Moneysupermarket Announces Its Share Buyback Amid Growing Profits

The Moneysupermarket Group is launching a £40m share buyback after reporting increased revenue and profit for the year to 31 December 2016.

The figures

Group revenue rose 12 per cent to £316.4m from £281.7m.

Operating profit was up 13 per cent to £91.1m from £80.5m, while profit after tax grew by 16 per cent to hit £73.5m, compared with £63.4m in 2015.

Adjusted earnings per share rose eight per cent to 15.7p from 14.5p.

The company hiked its dividend by eight per cent to 9.85p from 9.15p.

The firm also said the cash on its balance sheet increased by 167 per cent to £44.6m.

The company also announced today that it will run a share buyback programme for up to £40m "in line with (its) capital allocation policy". The share repurchase will be conducted at some point this year.

Shares in the group dropped 10 per cent at the open.

Why it's interesting

Shore Capital analyst Roddy Davidson noted that investors "may be disappointed" in Moneysupermarket's decision to distribute excess cash by way of a buyback programme rather than (as in the past) a special dividend – and this appears to have been borne out, with the stock dropping dramatically in early trading.

Meanwhile, the company said that, while insurance revenues and its credit card and loans business had delivered "strong growth" in the first two months of the year, "low interest rates continued to weaken savings and current account switching and energy is trading lower" because the group has "not yet run a collective switch".

As a result, Moneysupermarket said group revenues are currently behind last year. However, the firm added that it's "confident of delivering its expectations for the year".

What Moneysupermarket said

"We saved nearly seven million families £1.8bn on their household bills in 2016, which helped us grow revenues by 12 per cent. This adds up to another great year for the Moneysupermarket Group," said chief executive Peter Plumb, who is stepping down in May this year after eight years with the business. He is to be replaced by John Lewis retail boss Mark Lewis.

"Our technology investment programme is equipping us to save more families more money on a wider range of bills in the years ahead. Using data to make comparison more personalised, more informed, quicker and easier is differentiating us from other comparison sites."

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