(Alliance News) - Goco Group PLC on Thursday announced a GBP12.5 million acquisition and significant reduction in half year profit on distribution costs and expenses.
The price comparison company, which owns GoCompare, has acquired This Is The Big Deal Ltd, trading as Look After My Bills.
Goco will pay GBP6.0 million upfront for the energy savings service, with a GBP2.5 million deferred consideration and additional GBP4.0 of performance-based earn-out. The initial payment will be funded through Goco's existing resources.
Goco expects Look After My Bills, which has a live customer base of 150,000, and its weflip energy switching service, will result in a "significantly higher" earnings before interest, depreciation, taxation, and amortisation margin profile and become transformative to earnings by 2022.
Matthew Crummack, Goco Chief Executive, said: "We are incredibly excited to announce this acquisition, which enables the group to continue to address consumer inertia. weflip and Look After My Bills complement each other in their approach to saving UK consumers money and with both brands we can target the significant saving opportunities that still exist for consumers, who haven't been tackled by existing price comparison websites or regulation."
"Together, weflip and Look After My Bills, form the group's AutoSave segment which is building momentum and is in a great position to address the needs of infrequent switchers. Our ambition is to rapidly scale customers and build our AutoSave business to grow live customers by at least 25% in the next five months to 31st December 2019."
The company also separately announced its half year results, including a slight increase in revenue to GBP76.0 million from GBP75.8 million.
Pretax profit, however, was more than cut in half to GBP7.6 million from GBP15.9 million as distribution costs climbed to GBP23.6 million from GBP17.9 million. Administrative expenses rose also, to GBP19.2 million from GBP18.5 million.
Goco has declared a 0.4 pence per share interim dividend. In 2018, the company's interim dividend was 0.8 pence per share.
Crummack said: "The first six months of 2019 continued our transformation into a tech-led business. We maintained our disciplined approach in our Price Comparison business whilst working on the development of our new consumer-led proposition, offering up to GBP250 excess protection for customers."
"AutoSave is building momentum and is in a great position to address the needs of infrequent switchers. Our ambition is to rapidly scale customers and build our energy savings business to grow live customer numbers by at least 25% in the next five months to the end of the year."
"We continue to develop SaveStack, our proprietary technology platform, which is able to power both our own brands and other people's, as demonstrated in our partnership with CYBG/Virgin Money, providing in app energy switching to banking customers."
Following the TITBD acquisition expects to spend another GBP4 million on marketing and up to another GBP3 million on admin costs in the second half of the year. It plans to grow its AutoSave customer numbers by a minimum of 25% in the next five months. No further changes have been made to expectations.
Shares in Goco were down 3.1% at 80.70 pence on Thursday.
