Australia's Life Admin Store

iSelect Annual Report 2016 Australia’s Life Admin Store Annual Report 2016 www.iselect.com.au About Us iSelect is Australia’s leading destination for personalised comparison and expert advice across insurance, utilities and personal finance products. We are a consumer-led and customer-centric business. At iSelect, we get that most people find insurance, MORE THAN utilities and personal finance boring. But we understand that it’s really important to always get these things right. As Australia’s life admin store, iSelect gives customers the confidence to make the right call on some of the things that matter most. 9m UNIQUE VISITS TO Last year, our website had more than nine million OUR WEBSITE - FY16 unique visits by Australians and we provided recommendations to over six million customers. But we are much more than just another online comparison website. Our highly-trained experts at PROVIDED iSelect HQ help customers to choose and buy from CUSTOMERS thousands of available policies, products and plans. From health and life insurance through to energy and broadband, as well as car insurance and home loans, iSelect helps Australians take care of the boring but important stuff. 6m RECOMMENDATIONS ANNUAL REPORT 2016 www.iselect.com.au ISELECT MORE THAN JUST A COMPARISON WEBSITE While our comparison services are initially provided via our website, most of our customers choose to receive a personalised recommendation over the phone by speaking to one of our 500 highly-trained expert advisers. Health Energy Broadband Car Life Home & Home Credit Travel Mobile Contents Loans Cards Insurance Phones IMPORTANT NOTICE AND DISCLAIMER NON-IFRS INFORMATION All references to FY13, FY14, FY15, FY16 appearing in this Annual Report are to iSelect’s results are reported under International Financial Reporting Standards the financial years ended or ending 30 June 2013, 30 June 2014, 30 June 2015 (IFRS). Throughout this Annual Report, iSelect has included certain non- and 30 June 2016, respectively, unless otherwise indicated. Any references IFRS financial information. The information is presented to assist in making to 1H FY13, 2H FY13, 1H FY14, 2H FY14, 1H FY15 and 2H FY15 appearing in this appropriate comparisons with prior periods and to assess the operating Annual Report are to the half financial years ended 31 December 2012, 30 June performance of the business. iSelect uses these measures to assess the 2013, 31 December 2013, 30 June 2014, 31 December 2014 and 30 June 2015, performance of the business and believes that information is useful to respectively, unless otherwise indicated. investors. EBITDA, EBIT, Operating Cash Conversion and Revenue per Sale This Annual Report contains forward-looking statements. The statements (RPS) have not been audited or reviewed. in this Annual Report are based on an assessment of present economic and Any and all monetary amounts quoted in this Annual Report are in Australian operating conditions, and on a number of assumptions regarding future events dollars (AUD) unless otherwise stated. and actions that, at the date of this Annual Report, are expected to take place. Any references to “Group” in this Annual Report refer to iSelect Limited and its Such forward-looking statements are not guarantees of future performance controlled entities. and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Group, the ABN: 48 124 302 932 Directors and management. The Group cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this Annual Report will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. To the full extent permitted by law, iSelect disclaims any obligation or undertaking to release any updates or revisions to the information contained in this Annual Report to reflect any change in expectations or assumptions. 1 CONTENTS Chairman’s Letter 2 CEO’s Report 4 Highlights 2016 6 Segment Performance 8 Brand and Marketing 10 Partners 12 Our People and Culture 14 ANNUAL REPORT 2016 Board Members 16 Leadership Team 18 Financial Report 21 ISELECT Directors’ Report 22 Remuneration Report 31 Corporate Governance Statement 50 Auditor’s Independence Declaration 60 Financial Statements 61 Directors’ Declaration 121 Independent auditor’s report 122 ASX Additional Information 124 Corporate Information 126 “ My adviser was extremely knowledgeable and very patient. She was very understanding of my needs and wants with a provider and was able to deliver expert advice with such a lovely, professional can do attitude.” Jacobie, Glynde, SA CHAIRMAN'S LETTER Chairman’s Letter Chris Knoblanche AM Chairman Dear Shareholders, Our Health business returned With the retirement of two to growth in the second half directors early in the financial year, On behalf of the Board, I am after a disappointing result we appointed a highly qualified pleased to present the FY16 in the first half. The external additional board member in Annual Report to you. I have now market environment in the health Melanie Wilson. Melanie rounds been in the Chair for more than insurance sector continues out our board renewal process a year and it is most pleasing to to suffer from affordability and particularly the independent me that this report details some headwinds and FY16 was the first membership of the board. 2 outstanding achievements by year in almost a decade where your Company over the 2016 During FY16, we undertook a participation in private health financial year. full review of the management insurance declined in Australia. and board’s processes and Following a somewhat challenging The softness in the market performance and the outcomes beginning to the financial year, the contributed to a reduction in leads will deliver corporate governance Company’s performance since the of 9%, however this was offset in standards of the highest order. restructure in November 2015 has part by the average revenue per been commendable. I would like sale increasing by 18%. to take this opportunity to thank OUTLOOK our CEO, Scott Wilson, and his BALANCE SHEET Your Board are very positive ANNUAL REPORT 2016 renewed senior management and STRENGTH AND CAPITAL about the year ahead. The executive team for their continued MANAGEMENT PROGRAM recovery of our Health business efforts in realising the vast continues into the new financial potential of the company. Cash on the balance sheet year, despite external commentary ISELECT increased year-on-year, showing about industry softness. With FINANCIAL the strong cash-generation the management restructure capability of the Company. The PERFORMANCE now settled, I am confident that cash balance of $87.6 million the new alignment of industry iSelect delivered a solid result for at 30 June 2016 represents an sectors will enable the senior the financial year ending 30 June increase of 24% from June 2015. management to continue to 2016, with year-on-year revenue This strong cash position is in deliver outstanding results, with growth of 9% to $172 million, addition to almost $25 million that diversification of the Company’s reported EBIT up by 23% to $15 was used in the Board’s capital revenue a demonstration of the million and reported net profit management program. FY16 success of iSelect’s broadening after tax at $12.9 million, up by a saw iSelect pay its maiden fully- offering to customers. pleasing 34% after a first-half loss. franked dividend to shareholders as well as the commencement of Finally, I would like to thank you, The growth in revenue over the on-market buyback. The share our shareholders, for your support the year was contributed buyback resulted in the net assets and the entire iSelect team of predominantly by outstanding of the Company being reduced by dedicated, talented employees for growth from the non-health $12.3 million. their ongoing efforts. business segments, which now represent over 48% of total YOUR BOARD revenue. The shift towards a Regards, more balanced revenue mix is AND CORPORATE expected to continue through GOVERNANCE FY17, with Health expected to One of my highest priorities contribute less than 50% of the when I commenced as Chair was company’s revenue in the current to kick-off a full review of the financial year. Board and its processes. I and Overall sales volumes increased all your Directors recognise the Chris Knoblanche AM 10% in FY16, driven by growth need for the highest standards Chairman in both the Life & General of corporate behaviour and Insurance and the Energy & accountability across the whole Telecommunications businesses. business, and particularly at board These newer businesses and level. Corporate governance of the others in the pipeline are expected highest quality is essential and is, to continue to provide strong and will remain, my core focus as future growth for iSelect. chairman. CHAIRMAN'S LETTER “ Service with a smile! My first call is always to iSelect whenever I decide to shop around for my insurance.” Antonia, Hadfield, VIC 3 ANNUAL REPORT 2016 ISELECT ISELECT JOURNEY THROUGH LIFE STAGES iSelect’s Customer Lifetime value model is underpinned by our “no churn” policy. We don’t proactively reengage a customer in a business segment where they have Health Energy Broadband Travel purchased from us in the past. Insurance Energy Broadband Travel Health Life Energy Broadband Travel Insurance Insurance Home Loans Health Home Car Home Loans Loans Home & Home & Health Car Contents Contents CEO’S REPORT CEO’s Report “ iSelect’s vision is to be Australia’s Life Admin Store. In order to achieve that, we believe it is essential to focus wholly on the customer.” Scott Wilson Chief Executive Officer A CUSTOMER-CENTRIC to growth and, importantly, ENHANCING THE APPROACH WILL DELIVER profitability, in the second half. As ISELECT MARKETPLACE RESULTS noted in the Chairman’s letter, our – CREATING THE 4 performance turnaround in Health Putting the customer front- has continued despite the softness ‘NETWORK EFFECT’ and-centre is a fundamental in the external health insurance FOR STRONGER plank in our corporate strategy.

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