a strengthened management team and focus on a wider product offering. We are well placed for further profitable growth across both businesses in the second half of the year."|
|Hmmm.......hadn't seen any press speculation on Esure but if true I would agree that £5 would be nice but possibly £3.50 - £4.00 might be nearer the mark !|
|£5.00 a share would be nice! Come and get us KKR!
|Comment on Press Speculation - HTTP://www.investegate.co.uk/esure-group-plc--esur-/rns/statement-re-press-comment/201606301227088256C/
Bidders Go Compare Numbers On Esure Takeover - HTTP://news.sky.com/story/1719721/bidders-go-compare-numbers-on-esure-takeover|
|Go figure! Esure looks to spin off comparison site
GoCompare, the price comparison website, could be spun off into a separate company by its parent esure, which only took full control of the business a year and a half ago. Esure said it was considering options for GoCompare, including a demerger due to improved profit expectations for the business, after it revamped its marketing strategy and focused on a wider range of comparison products. The insurer bought the 50% in GoCompare that it did not already own in December 2014 for £95m.
Complete article here: http://www.thetimes.co.uk/edition/business/esure-mulls-gocompare-spin-off-zjjrq8fqh|
|The appointment of a new and heavyweight CEO, plus the comments in todays RNS, indicates that they are seriously considering a demerger and separate listing for GoCompare. If this transpires there could be a windfall return to shareholders from the capital raised from such a move.
RNS Number : 3719A
esure Group plc
07 June 2016
Given the positive performance and future opportunities of Gocompare.com, the Board has decided that it is the right time to review strategic opportunities for the business. The Board has therefore commenced a strategic review of Gocompare.com, including a potential demerger, and will update shareholders on this review as and when appropriate. Peter Wood, Chairman of esure Group plc, commented: "Now is the right time to review strategic opportunities for the Gocompare.com business, including a potential demerger, in order to continue to maximise value for our shareholders. Shareholders will be updated following this review process."|
|esure Group plc 2016 Q1 Interim Management Statement
Stuart Vann, Chief Executive Officer of esure Group plc, commented: "We have made an excellent start to 2016 with gross written premium growth of 15.5% to GBP151.0m and in-force policy growth of 1.7% in the quarter to 2.036m. In Motor, gross written premium growth of 17.1% to GBP128.9m reflects year-on-year policy growth and our positive rating actions. Home gross written premium growth of 7.3% to GBP22.1m is a good performance as our cross-sell and footprint expansion initiatives continue to build momentum in competitive market conditions. Gocompare.com made very good progress in the first quarter with income growth of 19.0% to GBP36.3m. The new advertising campaigns, largely focused on Money products, are delivering in line with our expectations. We continue to invest in Gocompare.com and we expect to increase Gocompare.com's profit before tax by 20-30% in 2016. We are on track to deliver on our guidance for 2016."|
|Q1 IMS due next Thursday, 5th May.|
|The market's loving esure at the moment. Buyer sniffing about? Who knows.
|Confidence returning here despite the reduction in profit and the cut in the dividend 2 weeks ago. The shareprice has risen by 21% over the past few weeks also fuelled by an optimistic outlook statement that should see growth in profit and dividend this year. It could also prompt a predator to appear.|
|Well the market reaction suggests that todays results were already incorporated in the price since an early 4% fall was quickly bought up and so far the recent rise in the shareprice has been maintained. Hopefully we will see an increase in both profit and therefore dividend this year. If not, then they could be vulnerable to a predator who would still have to pay a premium. Meanwhile, although disappointing, the new yield of 4.4% is still a reasonable return so I will continue to hold here.|