Go Compare sees profits rise and predicts boost from insurance changes
Price comparison site Go Compare has bolstered profits by close to a third and said the firm could enjoy an uplift from Government changes to the insurance industry.
The firm said adjusted operating profits jumped 30% to £30 million in the year to the end of December, while revenues rose 20% to £142.1 million.
However, a separate measure of operating profits, which included its listing costs on the London Stock Exchange (LSE), dropped 5% to £21.9 million.
It comes after Go Compare put the finishing touches to its demerger from insurer esure and listed on LSE on November 3 last year.
Chief executive Matthew Crummack said the Government's recent decision to adjust the discount rate calculation could bump up the price of car insurance premiums and inspire more customers to search for cheaper products.
Insurers have been pencilling in a financial hit after Lord Chancellor Liz Truss put forward the change, which is expected to increase payments given to victims of life-changing injuries through medical negligence, car crashes and other incidents.
Mr Crummack told Reuters: "What we hear from the sector about the (discount) rate is it is very likely to push up prices and our experience is that when you see price rises, you tend to see more people looking for better deals and therefore it's an opportunity for us."
Shares were down 4% in afternoon trading despite the firm saying it was on track to meet its full-year targets for 2017.
The Newport-based firm said the amount saved by customers had risen by 30% to more than £1 billion over the period, while customer interactions climbed 26% to £32 million.
The Go Compare boss hailed 2016 as a "transformational year", but said performance would "skew" in the second half of this year as its business transformation takes effect.
"We also expect to deploy capital during 2017 on investments that will drive shareholder value over the medium term," Mr Crummack added.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said Go Compare's full year performance showed "some pretty impressive" underlying growth.
"Throwing an extra £12 million at advertising has yielded results - with each pound of marketing spend generating a better return than before.
"Longer term we think price comparison websites are an industry with bags of potential. So far the industry (and GoCompare in particular) is focused on insurance comparison, but there's plenty of scope to throw the net wider, embracing areas such as other financial products and utilities."