iSelect Ltd Annual Report 2013

FY2013 Annual Report · iSelect Ltd

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Driven by
data, powered
by people

Since our launch in 2000,
iSelect has grown to become a
leading Australian online-driven
comparison service1 that compares
insurance, household utilities and
ﬁnancial products. The Group operates
nationally and employs more than
415 talented individuals.

www.iselect.com.au

Contents

1 2013 Financial Summary
2 Executive Chairman’s Message
4 Group Performance
5 Review of Operations
7 The Year Ahead
8 Board Members
10 Executive Team
12 Financial Report
85 Corporate Directory

IMPORTANT NOTICE AND DISCLAIMER
All references to FY12, FY13 and FY14 appearing in this Annual Report
are to the ﬁnancial years ended or ending 30 June 2012, 30 June 2013
or 30 June 2014, respectively, unless otherwise indicated. All references
to 1H FY13, 2H FY13 and 1H FY14 appearing in this Annual Report are
to the half ﬁnancial years ended or ending 31 December 2012, 30 June
2013 and 31 December 2013, respectively, unless otherwise indicated.
All references to CY12 and CY13 appearing in this Annual Report are to
the calendar years ended or ending 31 December 2012 and 31 December
2013 respectively.

Calendar year (CY) is not the annual reporting cycle of the Company
and accordingly is unaudited. References to results for the quarter ended
30 September 2013 are management estimates and accordingly are
unaudited.

This Annual Report contains (and the prospectus dated 06 June 2013
contained) forward-looking statements. The words “anticipate”, “believe”,
“expect”, “project”, “forecast”, “estimate”, “outlook”, “upside”, “likely”,
“intend”, “should”, “could”, “may”, “target”, “plan” and other similar
expressions are intended to identify forward-looking statements.
Indications of, and guidance on, future earnings and ﬁnancial position
and performance are also forward-looking statements. The statements
in this Annual Report are based on an assessment of present economic
and operating conditions, and on a number of assumptions regarding
future events and actions that, at the date of this update, are expected
to take place. Such forward-looking statements are not guarantees of
future performance and involve known and unknown risks, uncertainties,
assumptions and other important factors, many of which are beyond the
control of the Company, the Directors and management. Forward-looking
statements should therefore be read in conjunction with, and are qualiﬁed
by reference to, sections 4 and 5 of the prospectus dated 06 June 2013,
and other information in the prospectus and announcements since listing.
The Company 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 or the prospectus will actually
occur and investors are cautioned not to place undue reliance on these
forward-looking statements.

NON-IFRS INFORMATION
Throughout this Annual Report, certain non-IFRS information, such
as EBITDA, EBIT, Conversion Ratio, Leads and Revenue Per Sale (RPS)
are used. The information is presented to assist in making appropriate
comparisons with prior periods and to assess the operating performance
of the business. iSelect uses these measures to assess the performance
of the business and believes this information is useful to investors.
Earnings (proﬁt) before interest, income tax expense, depreciation and
amortisation (EBITDA) are deﬁned in the Financial Report in note 2(c) to
the ﬁnancial statements. EBIT is a similar measure to EBITDA, but it takes
into account depreciation and amortisation. The individual components of
EBITDA and EBIT are included as line items in the Consolidated Statement
of Comprehensive Income in the Financial Report. Non-IFRS information
is not audited.

Any and all monetary amounts quoted in this 2013 Annual Report are
in Australian dollars (AUD).

Any references to “Group” in this Annual Report refer to iSelect Limited
and its controlled entities.

ABN: 48 124 302 932

Health

Car

Life

Broadband

Home Loans

Energy

1Based on web visit data sourced from Hitwise, April 2013.

iSelect Annual Report 2013
iSelect Annual Report 2013

1
1

201,000

2013
Financial Summary

Net Product Sales2

2012: 169,000
2011: 92,000

Revenue

2012: $111.9 million
2011: $72.4 million

EBITDA

2012: $24.1 million
2011: $17.4 million

NPAT

2012: $12.9 million
2011: $10.7 million

Operating Cash Flow

2012: ($0.4) million
2011: ($3.3) million

Cash Balance

2012: $20.0 million
2011: $17.5 million

2Excluding Money Business Unit
3Excluding IPO costs

$118.0 million

$26.5 million3

$14.4 million3

$4.2 million

$85.3 million

Executive
Chairman’s
Message

iSelect is a company with big ambitions. Like many high-growth
companies with aspirations to grow larger do, we ran into some
turbulence this year.

The good news is that we have a plan to overcome the current
challenges. Our long term strategy is consistent. The structure
of the industries we operate in and the demand from both
consumers and providers alike remains strong. The Board and
I are very conﬁdent that we have the right business model and
the right people to realise the growth potential of our business.

As the company’s largest shareholder, I was as disappointed as
anyone to see iSelect’s value being impacted by a series of events
related to the IPO and during the months directly following. Having
said that, I am as convinced today as I was on the day we listed,
that we will deliver the returns that all shareholders expect from us.

We are focused on and conﬁdent that we can deliver results that
will please our shareholders.

We ﬁrmly believe that the fundamentals of the business remain
strong and that recent headwinds will dissipate over time as the
business continues to perform.

Our recent update regarding the ﬁrst full three months of trading
since we listed conﬁrmed that we are on track to achieve the
EBITDA guidance we issued in June and August. Revenue is lower
than we expected because of the softness we experienced at the
tail end of FY13, but is now trending back to where we want it to be.

The outlook for the ﬁrst half of the current ﬁscal year is
encouraging. Based on our results for the quarter just ended
30 September 2013*—with revenue up 11% and EBITDA up
52% on the prior comparative period—we are on track to deliver
an 18% lift in revenue in the half year to December and close
to double EBITDA compared to the same period a year before.

We acknowledge that in order to restore conﬁdence, we need
to deliver on our numbers in the short term and then keep
delivering on expectations over the long term.

Our latest forecast reﬂects a positive outlook for the business
that should provide comfort for investors concerned about the
company’s 2H FY13 performance.

SOLID YEAR ON YEAR GROWTH
In the ﬁnancial year to 30 June 2013 and in the current ﬁnancial
year to date we have been weathering some challenges generated
by regulatory changes in the private health insurance market.
Despite this, we posted solid year on year growth with our volume
of product sales up 18.9% to just over 201,000 for the year.

Our investment in new businesses is certainly delivering results,
and I am especially excited about the future of our high growth
Life and Energy businesses.

* Results for the quarter ended 30 September 2013 are an estimate
and are unaudited.

“Our long term
strategy
is consistent.”

“We ﬁrmly
believe the
fundamentals
of the business
remain strong.”

“Our latest
forecast reﬂects
a positive outlook
for the business.”

iSelect Annual Report 2013
iSelect Annual Report 2013

3
3

“ iSelect is a robust business.
We are tackling the challenging
economic conditions as well
as regulatory changes. We are
confident that we have the
right business fundamentals
in place to deliver results.”

Damien Waller,
Executive Chairman and co-founder

We are very encouraged by the resilience of the Group over the
last 12 months, underpinned by the growing diversity of our
revenue streams and the mix of established and new businesses
that are driving growth. Over the FY13 period; sales leads,
conversion of those leads into sales and operating cash ﬂow
continued their strong upward trajectory.

Our continued market share gains in private health insurance were
very pleasing, with leads and conversion ahead of our prospectus
forecast. It was disappointing to see group revenue per sale
below expectation, primarily due to the ﬂow on effects of FY12
regulatory changes, however it is my ﬁrm view that we are well
placed to capitalise on a return to more stable market conditions
when they occur.

Our Household Utilities and Financial segment recorded
very pleasing growth, with revenue and proﬁtability ahead
of expectation.

DIVERSITY
As foreshadowed in our prospectus, the Board has developed
a formal diversity policy which was adopted on 28 August 2013.
My Board colleagues and I are strongly committed to achieving
our diversity objectives and ensuring diversity remains a core
focus in FY14.

INITIAL PUBLIC OFFERING
As co-founder of the Company, it was very pleasing to see iSelect
mature to the point where we could list on the ASX. I would like
to congratulate management and the Board for the exceptional
effort and commitment that was required to see this milestone
achieved and would like to especially thank our shareholders
for their support.

LEADERSHIP CHANGES
I was very pleased to announce the appointment of Bridget Fair
to the iSelect Board as independent Non-executive Director
on 30 September, 2013. I was also pleased to see David
Christie join the iSelect Executive Team as General Counsel
on 30 September, 2013 and his appointment as Company
Secretary on 15 October 2013.

It was with sadness that I accepted Matt McCann’s resignation
as CEO and as a Director of iSelect Limited on 13 October, 2013.
David Chalmers, CFO, has been appointed as acting CEO as we
commence a worldwide search and selection process for Matt’s
replacement. I was also sad to see Roger McBride resign as
Marketing Director on 18 October, 2013. I am pleased however
to report that Roger will be succeeded by Geraldine Davys who
joins iSelect as Marketing Director, effective 21 October, 2013.

THE YEAR AHEAD
We view FY14 with optimism. We expect to see continued year on
year growth as a result of the investments made in data analytics
and our newer business units during FY13. We also look forward
to a return to more stable conditions within the private health
insurance market in FY14. With our strong net cash position we will
continue to assess acquisition opportunities over the coming year.

iSelect is a robust business. We are tackling the challenging
economic conditions as well as regulatory changes. We are
conﬁdent that we have the right business fundamentals in
place to deliver results.

I would be delighted if you could join me at the iSelect Limited
Annual General Meeting at 11am on Monday 18 November at
the Computershare Conference Centre, Yarra Falls, 452 Johnston
Street, Abbotsford, Victoria.

I would like to take this opportunity to sincerely thank our
shareholders for their support over the last year. I look forward
to sharing the ongoing journey with you as a fellow iSelect
shareholder in FY14.

Damien Waller
Executive Chairman
21 October, 2013

Group
Performance

The Group achieved total revenue of $118.0 million, representing
a 5.5% increase versus FY12, but 2.9% below expectation.
The revenue shortfall versus prospectus forecast was primarily
due to a decline in the average price of private health insurance
policies sold in 2H FY13.

It was pleasing however to see the Group achieve EBITDA
of $26.5 million (excluding IPO costs), 1.7% ahead of
prospectus forecast. Underpinning this EBITDA result was
a strong earnings contribution from our Household Utilities
and Financial (HU&F) segment.

Our focus on efﬁciency in FY13 saw our EBITDA margin increase
to 22.4% (excluding IPO costs), versus 21.5% in FY12.

Net proﬁt after tax (excluding IPO costs) was in line with
expectation at $14.4 million, 11.4% up on previous year.

Signiﬁcant improvement in operating cash ﬂow was achieved
over the period, reaching $4.2 million in FY13 due to a change
in product provider mix and increasing contribution from our
newer business units.

We ﬁnished the FY13 period with a very strong balance sheet,
reporting a 30 June cash balance of $85.3 million.

It was
pleasing to
see the Group
achieve EBITDA
of $26.5 million
(excluding IPO costs),
1.7% ahead of
prospectus
forecast

iSelect Annual Report 2013

Review of
Operations

The iSelect Group achieved both revenue and EBITDA growth
year on year, despite challenging conditions in the private health
insurance market. The Group maintained its focus on earnings
diversiﬁcation, bearing fruit in the form of a strong contribution
from the Household Utilities and Financial segment.

PRIVATE HEALTH INSURANCE (PHI)
It was a year of record sales volume for the iSelect Health
business, with sales volume performance during 2H broadly
in line with expectations.

There were however several regulatory changes in FY12 and FY13
that affected the PHI market including but not limited to means
testing of the Australian Government PHI rebate, changes to the
Medicare levy surcharge and removal of the rebate on Lifetime

Health Cover Loading. These all created a turbulent dynamic
for the industry.

iSelect experienced a year on year decline in average revenue
per sale due to a mix shift toward lower priced private health
insurance policies, with many consumers choosing to purchase
these lower priced products late in June. We also observed an
increase in the proportion of singles (versus couples and family)
policies being purchased in FY13 versus the previous year.

The majority of the Company’s PHI sales continue to be new
to PHI, as opposed to customers switching between products/
providers. The fundamentals of the private health insurance
market remain strong however, underpinned by positive
membership trends.

Solid
performance
despite challenging
2H dynamics
in Health

Providing
a strong platform
for growth
in FY14

HEALTH AND CAR INSURANCE
The Health and Car Insurance segment performed solidly
during FY13, despite challenging 2H dynamics in Health.
Revenue and EBITDA were both below expectation, however
underlying ﬁnancial sales volumes in Health were up
approximately 5% versus the previous year.

We also observed an encouraging year on year improvement
in the underlying proﬁtability of our Car Insurance business.

HOUSEHOLD UTILITIES AND FINANCIAL

The performance of our Household Utilities and Financial
segment has provided a strong platform for growth in FY14
and has clearly demonstrated the ability of the iSelect business
model to be applied to new markets.

Our ﬁrst full year contribution from Energy and Money was very
encouraging, and we are very excited about the FY14 potential
of these two businesses. Margin improvements in Life and
Money were responsible for a substantial out performance
of the HU&F segment’s EBITDA forecast.

Health and Car Insurance segment results

Household Utilities and Financial segment results

Revenue

EBITDA

Margin

A = Actual.
P = Prospectus Forecast

FY13A

FY13P

(cid:86)

FY12A

(cid:86)

FY13A

FY13P

(cid:86)

FY12A

(cid:86)

93.1

36.5

97.3

37.3

(4%)

(2%)

98.0

40.4

(5%)

(10%)

39.2% 38.4%

2% 41.3%

(5%)

Revenue

EBITDA

Margin

A = Actual.
P = Prospectus Forecast

24.9

3.1

24.3

0.8

279%

12.3%

3.3% 269%

13.9

(5.6)

n.m

79%

n.m

Health

Car

Life

Broadband

Home Loans

Energy

Review of
Operations continued

CUSTOMER EXPERIENCE
Management undertook a refresh of the successful
“Mr iSelect” creative platform in FY13, which resonated
strongly with consumers. Brand awareness continued
to be a key strength for the Group over the period,
none more so than in Health Insurance.

The product development team continued to roll out
enhancements to the iSelect web experience during the period.
Mobile and tablet-speciﬁc enhancements planned for the year

ahead are a key opportunity for the Group and promise
to deliver a new experience for our customers in FY14.

An ongoing focus on our data analytics capability delivered
ongoing sales lead conversion improvements over the year.
We continued to roll out the iConnect platform to drive speciﬁc
conversion improvements in Health and Car Insurance, with great
success. The rollout of the iConnect platform to other business
units will continue in FY14.

FY13 Key Performance Highlights

Leads
(‘$000)

FY12A

FY13A

FY13P

Leads

2,945

3,317

3,306

– 12.6% YoY lead growth
–

FY13A in line with prospectus forecast

– Lead volumes driven by brand
and organic search positions
– Over 60% of FY13 web visits

came direct to website or from
organic search

Conversion
(%)

FY12A

FY13A

FY13P

Conversion

5.7%

6.1%

– 5.5% YoY uplift in conversion rate
–

FY13A in line with prospectus forecast

– Conversion improvement has
continued with the ongoing
rollout of iConnect platform
– HU&F segment converting

above expectations

Sales
(‘$000)

FY12A

FY13A

FY13P

Sales

169

201

– 18.9% YoY sales volume growth
–

FY13A in line with prospectus forecast

FY12A

FY13A

FY13P

Revenue Per
Sale

$642

$564

$581

– 12.1% YoY decrease in RPS

Revenue
Per Sale
(RPS – $)

YoY = Year on Year

– Record year, driven by growth in

lead generation and conversion ratio,
as well as full year Energy contribution

– Signiﬁcant growth in HU&F sales

volumes YoY

– Underlying ﬁnancial sales

in Health up ~5% YoY

– Contribution from new (typically

higher volume, lower RPS) businesses
is increasing, lowering average RPS
across the group

– RPS trends in business units

are generally positive

– Health impacted by product mix

shift in 2H FY13

iSelect Annual Report 2013

We are
on track to
achieve EBITDA
of $30.0 million
for CY13

The Year Ahead

Our recent CY13 trading update confirmed that we are on
track to achieve EBITDA of $30.0 million for CY13, representing
a 51% increase on CY12.

Forecast revenue for CY13 is $126.5 million, and would
represent a 10% increase on CY12.

The September quarter of CY13 has been strong,
notwithstanding the normal seasonal factors, with revenue
up 11% and EBITDA up 52% compared to the same quarter
in 2012. New business leads, the conversion of those leads into
sales and our operating cash flow are all on encouraging and
positive trajectories.

In Car Insurance, we have decided to delay some marketing
initiatives to 2H FY14, enabling the team to focus on other

projects in the intervening period. This means Car Insurance
revenue is down, but profitability is in line with where
we wanted it to be and business leads are trending upwards
as we enter the second quarter.

In the Household Utilities and Financial segment, we are seeing
revenue and profitability trending ahead of expectations for
Life Insurance and a stronger revenue per sale performance,
while in Energy revenue is in line with prospectus forecasts and
we are re-investing some of our gross profit in staff training
to capitalise on an expected increase in activity in early 2014.

Close management of costs remains a focus, with planned
investment in additional resources re-aligned to business
requirements and our current growth trajectory.

Creating
an exceptional
end-to-end customer
experience remains
a key focus for
iSelect

Board
Members

Damien Waller
Executive Chairman and co-founder

Damien is one of Australia’s leading online entrepreneurs and is the Executive Chairman and co-
founder of iSelect.

Under Damien’s leadership over the past 13 years the Company has grown to become a leading
Australian online-driven comparison service. In recent years, Damien spearheaded the expansion
of the Company into new underlying markets including Home Loans, Money and Energy. Damien’s
position within iSelect has evolved over the years and has included Managing Director, CEO and
now, Executive Chairman.

Prior to iSelect, Damien was recruited by JB Were & Son via its elite graduate program. Damien is
a Fellow of FINSIA (the Financial Services Institute of Australasia) and a member of the Australian
Institute of Company Directors (AICD).

Matt McCann
Chief Executive Officer (resigned 13 October, 2013)

Appointed as Chief Executive Officer of iSelect in January 2012 and to the iSelect Board of Directors
in February 2012. Joining iSelect in 2008 as Corporate Development Director, to drive iSelect’s group
strategy, mergers and acquisitions (M&A) and corporate finance.

In this role, Matt was responsible for expanding the iSelect consumer offering via the launch of new
business categories and for attracting additional investment to support the continued growth of the
Company. Since 2011, Matt has also led the successful acquisition and integration of InfoChoice. Matt
was appointed as Company Secretary in September 2010 and held that position until February 2012.

Matt holds an LLB and trained at the international law firm Allens Arthur Robinson. He is admitted to
practice in the Supreme Court of Victoria and the Federal and High Courts of Australia.

Greg Camm
Non-Executive Director and Deputy Chairman
Greg joined the iSelect Board in August 2012 and has nearly 40 years experience in the financial
services industry in Australia and New Zealand.

Greg spent 16 years in senior roles at Australia and New Zealand Banking Group Limited, including
Managing Director of the Mortgage Division, Managing Director of ANZ New Zealand and
Managing Director of the Australian Retail Banking Division of ANZ.

Following ANZ, he served as Managing Director of AMP Financial Services (New Zealand). He then
served as CEO of Superpartners Pty Ltd for five years. Greg retired from executive management
roles in 2012.

Greg holds an MBA from The University of Melbourne and a BBus (Accounting & Finance) from
Monash University. He is a Certified Practising Accountant and a Senior Fellow of FINSIA. He serves
on the boards of mecu Ltd (trading as bankmecu) and Bottlecyclers Pty Ltd. He is a trustee of the
Australian Cancer Research Foundation.

iSelect Annual Report 2013

Leslie Webb
Non-Executive Director

Leslie was appointed to the iSelect Board of Directors in February 2001. He brings legal expertise
to the Board, given his experience as a barrister and solicitor.

Leslie has consulted extensively to both publicly listed and unlisted public companies in the
information technology (IT) and biotechnology industries on corporate and financial planning,
intellectual property, corporate governance and strategic planning issues. In his role as a
consultant, he has been actively involved in advising on the globalisation of Australian companies

Previously, Leslie was a director of the ASX-listed biotechnology company Gradipore Ltd, Non-Executive
Chairman of Stem Cell Sciences (Australia) and a non-executive director of Stem Cell Sciences PLC
(previously listed on the London Alternative Investment Market).

Leslie is currently a Non-Executive Director of Generic Health and is Non-Executive Chairman
of Nimble Money Pty Ltd. Leslie is a member of the AICD.

Shaun Bonètt
Non-Executive Director

Shaun was appointed to the iSelect Board of Directors in May 2003. Shaun founded and is the
Chief Executive Officer of Precision Group, an investor, developer and financier of retail and
commercial property across Australia. Precision Group owns over A$1 billion of commercial assets
in Australia and has diversified its business into financial services and private equity investments,
primarily in the IT and health sectors.

Shaun is a qualified lawyer and barrister and solicitor of the High Court of Australia and previously
held various corporate advisory roles with publicly listed and private companies. He is also a
member of the AICD and Young Presidents’ Organisation.

Shaun is also a Director and Chairman of Litigation Lending Services Ltd.

Shaun is founder and trustee of the Heartfelt Foundation, an Australian charitable trust.

Pat O’Sullivan
Non-Executive Director

Pat was appointed to the iSelect Board of Directors in September 2010. Pat brings over 30 years
of international commercial and business management experience to the iSelect Board.

Pat’s prior professional experience includes Chief Financial Officer of Nine Entertainment
Co. between 2007 and 2012. Prior to that he was Chief Operating Officer of Publishing and
Broadcasting Ltd (PBL), a position he had held since February 2006. Before joining PBL, Pat
was the Chief Financial Officer of SingTel Optus Pty Ltd, a position he held for over five years
with responsibility for the company’s financial affairs including corporate finance, taxation,
treasury, risk management, procurement and property.

Previously, Pat held a number of positions at Goodman Fielder, Burns, Philp & Company, and PwC.
Pat is also a Non-Executive Director of carsales.com Limited and Little Company of Mary Health Care Ltd.,
and Chairman and Non-Executive Director of Health Engine Pty Limited. Pat is currently a member of
The Institute of Chartered Accountants in Ireland and The Institute of Chartered Accountants in
Australia, and is a graduate of the Harvard Business School’s Advanced Management Program.

Executive
Team

Matt McCann
Chief Executive Officer (resigned 13 October, 2013)

Matt holds an LLB and trained at the international law firm Allens Arthur Robinson. He is admitted
to practice in the Supreme Court of Victoria and the Federal and High Courts of Australia.

David Chalmers
Chief Financial Officer and Company Secretary

David joined iSelect in February 2012 and held the role of Corporate Development Director
until being promoted to the role of Chief Financial Officer later that year. In his current role,
David maintains overall responsibility for iSelect’s finance and administration functions.

David has over 15 years’ experience across corporate finance, strategy, investment banking
and M&A.

Before joining iSelect, David led the corporate M&A and strategy function for DuluxGroup.
Prior to this, he held corporate finance and private equity management roles of increasing
responsibility with Macquarie Capital. During his time at Macquarie Group, David took a lead
role in developing Macquarie Capital’s private equity business in Asia.

David holds a BComm (Hons) from The University of Melbourne and a MBA from INSEAD.

Following the resignation of Matt McCann on 13 October 2013, David Chalmers was appointed acting Chief Executive
Officer pending the appointment of a new Chief Executive Officer. He resigned as Company Secretary on 15 October 2013.

Jo Thomas
Operations Director

Jo joined iSelect in 2008 to lead the Consumer Advice Team and following increasing levels of
responsibility was promoted to the role of Operations Director in 2012. Jo maintains responsibility
for iSelect’s end-to-end consumer experience, including the Consumer Advice Centre, e-commerce
and online technology platform.

With over a decade of experience in leading large sales teams, Jo has worked with, and on behalf
of, some of Australia’s largest companies including Telstra, Citibank, Metlife, Aegis Pty Ltd,
Vodafone, Westpac and TRUenergy.

Jo holds a Bachelor of Communication Studies from The University of Auckland and a MBA from
Monash University.

iSelect Annual Report 2013
iSelect Annual Report 2013

Scott Wilson
Commercial Director

Scott joined iSelect in February 2013 and holds the position of Commercial Director and maintains
overall responsibility for the Company’s individual business units and Product Provider relationships.

Scott has over 20 years’ of sales and key account management experience within multinational
fast-moving consumer goods and entertainment companies.

Prior to joining iSelect, Scott was Sales Director (Australia & New Zealand) for 20th Century Fox
Home Entertainment, following senior national sales roles at PZ Cussons and SPC Ardmona.

Scott holds a Master of Business and Graduate Certificate of Business Administration from
The University of Newcastle.

Roger McBride
Marketing Director (resigned 18 October, 2013)

Roger joined iSelect in 2004 as Marketing Manager and over the years has been a driving force
behind the strategic development of the iSelect brand in Australia.

Today, Roger directs all marketing operations at iSelect and brings extensive experience and a
record of success in innovative marketing including B2B and B2C across online and integrated
media and business landscapes.

Prior to iSelect, Roger held various senior marketing and innovation roles across a number of large
national and multinational corporations, leading the development and marketing of globally
recognised and iconic brands such as Sensis, Thomson Reuters and Ford Motor Company.

Roger holds a BBus (Marketing) from Monash University.

Elise Morris
Human Resources Director

Elise joined iSelect in February 2012 and leads iSelect’s human resources function.

Prior to this, Elise held human resources roles of increasing responsibility for over a decade
within some of Australia’s most well-recognised companies including Seek Limited and Pacific
Brands. During her career, Elise has also held senior management positions within the UK-based
confectionery manufacturer Cadbury and its parent company Kraft Foods.

Elise holds a BBus (Marketing), a Master of Management from Monash University and graduate
qualifications in psychology.

Chris Billing
Chief Innovation Officer

Chris joined iSelect in 2009 as Product Director, later leading both product and IT delivery and
in 2013 became Chief Innovation Officer. Before coming to iSelect, Chris held various senior
management positions with REA Group, Uecomm Pty Ltd and Sensis. He has 18 years’ strategy,
product management and marketing experience with online and IT companies.

Today, Chris is responsible for business innovation and future growth at iSelect.

Chris holds a BBus from Victoria University and a Master of Marketing from The University
of Melbourne.

Financial
Report

13 Directors’ Report
20 Remuneration Report
29 Corporate Governance Statement
34 Auditor’s Independence Declaration
35

Consolidated Financial Statements for
the Year Ended 30 June 2013

35 Consolidated Statement of Comprehensive Income
36 Consolidated Statement of Financial Position
37 Consolidated Statement of Changes in Equity
38 Consolidated Statement of Cash Flows
39 Notes to the Consolidated Financial Statements
79 Directors’ Declaration
80
82 ASX Additional Information
84 Guidance versus Reported Results

Independent Auditor’s Report

iSelect Annual Report 2013

Directors’ Report

The Directors of iSelect Limited and its controlled entities
(the Group) submit herewith the ﬁnancial report of the
Group for the ﬁnancial year ended 30 June 2013.

.
The names of the Directors in ofﬁce during or since the end of the
ﬁnancial year are:

Damien Waller

Executive Chairman

Matt McCann

Chief Executive Ofﬁcer

Greg Camm

Non-Executive Director and Deputy Chairman
– appointed 20 August 2012

Shaun Bonètt

Non-Executive Director

Pat O’Sullivan

Non-Executive Director

Leslie Webb

Non-Executive Director

Michael McLeod

Non-Executive Director
– ceased 30 November 2012

The above named Directors held ofﬁce for the whole of the period
unless otherwise speciﬁed.

COMPANY SECRETARY
Trevor Jeffords

Appointed 7 February 2012, ceased 5 April 2013

David Chalmers

Appointed 5 April 2013

PRINCIPAL ACTIVITIES
The principal activities during the ﬁnancial year within the Group
were health, life, car insurance sales, mortgage brokerage, energy,
broadband and ﬁnancial referral services. There have been no
signiﬁcant changes in the nature of these activities during the year.

OPERATING AND FINANCIAL REVIEW

SUMMARY FINANCIAL
REPORTED RESULTS

Operating revenue

Gross Proﬁt

EBITDA

Depreciation and
amortisation

EBIT

Net ﬁnance costs

Tax

NPAT

EPS (cents)

FY13
$000

118,037

56,882

25,004

5,150

19,854

1,698

4,787

13,369

6.6

FY12
$000

111,928

54,958

24,082

4,054

20,028

895

6,204

12,929

7.8

Change
%

5.5

3.5

3.8

27.0

(0.9)

89.7

(22.8)

3.4

(15.4)

RESULTS ON A GUIDANCE BASIS
VERSUS REPORTED RESULTS1

FY13
Reported
Results
$000

118,037

25,004

13,369

FY13
Adjust-
ments
$000

–

1,479

1,035

FY13
Guidance Basis
$000

118,037

26,483

14,404

Operating revenue

EBITDA

NPAT

Refer to the guidance versus reported results reconciliation on page 84. This reconciliation
forms part of the Operating and Financial Review.

Throughout this report, certain non-IFRS information, such as EBITDA, EBIT, Conversion Ratio,
Leads and Revenue Per Sale (RPS) is used. Earnings (proﬁt) before interest, income tax expense,
depreciation and amortisation (EBITDA) is deﬁned in Note 2(c) to the ﬁnancial statements. EBIT is a
similar measure to EBITDA, but it takes into account depreciation and amortisation. The individual
components of EBITDA and EBIT are included as line items in the Consolidated Statement of
Comprehensive Income. Non-IFRS information is not audited.

The Group operates in the online product comparison sector and
compares private health insurance, life insurance, car insurance,
broadband, energy, home loans and personal ﬁnancial products.
The Group maintains two brands, iSelect (www.iselect.com.au) and
InfoChoice (www.infochoice.com.au). The Group’s business model is
comprised of four key pillars that are linked: brand, lead generation,
conversion and Product Providers. The Group derives the majority of
its revenue from fees or commissions paid by Product Providers for
successful sale of their products.

Group Financial Performance and Reported Results
Operating revenue in the 2013 ﬁnancial year increased by 5.5% to
$118,037,000. The Group recorded strong year-on-year growth in
its newer businesses as they gained traction in the market, with an
increased number of leads and higher conversion. Our overall sales
volumes increased on the prior year, though a decline in revenue per
sale in Health, which reﬂected a shift by consumers to less expensive
products, offset this growth.

Gross proﬁt for the period increased by $1,924,000, or 3.5%. Direct
marketing expenditure increased by 5.2% over the previous period, in
part due to a refresh of the creative platform in the second half of the
2013 ﬁnancial year.

Operating expenses (excluding IPO transaction costs associated with
the ASX listing) were down on FY12 by $471,000 or 1.5%, reﬂecting a
conscious focus on the management of costs.

Reported EBITDA increased by 3.8% to $25,004,000. Excluding IPO
transaction costs, EBITDA (on a guidance basis) for the 2013 ﬁnancial
year was $26,483,000, representing an increase of 10.0% on the
prior year.

Net ﬁnance costs increased by 89.7% to $1,698,000. This is as a
result of the ﬁnance costs associated with having three consecutive
facilities in place during FY13.

Reported net proﬁt after tax was $13,369,000, an increase on
prior year of 3.4%. NPAT on a guidance basis was $14,404,000,
an increase of 11.4%.

Directors’ Report (continued)
for the year ended 30 June 2013

KEY OPERATING METRICS

Leads
iSelect categorise a ‘lead’ across the business (except in the Money
business unit within the Household Utilities and Financial segment)
as a second-page visit to one of its websites, or an inbound phone
call from a potential customer to the Consumer Advice Team. This is
considered by management to be a more conservative metric than
considering all the visits to the homepage as sales leads.

Leads for the Money business unit are sourced via the InfoChoice
website, which operates under a lead generation model providing
a low-cost source of sales leads. On this basis, a lead for the Money
business unit is considered a visit to its website.

Conversion Ratio
Once a lead is generated, iSelect provides purchase advice and
information to the consumer. If that purchase advice results in a
referral to a Product Provider, then the lead is considered to have
been converted. Product sales are subject to claw back provisions
and lapses before the enforcement of the policies. The conversion
ratio expresses the net number of product sales (adjusted for claw
back and lapses before the enforcement of policies) achieved as a
percentage of sales leads and is used to measure the efﬁciency in
turning sales leads into sales. An increase in the conversion ratio
increases iSelect’s earnings, as without the need for additional
marketing spend, iSelect has leveraged efﬁciencies from its existing
resources to achieve a greater number of sales from the same
lead pool. This uplift in efﬁciency creates the margin to enable
further spend on advertising and brand investment (where market
conditions are appropriate) in order to grow market share.

Under the lead generation model operated by the Money business
unit, consumers are able to click through to Product Providers via
third party afﬁliate arrangements, which do not register as a visit
to the InfoChoice website. As a result, the click-through is recorded
without registering a corresponding lead as deﬁned above. As such,
the conversion ratio metric just described is not meaningful for the
Money business unit.

Revenue Per Sale
Revenue per sale (RPS) measures the average revenue generated
from each lead that is converted to a sale. It should be noted the
RPS of different products sold by iSelect varies considerably.

iSelect Annual Report 2013

OPERATING AND FINANCIAL REVIEW (CONTINUED)
Consolidated Key Operating Metrics

Consolidated (excluding Money)

Leads (000s)

Conversion ratio (%)1

Average RPS ($)2

Leads growth

Money

Leads (000s)

Conversion ratio (%)

Average revenue per click-through ($)

Leads growth

FY10

FY11

FY12

FY13

1,519

3.6%

791

n.m.

n.a.

1,911

4.8%

787

25.8%

n.a.

2,945

5.7%

642

54.1%

874

n.m.

3,317

6.1%

564

12.6%

1,693

n.m.

93.7%

Conversion ratio is calculated as the number of net sales divided by sales leads (i.e. the average percentage of sales leads that are converted into sales).
Average RPS is calculated as revenue divided by the number of sales (net of terminations and sales direct to fund).

1
2
n.m. not meaningful
n.a. not applicable

Segment Performance
The Group reports segment information on the same basis as the
Group’s internal management reporting structure at reporting date.
Commentary on the performance of the two segments follows.

Health and Car Insurance
The Health and Car Insurance segment offers comparison and
referral services across the private health insurance and car
insurance categories.

Financial
Performance

Operating revenue

Segment EBITDA1

Key Operating
Metrics

Leads (000s)

Conversion ratio (%)

Average RPS ($)

FY13
$000

93,090

36,532

FY13

1,942

6.5%

734

FY12
$000

97,983

40,447

FY12

1,972

6.7%

742

Change
%

(5.0)

(9.7)

Change
%

(1.5)

(3.0)

(1.1)

Operating revenue declined by 5.0% to $93,090,000, with this
revenue shortfall also impacting segment EBITDA. Performance
in Health in particular was impacted by consumers selecting lower
priced products, especially evident in the key June period. There was
improvement in the underlying performance of the Car business
unit proﬁtability on the prior year.

Discussion of Consolidated Key Operating Metrics for the
2013 Financial Year
The consolidated key operating metrics for the 2013 ﬁnancial
year are discussed in more detail below. Key operating metrics by
segment are also discussed in this Operating and Financial Review,
in the section on Segment Results.

Leads Growth for the 2013 Financial Year
Overall leads for the business (excluding Money) were up 12.6%
in the 2013 ﬁnancial year whilst marketing spend was up 5.2%
for the same period, indicating greater marketing efﬁciency.
The Company’s strong brand and organic search position continues
to deliver beneﬁts, with over 60% of web visits to the iSelect and
InfoChoice websites in the 2013 ﬁnancial year coming from organic
search or direct to site. In addition, the Group refreshed its creative
platform during the current year.

Conversion Ratio for the 2013 Financial Year
The conversion ratio for the overall business (excluding Money)
has improved from 5.7% to 6.1%, with the improvement
year-on-year being driven by new businesses in the Household
Utilities and Financial segment.

iConnect has been progressively rolled out in the Car, Life and
Energy business units through the year, with the implementation of
intelligent lead queueing and allocation providing pleasing results in
those businesses. We expect continued improvement in conversion
across the group as the iConnect system is further optimised.

Revenue Per Sale for the 2013 Financial Year
There are three key drivers of RPS: commission rates (either ﬁxed
fee or percentage of product value), product mix within business
units, and business mix/segment contribution for the total business.

The decline in average RPS for the total business from $642 in
prior year to $564 in the 2013 ﬁnancial year largely reﬂects a
change in business mix/segment contribution. We have experienced
growth in the current year in high volume/low RPS value businesses
(e.g. Energy), whilst the higher RPS business in Health has seen
a small decline in RPS due to a consumer move towards less
expensive products.

Directors’ Report (continued)
for the year ended 30 June 2013

Household Utilities and Financial
The Household Utilities and Financial segment offers comparison
and lead referral services across a range of household utilities and
personal ﬁnancial products, including life insurance, broadband,
retail electricity and gas products, home loans, savings accounts,
term deposits, credit cards and personal loans.

Financial
Performance

Operating revenue

Segment EBITDA1

Key Operating
Metrics2

Leads (000s)

Conversion ratio (%)

Average RPS ($)

FY13
$000

24,947

3,063

FY13

1,376

5.4%

274

FY12
$000

13,945

(5,552)

FY12

973

3.8%

284

Change
%

78.9

n.m.

Change
%

41.4

42.1

(3.5)

Segment EBITDA excludes certain corporate overhead costs that are not allocated at segment
level. Earnings (proﬁt) before interest, income tax expense, depreciation and amortisation
(EBITDA) is deﬁned in Note 2(c) to the ﬁnancial statements.
Key operating metrics reported here for the Household Utilities and Financial segment exclude
the metrics for the Money business unit. The key operating metrics for the Money business unit
are reported above with the consolidated group’s key operating metrics.

Operating revenue grew by 78.9% to $24,947,000 and the
segment posted its ﬁrst EBITDA proﬁt of $3,063,000. It was the
ﬁrst full year contribution from Energy and Money, and all business
units within the segment recorded improvements on the prior year.
In particular, gross proﬁt improvements in Life and Money exceeded
expectations.

Financial Position

Summary Statement
of Cash Flows

Net cash provided by
operating activities

Net cash used in
investing activities

Net cash used in
ﬁnancing activities

Net increase in cash
and cash equivalents

FY13
$000

FY12
$000

Change
%

4,209

(362)

(4,401)

(44,752)

65,495

47,627

n.m.

90.2

37.5

65,303

2,513

2,498.6

Summary Statement
of Financial Position

FY13
$000

FY12
$000

Change
%

Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Net assets

Equity

138,632

135,629

274,261

25,123

21,412

46,535

227,726

63,044

111,353

174,397

60,791

20,600

81,391

93,006

119.9

21.8

57.3

(58.7)

3.9

(42.8)

144.9

Capital Expenditure and Cash Flow
Operating cash ﬂow was $4,571,000 higher than last year which can
be attributed to the increasing contribution of the newer business
units, as well as a shift in revenue mix towards upfront fees when
compared to the prior year.

Capital expenditure returned to business-as-usual levels after capital
investment on the new campus and the acquisition of InfoChoice
in 2012 ($31,348,000). Investment in the current year focused on
software development and technology platforms.

Financing cash ﬂows for the 2013 ﬁnancial year total $65,495,000,
representing an increase of $17,868,000, or 37.5%. The increase
is primarily driven by additional capital-raising activities, though is
offset by the repayment of borrowings that were outstanding at the
end of the prior year. In addition to this, the Group entered into an
agreement which provides a secured facility to NIA Health Pty Ltd.
The facility creates a deferred payment obligation for which NIA
Health provides security and pays interest.

One hundred million dollars was raised through the initial public
offering. Total costs associated with the initial public offering were
$13 million, including both capitalised amounts (before tax effect)
and expensed amounts. Part of the funds raised were used to repay
outstanding bank facilities in full.

Statement of Financial Position
Current assets have increased by 119.9% to $138,632,000. Cash
and cash equivalents increased primarily as a result of the capital
raised through the listing in June. The amount of upfront revenue
earned in the business has increased, which has resulted in an
increase in trade and other receivables. The trail commission asset
has also increased, reﬂecting a higher amount of trail revenue in the
current ﬁnancial year as an addition to the trail asset, compared to
trailing commissions received.

Non-current assets have increased by 21.8% to $135,629,000. The
non-current component of the trail commission asset has increased
for the same reasons noted above. Trade and other receivables
has increased from nil at 30 June 2012, to $15,378,000, reﬂecting
a facility established between iSelect Ltd and NIA Health Pty Ltd.
Property, plant and equipment declined as the ﬁrst full year of
depreciation on the leasehold improvements for the iSelect campus
was incurred, and exceeded the level of additions during the year.
This was partly offset by an increase in intangible assets as the
Group continues to invest in its website platforms.

Current liabilities decreased by 58.7% to $25,123,000, mainly due
to the repayment of $35 million of borrowings (further discussion in
the section following on Debt Position).

Non-current liabilities increased by 3.9% to $21,412,000. Net
deferred tax liability increased as a result of the increase in the trail
asset, which reﬂects an increase in future tax liabilities on the trail
commission as it is received. This is partly offset by a deferred tax
asset that has arisen in relation to capitalised IPO transaction costs
which are deductible over a period of ﬁve years.

iSelect Annual Report 2013

Debt Position
As at 30 June 2013 the Group has no debt, having used part
of the proceeds from its ASX listing to repay borrowings in full.
This compares with borrowings of $35 million as at 30 June 2012.

In September and October 2012, $28.8 million of capital was raised
and was used to repay $20.7 million of the $35 million owing to
Goldman Sachs at the end of the prior year. On 30 October 2012,
a new facility was entered into with Credit Suisse AG for $25 million,
and $14.3 million of these funds was used to repay the balance
of $35 million. The Credit Suisse AG borrowings were repaid in full
in April 2013, using newly established facilities for $40 million with
the CBA, and part of the funds raised through listing have repaid
all outstanding borrowings under the CBA facility.

FUTURE DEVELOPMENTS AND EXPECTED RESULTS
Via the Group’s two websites, www.iselect.com.au and
www.infochoice.com.au, the Group continues to meet the needs
of a growing population of consumers who are migrating online to
extend their buying power and to more efﬁciently ﬁnd appropriate
products at lower prices.

Recent research1 by Nielsen Australia indicates that 46% of Online
Australians surveyed are more likely to use an online comparison
service now than in the last 12 months. Research also shows that
the use of online comparison services in Australia is likely to continue
growing strongly over the next reporting period. As the Australian
market leader in online-driven comparison, the Group remains
uniquely positioned to beneﬁt from the increasing adoption and use
of the internet in this regard.

To maintain and build the Group’s market-leading position, we have
continued to invest in new business lines. Our Household Utilities
and Financials segment, which contains our youngest business units,
experienced 79% revenue growth for the year ended 30 June 2013.
This growth demonstrates the utility of the iSelect model outside
of private health insurance and we expect further growth from this
segment in FY14. This growth will be underpinned by the strong
potential present within each of that segment’s underlying markets,
in particular Energy.

As a ﬁrst mover and thought leader in the Australian online
comparison market, innovation across the Group will be a key focus
area in FY14. While the Group’s health insurance website is already
optimised for mobile and tablet devices, an observed increase in
trafﬁc to our websites from these devices during FY13 presents a
clear opportunity for a second iSelect sales experience across all
business units in FY14, driving consequential conversion and revenue
uplifts to be delivered in subsequent reporting periods.

With a view to continuing growth in sales lead conversion, the Group
will continue to invest in our people and technology. In order to
provide consumers with a better user experience and maximise sales
conversion, iSelect has developed processes to optimise information
capture and routing to ensure that each consumer is matched
with the optimal sales adviser based on an adviser’s demonstrated
expertise in providing the solution likely to best suit the consumer’s
requirements. This blend of technology with people is known as
the iConnect platform. It is expected that the application of the
iConnect platform to business units outside of Health Insurance
will drive signiﬁcant efﬁciency and conversion improvements within
those units over the next period.

The capital raising in the ﬁrst half of ﬁnancial year 2013 and
subsequent initial public offering gives the Group ﬁnancial ﬂexibility
to fund growth into the future.

The Group expects the performance of the newer business units to
continue over the next period as the iConnect platform continues to
improve conversion of leads to sales.

With some early signs in ﬁnancial year 2014 of a return to normal
private health insurance market conditions, the Group remains
cautious and will closely monitor the market with a view to
maintaining resilience over the coming period. RPS weakened late in
the second half of ﬁnancial year 2013; however, the Group considers
it too early to determine whether factors driving this weakening will
extend into the ﬁrst half of ﬁnancial year 2014. Notwithstanding
this, the Group has demonstrated the ability to manage the
business efﬁciently in response to external factors and accordingly
is re-afﬁrming its calendar year EBITDA forecast of $30 million
(excluding costs associated with the initial public offering).

The Group sees strong growth opportunities in its newer businesses;
however, the net impact of these on overall revenue growth remains
largely dependent upon how consumers respond to the means-
tested private health insurance landscape during the ﬁrst half of
ﬁnancial year 2014.

The Group does remain cognisant of potential risks to its business
and will continue to closely monitor and work to mitigate these
throughout ﬁnancial year 2014. These risks include potential
changes in government policy and legislation with regard to private
health insurance, lower than expected cash receipts from future
trail commissions, and any adverse decisions taken by product
providers currently listed on the Group’s websites. All of these risks
have the potential to adversely impact the Group’s revenue and
consequent proﬁtability.

Research conducted by Nielsen Australia between 18 February 2013 and 25 February 2013
of 2,012 online Australians

Directors’ Report (continued)
for the year ended 30 June 2013

CHANGES IN THE STATE OF AFFAIRS
On 31 May 2013, the shareholders of iSelect resolved to approve
a division of issued share capital in accordance with s254H of the
Corporations Act on the basis that every existing share becomes
ten new shares.

On 24 June 2013, iSelect listed on the ASX offering 54,054,054
new shares and 62,351,590 existing shares at a price of $1.85 per
share. The purpose of this offering was to:

–

Provide funding ﬂexibility to support future growth, including
by acquisition;

Raise capital to strengthen the Company’s balance sheet and to
pay down debt; and

– Create liquidity in iSelect shares by listing on the ASX, allowing
for existing and new shareholders to sell their shares or buy
further shares on market.

With $87 million (net of transaction costs) received from the
issue of new share capital (after payment of IPO related costs),
borrowings have been repaid in full, with the remaining monies to
be used to fund working capital and support future growth in the
company, including by acquisition.

SIGNIFICANT EVENTS AFTER BALANCE DATE
On 24 June 2013, iSelect listed on the Australian Securities
Exchange. iSelect has adopted a cash management strategy
speciﬁcally for funds raised to ensure the best return are obtained
whilst strategies for the use of the funds are formulated and
implemented. Post-year end, $60 million in rolling-term deposits
were set up. No other matters or circumstances have arisen since the
end of the ﬁnancial year that have signiﬁcantly affected the Group.

INDEMNIFICATION AND INSURANCE
OF DIRECTORS AND OFFICER
During the year the Group paid a premium in respect of a contract
insuring the Directors and Ofﬁcer of the Group against a liability
incurred as such a Director or Ofﬁcer to the extent permitted by
the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the
premium. The Group has not otherwise, during or since the end of
the period, indemniﬁed or agreed to indemnify a Director, Ofﬁcer or
Auditor of the company or of any related body corporate against a
liability incurred as such a Director, Ofﬁcer or Auditor.

DIRECTORS’ MEETINGS
The number of meetings of Directors, including meetings of committees of Directors, held during the year and the number of meetings
attended by each Director was as follows:

DIRECTORS

BOARD OF DIRECTORS

AUDIT & RISK
MANAGEMENT
COMMITTEE

REMUNERATION
COMMITTEE

NOMINATION
COMMITTEE

D. Waller1

M. McCann

G. Camm2

P. O’Sullivan3

L. Webb4

S. Bonètt

M. McLeod5

Held^

Attended

Held^

Attended

Held^

Attended

Held^

Attended

–

^ The number of meetings held indicates the total number held whilst the director was in ofﬁce during the course of the year.
1 Ceased as chair of Nominations Committee 15 April 2013 but continues as a member.
2 Appointed as director on 20 August 2012 and to the Audit & Risk Management Committee 15 April 2013.
3 Appointed to the Remuneration Committee 15 April 2013.
4 Appointed to Nominations Committee 15 April 2013.
5 Ceased as director on 30 November 2012.

iSelect Annual Report 2013

Ernst & Young received or are due to receive the following amounts
for the provision on non-audit services:

Regulatory compliance

Tax compliance

Assurance related services

Equity raising

Finance raising

36,000

10,000

46,015

1,016,815

105,000

1,213,830

ROUNDING
The Group is of the kind referred to in ASIC Class Order 98/0100,
dated 10 July 1998, and in accordance with that Class Order
amounts in the directors’ report and the ﬁnancial report are rounded
off to the nearest thousand dollars, unless otherwise indicated.

DIVIDENDS
Dividends paid or declared since the start of the year are $nil
(2012: $nil).

PROCEEDINGS ON BEHALF OF THE COMPANY
In March 2012, Bupa Australia Pty Ltd issued legal proceedings
against iSelect in the Federal Court. In October 2012, Bupa
Australia joined Directors Damien Waller and Matt McCann to the
proceedings. iSelect brought its own claim against Bupa Australia
Pty Ltd and its Managing Director for misleading and deceptive
conduct. This matter was settled in March 2013 by way of consent
orders as follows:

–

all proceedings commenced by the parties were dismissed;

iSelect provided certain undertakings to the Federal Court and to
Bupa Australia regarding representations around waiting periods
that cannot be made;

–

parties bear their own costs of the proceedings; and

iSelect paid the sum of $125,000 to a registered charity
nominated by Bupa Australia within 30 days of Bupa Australia
providing notiﬁcation of the charity.

No other proceedings have been brought or intervened in on behalf
of the Group with leave of the Court under section 237 of the
Corporations Act 2001.

ENVIRONMENTAL REGULATION
The Group is not subject to signiﬁcant environmental regulation
in respect of its operations. The Group has not incurred any
liability (including any liability for rectiﬁcation costs) under any
environmental legislation.

CORPORATE GOVERNANCE
In recognising the need for high standards of corporate behaviour and
accountability, the Directors have followed the corporate governance
statement found on the Group’s website at iSelect.com.au.

AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under
section 307C of the Corporations Act 2001 in relation to the audit
for the year ended 30 June 2013 is on page 34 of this report.

NON-AUDIT SERVICES
The following non-audit services were provided by the Group’s
auditor, Ernst & Young. The Directors are satisﬁed that the provision
of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
The nature and scope of each type of non-audit service provided
means that auditor independence was not compromised.

Remuneration Report (Audited)
for the year ended 30 June 2013

This Remuneration Report for the year ended 30 June 2013 outlines
the remuneration arrangements of the Group in accordance with
the Corporations Act 2001 and its regulations. This information has
been audited as required by section 308(3C) of the Act.

The Remuneration Report is presented under the following sections:

1. Introduction

2. Remuneration Governance

3. Executive Remuneration Arrangements

4. Executive Remuneration Outcomes for 2013

5. Executive Contracts

6. Non-Executive Director Remuneration

1. INTRODUCTION

The Remuneration Report details the remuneration arrangements
for key management personnel (KMP) who are deﬁned as those
persons having authority and responsibility for planning, directing
and controlling the major activities of the Group, directly or
indirectly, including any director (whether executive or otherwise)
of the Parent entity.

For the purposes of this report, the term “executive” includes the
Chief Executive Ofﬁcer (CEO), executive directors and other senior
executives of the Group.

There were no changes to KMP after the reporting date and before
the date the ﬁnancial report was authorised for issue.

Executive Directors

Non-Executive Directors

Senior Executives

Former Executives

Damien Waller
Executive Chairman

Greg Camm
Director (Non-Executive)
– appointed
20 August 2012

David Chalmers
Chief Financial Ofﬁcer &
Company Secretary
– appointed CFO 23 August
2012 and Company
Secretary on 5 April 2013

Trevor Jeffords
General Counsel &
Company Secretary
– ceased 5 April 2013

Former
Non-Executive Directors

Michael McLeod
Director (Non-Executive) –
ceased 30 November 2012

Matt McCann
Chief Executive Ofﬁcer

Shaun Bonètt
Director (Non-Executive)

Chris Billing
Chief Innovation Ofﬁcer

Chris Brant
Chief Financial Ofﬁcer –
ceased 23 August 2012

Martin Dalgliesh
Director (Non-Executive)
– ceased 16 March 2012

Pat O’Sullivan
Director (Non-Executive)

Roger McBride
Marketing Director
– appointed 20 August 2012

David May
Chief Marketing Ofﬁcer –
ceased 31 July 2012

Leslie Webb
Director (Non-Executive)

Elise Morris
People Director

Jo Thomas
Operations Director

Gerald Brown
Chief Executive Ofﬁcer
Insurance
– ceased 14 May 2012

Alla Keogh
Human Resources Director
– ceased 19 September 2011

Scott Wilson
Commercial Director
– appointed 4 February 2013

Mark Blackburn
Chief Financial Ofﬁcer
– ceased 4 October 2011

iSelect Annual Report 2013

2. REMUNERATION GOVERNANCE
Remuneration Committee
The Remuneration Committee comprises three
Non-Executive Directors.

The role of the Remuneration Committee is to review and make
recommendations to the Board on remuneration packages and
policies related to the directors and senior executives and to ensure
that the remuneration policies and practices are consistent with the
Group’s strategic goals and human resources objectives.

The Remuneration Committee meets as often as is required by the
Remuneration Committee Charter or other policy approved by the
Board to govern the operation of the Remuneration Committee.
Following each meeting, the Remuneration Committee will report
to the Board on any matter that should be brought to the Board’s
attention and on any recommendation of the Remuneration
Committee that requires Board approval. The CEO attends
certain Remuneration Committee meetings by invitation where
management input is required. The CEO is not present during any
discussions related to his own remuneration arrangements.

3. EXECUTIVE REMUNERATION ARRANGEMENTS
Remuneration Principles & Strategy
The Group’s executive remuneration strategy is designed to align
the interests of executives and shareholders, and attract, motivate
and retain high-performing individuals.

The following remuneration strategy aligns with the strategic
direction and links remuneration outcomes to performance.
The guiding principles are outlined below, and afﬁrm the Board’s
commitment to communicating KMP remuneration arrangements
in a transparent manner.

– Align the interests of executives with shareholders
– the remuneration framework incorporates “at-risk”
components, including short-term incentives and long-term
incentives. Performance is assessed against both ﬁnancial
and non-ﬁnancial targets and key performance indicators
that are relevant to the success of the Group and that will
provide acceptable returns for shareholders.

– Attract, motivate and retain high performing individuals
– remuneration is competitive with companies of a similar
size and complexity, and longer-term remuneration
encourages retention.

Overview of Components of Remuneration
The executive remuneration framework for the year ended 30 June 2013 consisted of the components outlined in the table below. Further
details of each of the individual components are set out in section 4 of this Remuneration Report.

Fixed Annual Remuneration (FAR)
60-75% of Total Remuneration

In setting FAR, consideration is given to
appropriate benchmark information and
individual performance as well as the ability
to retain key talent.

FAR includes superannuation
and other beneﬁts.

Short-Term Incentive (STI)

Long-Term Incentive (LTI)

25-40% of Total Remuneration

Rewards executives for their contribution to
achievement of group ﬁnancial outcomes as
well as individual key performance indicators.

Rewards executives for their contribution
to the creation of shareholder value over
the longer term.

STI is a cash-based incentive, paid quarterly and
annually to 30 June 2013. From 1 July 2013, STI
will be paid biannually and annually.

LTIP shares awarded are subject to
long-term performance conditions.

Within this framework, the Group aims to reward executives with a level of mix of remuneration appropriate to their position,
responsibilities and performance within the Group and aligned with market practice.

Remuneration Report (continued)
for the year ended 30 June 2013

Details of Executive Remuneration Components
Fixed Annual Remuneration
Fixed Annual Remuneration (FAR) consists of base salary and statutory superannuation contributions. Executive directors and senior
executives may also elect to have a combination of beneﬁts provided out of their FAR, including additional superannuation and the
provision of a motor vehicle. The value of any non-cash beneﬁts provided to them includes the cost of any fringe beneﬁts tax payable
by iSelect as a result of providing the beneﬁt.

Remuneration levels are considered annually through a remuneration review that considers market data, insights into remunerations
trends, the performance of the Group and individual, and the broader economic environment.

A review was undertaken during the 2013 ﬁnancial year. Fixed remuneration levels for the CEO and a number of senior executives
were increased based on individual performance and to align to market remuneration levels.

Short-Term Incentives

What is the short-term incentive and who participates?

What is the amount the executive
can earn?

SUMMARY OF STI PLAN

The short-term incentive (STI) program is a cash-based plan that involves linking
speciﬁc ﬁnancial and non-ﬁnancial targets with the opportunity to earn incentives based
on a percentage of ﬁxed salary for the CEO and senior executives.

All senior executives are eligible to receive an annual incentive.

The target STI opportunity is 45% of ﬁxed remuneration for the Executive
Chairman, 34% for the CEO, and between 28% and 35% for other senior executives.
Actual STI payments granted to each executive depends on the extent to which speciﬁc
targets, both ﬁnancial and non-ﬁnancial, are met. STI on non-ﬁnancial measures is
awarded based on individual performance. STI on ﬁnancial measures is based on the level
of performance compared to target, per below.

Financial measures
– level of performance

Percentage of
STI received

Below threshold
(i.e. < 95% of target)

Between threshold and target

Pro-rata, up to 100%

Target (100%)

Above target

100%

Up to 200%

What were the performance conditions
for the 2013 ﬁnancial year?

The performance conditions for the short-term incentive are a mix between
ﬁnancial and non-ﬁnancial measures.

Why were the performance conditions chosen?

When are the performance conditions tested?

Performance
measure

EBITDA

Gross Proﬁt

Agreed Objectives

Senior Executive
allocation

Executive Chairman
& CEO allocation

40%

30%–50%

10%–30%

50%

–

From 1 July 2013, the Gross Proﬁt based component will be replaced by a Revenue
based component in order to align performance with the Group’s growth objectives.
The allocation will remain unchanged.

The Board considers the performance measures to be appropriate, as they are
aligned with the Group’s objective of delivering growth and shareholder returns,
as well as leadership behaviours aligned with the Group’s corporate philosophy.

Incentive payments based on Gross Proﬁt and Agreed Objectives are determined
and paid quarterly for the year ended 30 June 2013, and biannually and annually from
1 July 2013. Incentive payments based on EBITDA are determined after the preparation
of the ﬁnancial statements each year (in respect of the ﬁnancial measures) and after a
review of performance against non-ﬁnancial measures by the CEO (and in the case of
the CEO, by the Board).

Payments of annual incentives are generally made in September after the
reviews are complete.

iSelect Annual Report 2013

Short-Term Incentives (continued)
In addition to the STI program outlined above, selected executives were eligible for discretionary bonuses in relation to:

–

The successful capital raise of $28.8 million of equity in September and October 2012; and

The successful listing of iSelect Limited on the Australian Securities Exchange.

Bonuses paid or accrued in relation to the above are included in the table on Executive Remuneration Outcomes for 2013 on pages 25 and 26.

Long-Term Incentives

SUMMARY OF LTI PLAN

What is the long-term incentive and who participates?

How is the LTIP grant determined?

What is the performance period?

What are the performance conditions?

What vesting schedules apply?

Why were these performance conditions chosen?

The long-term incentive plan (LTIP) has been established as the long-term incentive
component of remuneration in order to assist with the attraction, reward and retention
of certain employees.

The LTIP is designed to link long-term reward with the ongoing creation of shareholder
value, through the allocation of LTIP Shares which are subject to satisfaction of long-term
performance conditions.

All senior executives, including the Executive Chairman and CEO, participate in the plan.

The Remuneration sub-committee determines the size and allocation of the LTIP grant in
accordance with the LTI plan rules, for recommendation to the Board, who is responsible for
ﬁnal approval.

The performance period for the 2013 LTIP is the period 1 April 2013 to 30 June 2015. Any
LTIP Shares which do not vest following testing of the performance hurdles at the end of the
performance period will lapse.

LTIP Shares under the 2013 offer may vest in three tranches if the relevant performance
condition is met is respect of that period. The ﬁrst testing date was 30 June 2013 in respect
of 20% of LTIP Shares. The performance condition for this test was not met, and the ﬁrst
tranche did not vest. The remaining LTIP Shares may vest in two equal tranches of 40%,
tested at 30 June 2014 and 30 June 2015 respectively, where performance conditions are
met. It is the Board’s intention that the performance condition will be tested over the full
performance period in respect of any future offers under the LTIP.

Where a performance condition is not satisﬁed, any LTIP Shares which remain unvested
following testing of tranche 1 and/or tranche 2, will be aggregated and tested on a
cumulative basis at subsequent testing dates.

The performance condition is a compound annual growth rate (CAGR) in total
shareholder return (TSR). TSR measures the total change in the value of the shares over
a period, plus the value of any dividends and other distributions being treated as if they
were re-invested in shares.

CAGR in TSR
performance level

Less than 12%

12%

Greater than 12%,
less than 15%

15% or more

Percentage of
awards vesting

50%

Percentage of vesting increases
on a straight line basis

100%

The Board considers a CAGR in TSR to be an appropriate performance hurdle on the
basis that it:

(cid:242) ensures alignment between shareholder return and reward for the executive; and

(cid:242) provides an external market performance measure to encourage and motivate

executive performance.

What happens in the event of a change in control?

Unless the Board determines otherwise, all LTIP Shares vest upon a change in control.

What happens if the executive ceases employment?

Where an executive ceases employment, any unvested LTIP Shares will lapse, unless
determined and approved otherwise by the Board.

Remuneration Report (continued)
for the year ended 30 June 2013

The table below sets out details of LTIP Shares held by and granted to executives during the year under the LTIP.

Damien Waller

Matt McCann

David Chalmers

Chris Billing

Roger McBride

Elise Morris

Jo Thomas

Scott Wilson

Trevor Jeffords1

Balance at
start of year

–

Granted
during year

1,351,350

1,891,890

702,700

621,620

540,540

621,620

540,540

81,080

Vested
during year

Forfeited
during year

–

Balance at
end of year

1,351,350

1,891,890

702,700

621,620

540,540

621,620

540,540

81,080

Value at
grant date

1.85

1 The Board approved Trevor Jeffords’ retention of LTIP Shares post-cessation of his employment on 5 April 2013.

Employee Share Option Plans
2010 and 2011 Option Plans
These plans are predecessors to the LTIP. No additional offers will be made under these plans, though awards previously granted under
these plans will continue to be governed by the respective terms of these plans. Refer to Note 28 for further detail on the 2010 and 2011
option plans.

Offer to Director under the 2011 Option Plan
A number of options have been granted to Mr Leslie Webb under the 2011 Option Plan in lieu of director’s fees generally in line with the
terms of that plan and as follows:

Grant date:

1 July 2012

Number:

450,000

Consideration:

Nil

Exercise price:

$2.365

Expiry date:

30 June 2015

Service condition:

Must be a director of iSelect or a related body corporate of iSelect

Vesting conditions: Options vest monthly in equal instalments during the period 1 July 2012 to 30 June 2013

iSelect Annual Report 2013

4. EXECUTIVE REMUNERATION OUTCOMES FOR 2013
The remuneration table below sets out the remuneration information for the executive directors and senior executives who are considered to
be the key management personnel of the Group.

SHORT-TERM BENEFITS

POST-EMPLOYMENT
BENEFITS

SHARED-BASED
PAYMENTS

TERMIN-
ATION

TOTAL

PERFORM-
ANCE
RELATED

Salary
$

STI
$

Other
$

Super
$

Other
$

Options
$

Shares
$

Payments
$

Executive Directors
Damien Waller (Executive Chairman)

2013

2012

526,995

172,687

495,123

214,725

Matt McCann (Chief Executive Ofﬁcer)

2013

2012

459,763

276,456

397,832

114,750

Senior Executives
David Chalmers (Chief Financial Ofﬁcer)1

2013

2012

250,029

191,335

–

Chris Billing (Chief Innovation Ofﬁcer)

2013

2012

238,532

46,248

183,486

94,502

Roger McBride (Marketing Director)2

2013

2012

208,830

15,721

–

Elise Morris (Human Resources Director)3

2013

2012

287,615

36,125

112,914

3,346

Jo Thomas (Operations Director)4

2013

2012

248,820

32,139

9,153

20,112

Scott Wilson (Commercial Director)5

2013

2012

120,833

23,434

–

25,000

23,987

25,000

25,324

21,767

–

24,706

25,019

20,012

–

28,754

10,463

23,240

4,703

12,172

–

58,320

56,132

116,640

–

19,440

38,880

78,585

–

29,189

–

15,860

25,821

31,720

–

22,453

–

22,453

–

9,380

3,127

25,821

–

22,453

–

839,134

287,139

850,475

331,365

859,244

374,481

576,786

153,630

492,320

220,524

–

351,167

87,929

334,727

126,222

267,016

38,174

–

374,947

58,578

126,723

3,346

316,414

44,354

60,081

23,239

178,892

45,887

–

Remuneration Report (continued)
for the year ended 30 June 2013

SHORT-TERM BENEFITS

POST-EMPLOYMENT
BENEFITS

SHARED-BASED
PAYMENTS

TERMIN-
ATION

TOTAL

PERFORM-
ANCE
RELATED

Salary
$

STI
$

Other
$

Super
$

Other
$

Options
$

Shares
$

Payments
$

Former Senior Executives
Trevor Jeffords(General Counsel)6

2013

2012

215,362

83,325

13,822

14,999

Chris Brant (Chief Financial Ofﬁcer)7

2013

2012

133,790

27,848

209,127

–

David May (Chief Marketing Ofﬁcer)8

2013

2012

22,936

24,722

280,287

58,747

Total Current & Former KMP

2013

2012

2,713,505

837,551

1,794,233

521,181

1 Appointed 23 August 2012.
2 Appointed 20 August 2012.
3 Appointed 2 February 2012.
4 Appointed 3 May 2012.
5 Appointed 4 February 2013.
6 Appointed 7 February 2012, ceased 5 April 2013.
7 Appointed 24 October 2011, ceased 23 August 2012.
8 Ceased 31 July 2012.

–

26,926

8,849

10,308

18,821

4,289

25,000

222,174

142,166

–

6,480

5,400

–

9,720

12,960

–

3,368

145,888

411,846

–

112,573

23,670

20,399

23,230

195,176

27,848

–

227,948

–

71,743

133,410

34,442

–

376,994

71,707

119,200

286,275

240,861

4,419,566

1,216,273

208,727

–

2,666,307

729,908

The total of the KMP in FY2012 as per the audited ﬁnancial statements was $3,854,062 ($3,603,927 for Executive KMP and $250,135 for
Non-Executive Directors). The FY2012 total displayed in the main table above ($2,666,307) does not include previous KMP (as noted on
page 20) who had nil remuneration in FY2013.

Comparison of Total
FY2013 to FY2012 Remuneration Report

2013

2012

2,713,505

837,551

2,210,972

790,205

–

222,174

197,372

–

119,200

286,275

240,861

4,419,566

1,216,273

238,967

–

166,411

3,603,927

1,029,172

iSelect Annual Report 2013

5. EXECUTIVE CONTRACTS
Remuneration arrangements for KMP are formalised in employment contracts. All contracts are for unlimited duration.

Name

Damien Waller

Notice Period and Termination Payment

(cid:242) 12 months by either party (or payment in lieu)

(cid:242) 1 month notice within 6 months of ceasing to hold the position of Executive

Chairman or Executive Director or where the scope of responsibilities or authority
is materially diminished

(cid:242) Immediate for misconduct, breach of contract or bankruptcy

Matt McCann

(cid:242) 12 months by either party (or payment in lieu)

(cid:242) Immediate for misconduct, breach of contract or bankruptcy

David Chalmers

(cid:242) 6 months by either party (or payment in lieu)

Chris Billing

Roger McBride

Elise Morris

Jo Thomas

Scott Wilson

(cid:242) Immediate for misconduct, breach of contract or bankruptcy

(cid:242) 6 months by either party (or payment in lieu)

(cid:242) Immediate for misconduct, breach of contract or bankruptcy

(cid:242) 3 months by either party (or payment in lieu)

(cid:242) Immediate for misconduct, breach of contract or bankruptcy

(cid:242) 3 months by either party (or payment in lieu)

(cid:242) Immediate for misconduct, breach of contract or bankruptcy

(cid:242) 6 months by either party (or payment in lieu)

(cid:242) Immediate for misconduct, breach of contract or bankruptcy

(cid:242) 3 months by either party (or payment in lieu)

(cid:242) Immediate for misconduct, breach of contract or bankruptcy

6. NON-EXECUTIVE DIRECTOR REMUNERATION
Non-Executive Director Remuneration Policy
The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain Directors of the
highest calibre, whilst incurring a cost that is acceptable to shareholders. The amount of aggregate remuneration is reviewed annually.
The Non-Executive Director (NED) fee pool is determined from time to time by a general meeting. The latest determination was on
31 May 2013 where a fee pool of $950,000 per annum was approved. The Board will not seek any increase in the NED pool at the 2013 AGM.

Board and committee fees, as well as statutory superannuation contributions made on behalf of the Non-Executive Directors, are included
in the aggregate fee pool. The payment of additional fees for serving on a committee recognises the additional time commitment required
by the NEDs who serve on those committees.

Non-Executive Director Fees
The table below provides details of Board and committee fees (inclusive of superannuation) for the 2013 and 2012 ﬁnancial years and
current committee membership. The remuneration of Non-Executive Directors does not include any commission or percentage of proﬁts.

Main Board

Members – non-executive directors1

Deputy Chairman

Audit Committee

Chairman1

Remuneration Committee

Chairman

Nomination Committee

Chairman

2013 $

85,000

10,000

2012 $

65,000

10,000

–

10,000

Prior to 24 June 2013, three of the four Directors received fees. Pat O’Sullivan received no fees for his Board membership nor as Chairman of the Audit & Risk Management Committee.
From 24 June 2013, each Non-Executive Director receives fees of $85,000 per annum. The Executive Chairman is not paid any fees in addition to his salary.

Remuneration Report (continued)
for the year ended 30 June 2013

Non-Executive Director Remuneration for 2013

Non-Executive
Director

Greg Camm1

Shaun Bonètt

Pat O’Sullivan

Leslie Webb

Former Non-Executive
Director

Michael McLeod2

Martin Dalgliesh3

Total

Fees &
Allowances $

Short-Term
Beneﬁts^ $

Superannuation $

Other^^
$

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

54,787

–

59,633

–

9,174

71,196

69,633

62,442

194,790

200,882

18,307

–

18,307

–

18,307

–

54,921

–

6,624

–

7,060

5,367

–

2,519

826

6,408

6,267

5,592

22,611

18,052

–

50,400

–

31,201

50,400

31,201

Total
$

79,718

–

85,000

65,000

–

80,400

10,000

77,604

75,900

99,235

322,722

250,135

1 Appointed 20 August 2012.
2 Ceased 30 November 2012.
3 Ceased 16 March 2012.
^ Short-term beneﬁts represent one-off cash bonuses upon the successful listing of the Group.
^^ For the 2013 ﬁnancial year, “Other” represents share-based payment expense in relation to options issued under the 2011 Option Plan to Leslie Webb,

as described in Note 29 to the Financial Statements. For the prior year, “Other” represents share based payments expense for Martin Dalgliesh.

This Directors’ Report and Remuneration Report is signed in accordance with a resolution of the Directors.

On behalf of the Directors

Damien Waller
Director

Melbourne
29 August 2013

Matt McCann
Director

Melbourne
29 August 2013

iSelect Annual Report 2013

Corporate Governance Statement

This statement explains how the Board of iSelect Limited (the Board)
oversees the management of iSelect’s business. The Board is responsible
for the overall corporate governance of iSelect, including establishing
and monitoring key performance goals. The Board monitors the
operational and ﬁnancial position and performance of iSelect and
oversees its business strategy including approving the strategic goals
of iSelect and considering and approving an annual business plan,
including a budget.

The Board is committed to maximising performance, generating
appropriate levels of shareholder value and ﬁnancial return, and
sustaining the growth and success of iSelect. In conducting iSelect’s
business with these objectives, the Board seeks to ensure that iSelect
is properly managed to protect and enhance shareholder interests,
and that iSelect, its Directors, ofﬁcers and personnel operate in an
appropriate environment of corporate governance. Accordingly,
the Board has created a framework for managing iSelect including
adopting relevant internal controls, risk management processes and
corporate governance policies and practices which it believes are
appropriate for iSelect’s business and which are designed to promote
the responsible management and conduct of iSelect.

The ASX Corporate Governance Council has developed and released
its ASX Corporate Governance Principles and Recommendations
(ASX Recommendations) for Australian listed entities in order
to promote investor conﬁdence and to assist companies in
meeting stakeholder expectations. The recommendations are
not prescriptions, but guidelines. However, under the ASX Listing
Rules, iSelect is required to provide a statement in its Annual
Report disclosing the extent to which it has followed the ASX
recommendations in the reporting period. Where iSelect does not
follow a recommendation, it must identify the recommendation that
has not been followed and give reasons for not following it.

An overview of iSelect’s main corporate governance practices
are set out below. The information in this statement relating to
the Directors, Board committee memberships and other details
is current as at 21 October 2013.

Details of iSelect’s key policies and practices and the charters
for the Board and each of its committees are available at
www.iselect.com.au.

1. THE BOARD OF DIRECTORS
The Board of Directors is comprised of the Executive Chairman, and
ﬁve Non-Executive Directors. The Board consists of:

– Damien Waller – Executive Chairman;

– Greg Camm – Non-Executive Director and Deputy Chairman;

–

Pat O’Sullivan – Non-Executive Director;

Leslie Webb – Non-Executive Director

Shaun Bonètt – Non-Executive Director; and

– Bridget Fair – Non-Executive Director.

iSelect’s Chief Executive Ofﬁcer, Matt McCann, resigned on
13 October 2013. Mr David Chalmers, iSelect’s Chief Financial
Ofﬁcer, has been appointed acting Chief Executive Ofﬁcer until
a suitable successor is appointed.

Details of the Directors’ skills, experience, expertise, qualiﬁcations,
terms of ofﬁce, relationships affecting independence, their
independence status and membership of committees are set out
within this statement and in the Group’s Annual Report.

The Board considers an independent Director to be a Non-Executive
Director who is not a member of iSelect’s management and who
is free of any business or other relationship that could materially
interfere with or reasonably be perceived to interfere with the
independent exercise of their judgement. The Board will consider
the materiality of any given relationship on a case-by-case basis and
has adopted guidelines to assist in this regard. The Board reviews the
independence of each Director in light of interests disclosed to the
Board from time to time.

The iSelect Board Charter sets out guidelines and thresholds of
materiality for the purpose of determining independence of Directors
in accordance with the ASX Recommendations and has adopted a
deﬁnition of independence that is based on that set out in the ASX
Recommendations.

The Board considers thresholds of materiality for the purpose of
determining ‘independence’ on a case-by-case basis, having regard
to both quantitative and qualitative principles. Without limiting the
Board’s discretion in this regard, the Board has adopted the following
guidelines:

–

The Board will determine the appropriate base to apply (e.g.
revenue, equity or expenses), in the context of each situation.

In general, the Board will consider an afﬁliation with a business
which accounts for less than 5% of the relevant base to be
immaterial for the purpose of determining independence.
However, where this threshold is exceeded, the materiality of the
particular circumstance with respect to the independence of the
particular Director should be reviewed by the Board: and

– Overriding the quantitative assessment is the qualitative

assessment. Speciﬁcally, the Board will consider whether there
are any factors or considerations which may mean that the
Director’s interest, business or relationship could, or could be
reasonably perceived to, materially interfere with the Director’s
ability to act in the best interests of iSelect.

The Board considers that each of Greg Camm, Leslie Webb,
Shaun Bonètt and Bridget Fair is free from any business or any other
relationship that could materially interfere with, or reasonably be
perceived to interfere with, the independent exercise of the Director’s
judgement and is able to fulﬁl the role of independent Director for
the purpose of the ASX Recommendations.

Pat O’Sullivan was originally the nominated Board nominee on
behalf of ninemsn and upon ninemsn’s sale of its shares in iSelect
pursuant to the initial public offering and listing on ASX on 24 June
2013, became an independent Director.

Damien Waller is currently considered by the Board not to be
independent. Damien Waller is the co-founder of iSelect and
Executive Chairman and is also a substantial shareholder of iSelect.

Bridget Fair was appointed to the iSelect Board as an independent
Non-executive Director on 30 September, 2013.

Corporate Governance Statement (continued)

Bridget Fair is a senior media executive with over 20 years’
experience in government relations, business strategy, corporate
affairs and commercial negotiation. Bridget Fair is currently Group
Chief of Corporate and Regulatory Affairs at Seven West Media,
following 13 years as Head of Regulatory and Business Affairs at
the Seven Network. Between 1995 and 2000, Bridget Fair held
the position of General Counsel for SBS. Prior to this, she was legal
counsel for the ABC and practiced as a solicitor at law ﬁrm Phillips
Fox, now DLA Piper. Bridget Fair holds Board positions at Freeview
Australia Limited and Free TV Australia Limited. Bridget Fair holds
a BA/LLB from the University of New South Wales (UNSW).

The Board consists of a majority of independent Directors.

The Board recognises the ASX Corporate Governance Council’s
recommendation that the Chairman should be an independent
Director and it also recognises that Damien Waller does not meet
the deﬁnition of independence. However, the Board believes that
Damien Waller is the most appropriate person to lead the Board
as Executive Chairman and that he is able to, and does, bring
considered and independent judgment to all relevant issues falling
within the scope of the role of Chairman and that the Company as
a whole beneﬁts from his long standing experience of its operations
and business relationships.

2. BOARD CHARTER
The Board has adopted a formal Charter that details the functions
and responsibilities of the Board. The Board Charter also establishes
the functions reserved to the Board and those powers delegated to
management.

The Board Charter allows the Board to delegate powers and
responsibilities to committees established by the Board. The Board
retains ultimate accountability to shareholders in discharging its
duties.

The Board Charter provides that with guidance from the
Nominations Committee and, where necessary, external consultants,
the Board shall identify candidates with appropriate skills, experience,
expertise and diversity in order to discharge its mandate effectively
and to maintain the necessary mix of expertise on the Board.

The Nominations Committee assesses nominations of new Directors
against a range of criteria including the candidate’s background,
experience, gender, professional skills, personal qualities and whether
their skills and experience will complement the existing Board.

The criteria to assess nominations of new Directors is reviewed
annually and the Nominations Committee regularly compares
the skill base of existing Directors with that required for the future
strategy of iSelect to enable identiﬁcation of attributes required in
new Directors.

A copy of the Board Charter is publicly available in the Governance
section of the Company’s website at www.iselect.com.au.

3. BOARD COMMITTEES
The Board may from time to time establish appropriate committees
to assist in the discharge of its responsibilities. The Board has
established an Audit and Risk Management Committee, a
Nominations Committee and a Remuneration Committee.

Other committees may be established by the Board as and when
required. Membership of Board committees will be based on the
needs of iSelect, relevant legislative and other requirements and
the skills and experience of individual Directors.

(3.1) Audit and Risk Management Committee
The role of the Audit and Risk Management Committee is to assist
the Board in fulﬁlling its responsibilities for corporate governance and
overseeing iSelect’s internal control structure and risk management
systems. The Audit and Risk Management Committee also conﬁrms
the quality and reliability of the ﬁnancial information prepared by
iSelect, works with the external auditor on behalf of the Board and
reviews non-audit services provided by the external auditor, to conﬁrm
they are consistent with maintaining external audit independence.

The Audit and Risk Management Committee provides advice to the
Board and reports on the status and management of the risks to
iSelect. The purpose of the committee’s risk management process
is to ensure that risks are identiﬁed, assessed and appropriately
managed.

The Board has adopted a policy regarding the services that iSelect
may obtain from its external auditor. It is the policy of iSelect that
its external auditor:

– must be independent of iSelect and the Directors and senior

executives. To ensure this, iSelect requires a formal conﬁrmation
of independence from its external auditor on a six-monthly
basis; and

– may not provide services to iSelect that are, or are perceived

to be, materially in conﬂict with the role of the external auditor.
Non-audit or assurance services that may impair, or appear
to impair, the external auditor’s judgement or independence
are not appropriate. However, the external auditor may be
permitted to provide additional services which are, or are not
perceived to be, materially in conﬂict with the role of the auditor,
if the Board or Audit and Risk Management Committee has
approved those additional services. Such additional services
may include ﬁnancial audits, tax compliance, advice on
accounting standards and due diligence in certain acquisition
or sale transactions.

Information on the procedures for the selection and appointment
of the external auditor, and for the rotation of external audit
engagement partners is contained within the Company’s Audit
and Risk Management Committee Charter.

The Audit and Risk Management Committee must comprise, to the
extent practicable given the size and composition of the Board from
time to time, at least three Directors, all of whom must be Non-
Executive Directors and the majority of which must be independent
in accordance with the independence criteria set out in the Board
Charter. A member of the Audit and Risk Management Committee,
who does not chair the Board, shall be appointed the Chair of the
committee. The Board acknowledges the ASX Recommendation
that the Audit and Risk Management Committee should be chaired
by an independent Director (who is not Chair of the Board) and
in recognition of this, Pat O’Sullivan chairs the Audit and Risk
Management Committee.

iSelect Annual Report 2013

The Audit and Risk Management Committee meets as often as is
required by the Audit and Risk Management Committee Charter
or other policy approved by the Board to govern the operations
of the Audit and Risk Management Committee. The chair of the
Audit and Risk Management Committee invites members of senior
management and representatives of the external auditor to be
present at meetings of the committee and may seek advice from
external advisors. The Audit and Risk Management Committee
regularly reports to the Board about committee activities, issues
and related recommendations.

A copy of the Company’s Audit and Risk Management Committee
Charter is publicly available in the Governance section of the
Company’s website at www.iselect.com.au.

The committee comprises Pat O’Sullivan (Chair),
Shaun Bonètt and Greg Camm.

(3.2) Remuneration Committee
The role of the Remuneration Committee is to review and make
recommendations to the Board on remuneration packages and
polices related to the Directors and senior executives and to ensure
that the remuneration policies and practices are consistent with
iSelect’s strategic goals and human resources objectives.

A copy of the Company’s Remuneration Committee Charter is
publicly available in the Governance section of the Company’s
website at www.iselect.com.au.

The committee comprises Leslie Webb (Chair), Shaun Bonètt
and Pat O’Sullivan.

(3.3) Nominations Committee
The Nominations Committee is responsible for reviewing and making
recommendations in relation to the composition and performance
of the Board and its committees and ensuring that adequate
succession plans are in place (including for the recruitment and
appointment of Directors and senior management). Independent
advice will be sought where appropriate.

The Nominations Committee meets as often as is required by the
Nominations Committee Charter or other policy approved by the
Board to govern the operation of the Nominations Committee.
Following each meeting, the Nominations Committee reports to the
Board on any matter that should be brought to the Board’s attention
and on any recommendation of the Nominations Committee that
requires Board approval.

A copy of the Company’s Nomination Committee Charter is publicly
available in the Governance section of the Company’s website at
www.iselect.com.au.

The committee comprises Shaun Bonètt (Chair), Leslie Webb
and Damien Waller.

4. DIVERSITY
The workforce of iSelect is made up of individuals with diverse skills,
backgrounds, perspectives and experiences and this diversity is
recognised, valued and respected by the Company.

The Company has established a Diversity Policy which is publicly
available in the Governance section of the Company’s website at
www.iselect.com.au.

The policy includes requirements for the Board to establish
measurable objectives for achieving gender diversity and for
the Board to assess annually both the objectives and progress in
achieving them.

The proportion of female employees in senior leadership, executive
and Board members are outlined below.

Employee Category

All employees

Board

Executive team

Senior leadership

Total

418

Female
Component

Change
%

193

46%

17%

43%

29%

iSelect currently employs 418 staff, 193 of whom are female
(representing 46% of the total). iSelect’s Executive leadership team
which numbers seven executives includes three females (representing
43% of the total). iSelect’s senior leadership team, numbering
21 managers, includes six female managers (representing 29%
of the total). Of iSelect’s 6 Board members, there is currently one
female director. Improvement of gender diversity on the Board
is a priority.

DISCLOSURE AND SHAREHOLDER COMMUNICATION
POLICIES

As a company listed on ASX, iSelect is required to comply with the
continuous disclosure requirements of the ASX Listing Rules and
the Corporations Act. iSelect is required to disclose to the ASX any
information concerning iSelect which is not generally available and
which, if it was made available, a reasonable person would expect
to have a material effect on the price or value of iSelect’s securities.

The Board aims to ensure that shareholders and stakeholders
are informed of all major developments affecting iSelect’s state
of affairs. As such, iSelect has adopted a Disclosure Policy and
Shareholder Communication Policy, which together establish
procedures to ensure that Directors and senior management are
aware of, and fulﬁl, their obligations in relation to providing timely,
full and accurate disclosure of material information to iSelect’s
stakeholders and comply with iSelect’s disclosure obligations under
the Corporations Act and Listing Rules. The Disclosure Policy also sets
out procedures for communicating with shareholders, the media and
the market.

iSelect is committed to observing its disclosure obligations under
the ASX Listing Rules and the Corporations Act. Information is to be
communicated to shareholders through the lodgement of all relevant
ﬁnancial and other information with the ASX and continuous
disclosure announcements are made available on iSelect’s website,
www.iselect.com.au.

Corporate Governance Statement (continued)

A copy of the Company’s Disclosure Policy is publicly available
in the Governance section of the Company’s website at
www.iselect.com.au.

6. SHARE TRADING POLICY
iSelect has adopted a Share Trading Policy which applies to iSelect
and its Directors, ofﬁcers, employees and senior management,
including those persons having authority and responsibility for
planning, directing and controlling the activities of iSelect
(Key Management Personnel), whether directly or indirectly.

The policy is intended to explain the types of conduct in relation to
dealings in shares that is prohibited under the Corporations Act and
establish procedures in relation to Directors, senior management or
employees dealing in the shares.

Subject to certain exceptions, including exceptional ﬁnancial
circumstances, the policy deﬁnes certain ‘closed periods’ during
which trading in shares by the Company’s directors, ofﬁcers,
employees and Key Management Personnel is prohibited. Those
closed periods are currently deﬁned as the following periods:

–

the period commencing six weeks prior to the announcement
of release of iSelect’s half-year and annual ﬁnancial results
to the ASX and ending 24 hours after such release; and

the period commencing two weeks prior to the Company’s
annual general meeting and ending 24 hours after the annual
general meeting.

Outside of these periods, Directors, management and iSelect
employees must receive clearance for any proposed dealing in
shares. In all instances, buying or selling shares is not permitted at
any time by any person who possesses price-sensitive information.

7. CODE OF CONDUCT
The Board recognises that it has a responsibility for setting and
maintaining the ethical tone and standards of the Company
and iSelect’s senior management recognise that they have a
responsibility to implement practices that are consistent with
those standards.

The Company has developed a Code of Conduct Policy which
has been fully endorsed by the Board and applies to all Directors
and employees. The Code of Conduct is designed to identify and
encourage:

–

the practices necessary to maintain conﬁdence in the
Company’s integrity;

the practices necessary to take into account the Company’s
legal obligations; and

the responsibility and accountability of individuals for reporting
and investigating reports of unethical practices.

A copy of the Company’s Code of Conduct is publicly available
in the Governance section of the Company’s website at
www.iselect.com.au.

BOARD AND COMMITTEE MEETING FREQUENCY AND
ATTENDANCE

The number of Board and Board committee meetings held during
the year along with the attendance by directors is set out in the
Directors’ Report under Directors’ Meetings.

9. SENIOR EXECUTIVE PERFORMANCE
The Company’s Board Charter details a process for the review of the
performance of the Chief Executive Ofﬁcer, the Executive Chair and
other executive Directors as may be appointed.

The performance of the Company’s Senior Executives is reviewed
regularly to ensure that Executive members continue to perform
effectively in their roles. Performance is measured against goals and
company performance set at the beginning of the ﬁnancial year and
reviewed at the half year.

The performance of the CEO is reviewed by the Executive Chairman
on a six-monthly basis.

10. PERFORMANCE OF THE BOARD, ITS COMMITTEES AND

INDIVIDUAL DIRECTORS

The Company’s Board Charter details a process for the review of
Board, committee and individual directors’ performance. During
the reporting period, regular performance evaluations have been
undertaken of the Board, Committees and individual Directors to
ensure that the Board, Committees and individual directors work
effectively and efﬁciently in fulﬁlling their functions. These reviews
have included the Board and Committees assessing their own
performance and the Chairman of the Board holding discussions
with individual directors as to their performance. No formal
review, using an external consultant, has been undertaken during
the reporting period due to the Company’s key focus on being
admitted to the Ofﬁcial List of the ASX Limited. Such admission
was successfully achieved on 24 June 2013. The Company expects
to conduct a formal review, using an external consultant, within the
current reporting period.

11. ACCESS TO INDEPENDENT PROFESSIONAL ADVICE
Directors may obtain independent professional advice at iSelect’s
expense on matters arising in the course of their Board and
committee duties, after obtaining the Executive Chair’s approval.

12. PROCEDURE FOR THE SELECTION OF AND APPOINTMENT

OF DIRECTORS

A description of the procedure for the selection and appointment
of new directors to the Board and the re-election of incumbent
directors and the Board’s policy for the nomination and
appointment of directors is contained with the Company’s
‘Nomination Committee Charter’ and ‘Board Charter’.

13. REMUNERATION ARRANGEMENTS
Board and Non-Executive Director
The remuneration policy for the Board and the remuneration of each
Director is set out in both the Remuneration report which forms part
of the Directors Report, and in Note 29 in the Financial report.

The Company’s Share Trading Policy prohibits the Directors and
Senior Executives from entering into transactions or arrangements
which limit the economic risk of participating in unvested
entitlements.

Senior Executives
Information on the performance evaluation and structure of
remuneration for the Company’s Senior Executives can be found in
the Remuneration Report, which forms part of the Directors’ Report.

iSelect Annual Report 2013

14. RISK
The Company’s Board Charter provides that a function of the Board,
with the guidance of the Audit and Risk Management Committee is:

–

approving policies on and overseeing the management of
business and ﬁnancial and non-ﬁnancial risks (including foreign
exchange and interest rate risks, enterprise risk and risk in
relation to occupational health and safety);

reviewing and monitoring processes and controls to maintain
the integrity of accounting and ﬁnancial records and reporting;
and

approving ﬁnancial results and reports for release and dividends
to be paid to shareholders.

The Company’s Audit and Risk Management Charter also
provides that the committee’s speciﬁc function with respect to risk
management is to review and report to the Board that:

–

iSelect’s ongoing risk management program effectively
identiﬁes all areas of potential risk;

adequate policies and procedures have been designed and
implemented to manage identiﬁed risks;

a regular program of audit is undertaken to test the adequacy
of and compliance with prescribed policies; and

proper remedial action is undertaken to redress areas of
weakness.

Both the Board Charter and the Audit and Risk Management Charter
are publicly available in the Governance section of the Company’s
website at www.iselect.com.au.

The Company has also developed a Risk Management Policy which
is publicly available in the Governance section of the Company’s
website at www.iselect.com.au.

The Company seeks to take and manage risk in ways that will
generate and protect shareholder value and recognises that the
management of risk is a continual process and an integral part
of the management and corporate governance of the business.

The Company acknowledges that it has an obligation to all
stakeholders, including shareholders, customers, employees,
contractors and the wider community and that the efﬁcient and
effective management of risk is critical to the Company meeting
these obligations and achieving its strategic objectives.

Written Afﬁrmations
The Board has received assurance from the Chief Executive Ofﬁcer
and the Chief Financial Ofﬁcer that the declaration provided in
accordance with section 295A of the Corporations Act is founded
on a sound system of risk management and internal control and that
the system is operating effectively in all material respects in relation
to ﬁnancial reporting risks. This assurance was given on 29 August 2013
by Matt McCann (who was Chief Executive Ofﬁcer at that time)
and David Chalmers (who was Chief Financial Ofﬁcer at that time).

Management has reported to the Board as to the effectiveness
of the Company’s management of its material business risks.

The Board has also received from the Chief Executive Ofﬁcer
and the Chief Financial Ofﬁcer written afﬁrmations concerning
the Company’s ﬁnancial statements as set out in the
Director’s Declaration.

Auditor’s Independence Declaration

to the Directors of iSelect Ltd

Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001

Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

Auditor’s Independence Declaration to the Directors of iSelect Limited

In relation to our audit of the financial report of iSelect Limited for the financial year ended 30 June
2013, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional
conduct.

Ernst & Young

Ashley Butler
Partner

Melbourne
29 August 2013

iSelect Annual Report 2013

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2013

Upfront fee revenue

Trail commission revenue

Operating revenue

Cost of sales

Gross proﬁt

Other income

Administrative expenses

Share-based payments expense

Initial public offering costs

Relocation costs

Acquisition costs

Proﬁt Before Interest, Tax, Depreciation and Amortisation

Depreciation and amortisation

Proﬁt Before Interest and Tax

Finance income

Finance costs

Proﬁt Before Income Tax Expense

Income tax expense

Proﬁt for the Period

Other comprehensive income

Other comprehensive income for the period, net of tax

Total Comprehensive Income for the Period

Proﬁt attributable to owners of the Group

Total comprehensive income attributable to owners of the Group

Earnings per share (cents per share)

Basic for proﬁt for the year attributable to ordinary equity holders of the parent

Diluted for proﬁt for the year attributable to ordinary equity holders of the parent

The accompanying notes form part of these ﬁnancial statements.

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

Note

74,806

43,231

118,037

(61,155)

56,882

(29,820)

(668)

(1,479)

–

25,004

(5,150)

19,854

1,300

(2,998)

18,156

(4,787)

13,369

–

13,369

6.6

57,303

54,625

111,928

(56,970)

54,958

(29,955)

(557)

–

813

(1,260)

24,082

(4,054)

20,028

875

(1,770)

19,133

(6,204)

12,929

–

12,929

7.8

7.0

Consolidated Statement of Financial Position

as at 30 June 2013

Assets

Current Assets

Cash and cash equivalents

Trade and other receivables

Trail commission receivable

Other assets

Total Current Assets

Non-Current Assets

Trade and other receivables

Trail commission receivable

Other assets

Property, plant and equipment

Intangible assets

Total Non-Current Assets

Total Assets

Liabilities

Current Liabilities

Trade and other payables

Provisions

Borrowings

Other

Total Current Liabilities

Non-Current Liabilities

Provisions

Net deferred tax liabilities

Total Non-Current Liabilities

Total Liabilities

Net Assets

Equity

Contributed equity

Share-based payment reserve

Business combination reserve

Retained earnings

Total Equity

The accompanying notes form part of these ﬁnancial statements.

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

Note

85,315

18,692

33,166

1,459

138,632

15,378

73,807

765

6,953

38,726

135,629

274,261

20,201

4,525

–

397

25,123

2,686

18,726

21,412

46,535

227,726

171,313

858

5,571

49,984

227,726

20,012

15,338

26,534

1,160

63,044

–

64,925

–

9,380

37,048

111,353

174,397

21,246

4,232

35,000

313

60,791

2,858

17,742

20,600

81,391

93,006

49,759

2,384

5,571

35,292

93,006

Consolidated Statement of Changes in Equity

for the year ended 30 June 2013

Note

Issued Capital
$’000

Shared-Based
Payment Reserves
$’000

Business
Combination Reserve
$’000

Retained Earnings
$’000

36,582

1,827

5,571

Balance at 1 July 2011

Proﬁt for the period

Other comprehensive income

Total comprehensive income for the year

Transactions with owners in their
capacity as owners

Recognition of share-based payments

Issue of share capital

Balance at 30 June 2012

Proﬁt for the period

Other comprehensive income

Total comprehensive income for the year

Transactions with owners in their
capacity as owners

Transfers of lapsed and exercised options

15,17

Recognition of share-based payments

Issue of share capital

Capitalised equity raising costs (net of tax)

Balance at 30 June 2013

–

13,177

49,759

–

871

–

129,864

(9,181)

171,313

–

557

–

2,384

–

(2,194)

668

–

858

The accompanying notes form part of these ﬁnancial statements.

iSelect Annual Report 2013

Total
$’000

66,343

12,929

–

22,363

12,929

–

12,929

–

557

13,177

–

5,571

35,292

93,006

–

13,369

–

13,369

1,323

–

668

129,864

(9,181)

5,571

49,984

227,726

Consolidated Statement of Cash Flows

for the year ended 30 June 2013

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

Note

Cash Flows from Operating Activities

Receipts from customers

Payments to suppliers and employees

Income taxes paid

Net cash provided by/(used in) operating activities

Cash Flows from Investing Activities

Payments for property, plant and equipment and intangible assets

Payments for acquisition of business

Net cash used in investing activities

Cash Flows from Financing Activities

Interest paid

Interest received

Proceeds from borrowings

Repayment of borrowings

Net proceeds from issue of shares

NIA facility

Net cash provided by/(used in) ﬁnancing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

The accompanying notes form part of these ﬁnancial statements.

109,276

(105,067)

–

4,209

(4,401)

–

(4,401)

(4,531)

1,154

50,000

(85,000)

119,250

(15,378)

65,495

65,303

20,012

85,315

80,925

(81,287)

–

(362)

(13,404)

(31,348)

(44,752)

(1,425)

875

35,000

–

13,177

–

47,627

2,513

17,499

20,012

iSelect Annual Report 2013

Notes to the Consolidated Financial Statements

for the year ended 30 June 2013

1. CORPORATE INFORMATION
The ﬁnancial report of iSelect Limited for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of Directors
on 29 August 2013.

iSelect Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities
Exchange. The company was admitted to the ofﬁcial list of the ASX on 24 June 2013. The consolidated ﬁnancial statements of the company
as at and for the year ended 30 June 2013 comprise the ﬁnancial statements of the company and its subsidiaries (as outlined in Note 24),
together referred to in these ﬁnancial statements as the “Group” and individually as “Group entities”.

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

2. SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PREPARATION
The ﬁnancial report is a general purpose ﬁnancial report, which has been prepared in accordance with the requirements of the Corporations
Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board.
The ﬁnancial report has also been prepared on an historical cost basis, except for certain assets, which as noted have been measured at
amortised cost.

All amounts are presented in Australian dollars unless otherwise noted. The company is a company of the kind referred to in ASIC Class
Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the Directors’ report and the ﬁnancial report are
rounded off to the nearest thousand dollars, unless otherwise indicated.

b) STATEMENT OF COMPLIANCE
The ﬁnancial report complies with the Corporations Act 2001, Australian Accounting Standards and International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standard Board.

CLARIFICATION OF TERMINOLOGY USED IN THE STATEMENT OF COMPREHENSIVE INCOME AND THE STATEMENT
OF CASH FLOWS

Under the requirements of AASB 101: “Presentation of Financial Statements”, the Group classiﬁes expenses (apart from any ﬁnance costs)
according to either the nature (type) of the expense or function (activity to which the expense relates). The Directors have chosen to classify
expenses using the nature classiﬁcation, as it more accurately reﬂects the type of operations undertaken.

Earnings (proﬁt) before interest, income tax expenses, depreciation and amortisation (EBITDA) reﬂect proﬁt for the year prior to including
the effect of net ﬁnance costs, income taxes, depreciation and amortisation. Depreciation and amortisation are calculated in accordance
with AASB 116: “Property, Plant and Equipment” and AASB 138 “Intangible Assets” respectively. In addition to this, the Directors believe that
EBITDA is a relevant and useful ﬁnancial measure used by management to measure the Group’s operating performance.

Group management uses EBITDA and earnings before interest and income tax expense (EBIT), in combination with other ﬁnancial
measures, primarily to evaluate the Group’s operating performance before ﬁnancing, income tax and non-cash capital related expenses.
In addition, the Directors believe EBITDA is useful to investors because analysts and other members of the investment community largely
view EBITDA as a key and widely recognised measure of operating performance.

EBIT is a similar measure to EBITDA, but it takes into account depreciation and amortisation.

Free cash ﬂow is deﬁned as the sum of net cash provided by operating activities and net cash used in investing activities. Management and
the Directors believe this is useful in understanding cash ﬂows available to the Group before any ﬁnancing cash ﬂows.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
New standards effective from 1 July 2012
The Group has adopted the following new and revised Accounting Standards issued by the AASB that are relevant to its operations.

Reference

Title

AASB 2011-9

Amendments to Australian Accounting Standards – Presentation of Other
Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049]
This standard requires entities to group items presented in other comprehensive income on the
basis of whether they might be reclassiﬁed subsequently to proﬁt or loss and those that will not.

Application date
of standard

Application date
for Group

1 July 2012

New standards and interpretations issued not yet adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not
been adopted by the Group for the annual reporting period ending 30 June 2013 are outlined below.

Reference

Title

Summary and Impact on Group ﬁnancial report

AASB 10

Consolidated Financial
Statements

AASB 12

Disclosure of Interests in
Other Entities

AASB 10 establishes a new control model that applies to all entities.
It replaces parts of AASB 127 Consolidated and Separate Financial
Statements dealing with the accounting for consolidated ﬁnancial
statements and UIG-112 Consolidation – Special Purpose Entities.

The new control model broadens the situations when an entity is
considered to be controlled by another entity and includes new guidance
for applying the model to speciﬁc situations, including when acting as a
manager may give control, the impact of potential voting rights and when
holding less than a majority voting rights may give control.

Consequential amendments were also made to other standards via
AASB 2011-7 and 2012-10.

The Group does not expect any material impact as a result of
this standard.

AASB 12 includes all disclosures relating to an entity’s interests in
subsidiaries, joint arrangements, associates and structures entities.
New disclosures have been introduced about the judgments made
by management to determine whether control exists, and to require
summarised information about joint arrangements, associates and
structured entities and subsidiaries with non-controlling interests.

This amendment is not expected to have a material impact on
measurement and disclosure.

Application date
of standard

Application date
for Group

1 January 2013

1 July 2013

1 January 2013

1 July 2013

AASB 13

Fair Value Measurement AASB 13 establishes a single source of guidance for determining the fair

1 January 2013

1 July 2013

value of assets and liabilities.

AASB 13 does not change when an entity is required to use fair value, but
rather, provides guidance on how to determine fair value when fair value is
required or permitted. Application of this deﬁnition may result in different
fair values being determined for the relevant assets.

AASB 13 also expands the disclosure requirements for all assets or
liabilities carried at fair value. This includes information about the
assumptions made and the qualitative impact of those assumptions
on the fair value determined.

Consequential amendments were also made to other standards via
AASB 2011-8.

The Group is currently considering the impact of this standard.

iSelect Annual Report 2013

Application date
of standard

Application date
for Group

1 January 2013

1 July 2013

1 January 2015

1 July 2015

Reference

Title

Summary and Impact on Group ﬁnancial report

AASB 119

Employee Beneﬁts

AASB 9

Financial Instruments

The main change introduced by the standard is to revise the accounting
for deﬁned beneﬁt plans. The amendment removes the options for
accounting for the liability, and requires that the liabilities arising from
such plans are recognised in full with actuarial gains and losses being
recognised in other comprehensive income. It also revised the method
of calculating the return on plan assets.

The revised standard changes the deﬁnition of short-term employee
beneﬁts. The distinction between short-term and other long-term
employee beneﬁts is now based on whether the beneﬁts are expected
to be settled wholly within 12 months after the reporting date.

Consequential amendments were also made to other standards via
AASB 2011-10.

This amendment is not expected to have a material impact on
measurement and disclosure.

AASB 9 includes requirements for the classiﬁcation and measurement
of ﬁnancial assets. It was further amended by AASB 2010-7 to reﬂect
amendments to the accounting for ﬁnancial liabilities.

These requirements improve and simplify the approach for classiﬁcation
and measurement of ﬁnancial assets compared with the requirements of
AASB 139. The main changes are described below.

(a) Financial assets that are debt instruments will be classiﬁed based on:
(1) the objective of the entity’s business model for managing the ﬁnancial
assets; (2) the characteristics of the contractual cash ﬂows.

(b) Allows an irrevocable election on initial recognition to present gains
and losses on investments in equity instruments that are not held for
trading in other comprehensive income. Dividends in respect of these
investments that are a return on investment can be recognised in proﬁt or
loss and there is no impairment or recycling on disposal of the instrument.

(c)

Financial assets can be designated and measured at fair value
through proﬁt or loss at initial recognition if doing so eliminates or
signiﬁcantly reduces a measurement or recognition inconsistency
that would arise from measuring assets or liabilities, or recognising
the gains and losses on them, on different bases.

(d)

Where the fair value option is used for ﬁnancial liabilities the change
in fair value is to be accounted for as follows:

(i)

The change attributable to changes in credit risk are presented in
other comprehensive income; and

(ii) The remaining change is presented in proﬁt or loss.

If this approach creates or enlarges an accounting mismatch in the proﬁt
or loss, the effect of the changes in credit risk are also presented in proﬁt
or loss.

Further amendments were made by AASB 2012-6 which amends the
mandatory effective date to annual reporting periods beginning on or
after 1 January 2015. AASB 2012-6 also modiﬁes the relief from restating
prior periods by amending AASB 7 to require additional disclosures on
transition to AASB 9 in some circumstances. Consequential amendments
were also made to other standards as a result of AASB 9, introduced by
AASB 2009-11 and superseded by AASB 2010-7 and 2010-10.

These amendments are only expected to affect the presentation
of the Group’s ﬁnancial report and will not have a direct impact
on the measurement and recognition of amounts disclosed in the
ﬁnancial report.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e) BASIS OF CONSOLIDATION
The consolidated ﬁnancial statements comprise the ﬁnancial
statements of the Group. A list of controlled subsidiaries at year end
is contained in Note 24. Subsidiaries are all those entities over which
the Group has the power to govern the ﬁnancial and operating
policies so as to obtain beneﬁts from their activities. The existence
and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether a group controls
another entity.

SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS

The preparation of the Group’s consolidated ﬁnancial statements
requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the accompanying disclosures,
and the disclosure of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of assets or liabilities
affected in future periods.

The ﬁnancial statements of subsidiaries are prepared for the same
reporting period of the parent company using consistent accounting
policies. Adjustments are made to bring into line any dissimilar
policies that may exist. In preparing the consolidated ﬁnancial
statements, all intercompany balances and transactions, income
and expenses and unrealised gains and losses resulting from
intra-group transactions have been eliminated in full.

Subsidiaries are consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the
date on which control is transferred out of the Group. Investments
in subsidiaries held by iSelect Limited are accounted for at cost
in the separate ﬁnancial statements of the parent less any
impairment charges.

The acquisition of subsidiaries is accounted for using the acquisition
method of accounting. This method involves recognising at
acquisition date, separately from goodwill, the identiﬁable
assets acquired, the liabilities assumed and any non-controlling
interest in the acquiree. The identiﬁable assets acquired and the
liabilities assumed are measured at their acquisition date fair
values. The difference between these items and the fair value
of the consideration (including the fair value of any pre-existing
investment in the acquiree) is goodwill or a discount on acquisition.

After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date allocated to each of the Group’s cash generating
units that are expected to beneﬁt from the combination, irrespective
of whether assets or liabilities of the acquiree are assigned to
those units.

f) BUSINESS COMBINATION RESERVE
The internal group restructure performed in the 2007 ﬁnancial
year, which interposed the holding Company, iSelect Limited,
into the consolidated Group was exempted by AASB 3 Business
Combinations as it precludes entities or businesses under
common control.

The carry-over basis method of accounting was used for the
restructuring of the iSelect Group. As such, the assets and liabilities
were reﬂected at their carrying amounts. No adjustments were
made to reﬂect fair values, or recognise any new assets or liabilities.
No goodwill was recognised as a result of the combination and any
difference between the consideration paid and the ‘equity’ acquired
was reﬂected within equity as an equity reserve titled “Business
Combination Reserve”.

Signiﬁcant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often
determined based on estimates and assumptions of future events.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected. The key estimate and assumptions that have a signiﬁcant
risk of causing a material adjustment to the carrying amount of
certain assets and liabilities are described below.

Revenue recognition
Revenue is recognised at the point in time where the Group has
essentially completed its contracted service with its Product
Providers and it is probable that the Group will receive the revenue
in relation to the underlying consumer. This point in time is where
a consumer is referred to a Product Provider. As such, the Group
determines a reliable measurement of its revenue on the basis of
the probability of a ‘referred’ sale becoming a ‘ﬁnancial’ or paid
sale on the basis of extensive historical statistical and trend data.
Revenue is recognised on a net basis of the historical percentage
of ‘referred’ sales expected to become ‘ﬁnancial’ and is adjusted
to actual percentages experienced at each reporting date. Where
this information cannot be reliably measured, the Group recognises
revenue at the time the consumer makes its ﬁrst payment to the
Product Provider.

Trail commission receivable
The Group has elected to account for trail commission revenue at
the time of selling a product to which trail commission attaches,
rather than on the basis of actual payments received from the
relevant fund or providers involved. This method of revenue
recognition requires the Directors and management to make
certain estimates and assumptions based on industry data and the
historical experience of the Group. In undertaking this responsibility,
the Group engages Deloitte Actuaries & Consultants Limited, a
ﬁrm of consulting actuaries, to assist in reviewing the accuracy of
assumptions for health, general, mortgages and life trail revenue.
These estimates and assumptions include, but are not limited to:
termination or lapse rates, mortality rates, inﬂation, risk-free and
other discount rates, counter party credit risk, forecast fund premium
increases and the estimated impact of known Australian Federal
and State Government policy.

The Directors consider this method of trail commission recognition
to be a more accurate representation of the Group’s ﬁnancial results.
This method is further detailed in Note 2(h).

iSelect Annual Report 2013

Clawback provisions
Upfront fees received from certain insurance funds and mortgage
brokers can be clawed back in the event of early termination of
membership. They vary across the insurance industry and insurers
and are usually triggered where a referred member terminates
their policy. Each relevant Product Provider has an individual
agreement and the clawback period ranges between 0 and 12
months, depending on the agreement. The Group provides for this
liability based upon historic average rates of attrition and recognises
revenue net of these clawback amounts.

Provisions for employee beneﬁts
Provisions are measured at the present value of management’s best
estimate of the expenditure required to settle the present obligation
at the reporting date using the discounted cash ﬂow methodology.
The risks speciﬁc to the provision are factored into the cash ﬂows
and as such a risk-free government bond rate relative to the
expected life of the provision is used as a discount rate. If the effect
of the time value of money is material, provisions are discounted
using a current pre-tax rate that reﬂects the time value of money
and the risks speciﬁc to the liability. The increase in the provision
resulting from the passage of time is recognised as interest expense.

Research and development costs
Internal project costs are classiﬁed as research or development
based on management’s assessment of the nature of each cost and
the underlying activities performed. Management performs this
assessment against the Group’s development costs policy which is
consistent with the requirements of AASB 138 Intangible Assets.

Taxation
The Group’s accounting policy for taxation requires management’s
judgement as to the types of arrangements considered to be a tax
on income, in contrast to an operating cost. Judgement is also
required in assessing whether deferred tax assets and certain
deferred tax liabilities are recognised on the statement of ﬁnancial
position. Deferred tax assets, including those arising from
unrecouped tax losses, capital losses and temporary differences, are
recognised only where it is considered more likely than not that they
will be recovered, which is dependent on the generation of sufﬁcient
future taxable proﬁts.

Assumptions about the generation of future taxable proﬁts depend
on management’s estimates of future cash ﬂows. These depend
on estimates of future sales volumes, operating costs, capital
expenditure, dividends and other capital management transactions.

Judgements are also required about the application of income tax
legislation in respect of the availability of carry forward tax losses.
These judgements and assumptions are subject to risk and
uncertainty, hence there is a possibility that changes in
circumstances will alter expectations, which may impact the
amount of deferred tax assets and deferred tax liabilities recognised
on the statement of ﬁnancial position and the amount of other
tax losses and temporary differences not yet recognised. In such
circumstances, some or all of the carrying amounts of recognised
deferred tax assets and liabilities may require adjustment,
resulting in a corresponding credit or charge to the statement of
comprehensive income in future periods.

Share-based payments
Accounting judgements, estimates and assumptions in relation
to share based payments are discussed in Note 28.

REVENUE RECOGNITION

Revenue is recognised to the extent that it is probable that the
economic beneﬁts will ﬂow to the Group and the revenue can
be reliably measured.

Fee Revenue
The Group primarily earns two distinct types of fee-based revenue:
upfront fees and trail commission.

i. Upfront fees
Upfront fees are upfront fees earned upon new members joining
a health fund, initiating a life insurance policy, obtaining general
(car) insurance products, mortgages, broadband or energy products
via iSelect. Upfront fees may trigger a ‘clawback’ of revenue in the
event of early termination by customers as speciﬁed in individual
Product Provider agreements. These clawbacks are provided for
by the Group on a monthly basis by utilising industry data and
historical experience.

ii. Trail commission
Trail commissions are ongoing fees related to customers referred
to individual funds or applied for mortgages via iSelect. Trail
commission revenue represents commission earned calculated
as a percentage of the value of the underlying policy relationship
of the expected life and in the case of mortgages a proportion
of the underlying value of the loan. The Group is entitled to receive
trail commission without having to perform further services. On
initial recognition, trail revenue and receivables are recognised at
fair value, being the present value of expected future trail revenue
receivables discounted to their net present value using discounted
cash ﬂow valuation techniques. These calculations require the
use of assumptions. Due to the differences in underlying product
characteristics and Product Provider circumstances, the discount
rates applied in the most recent valuation of the trail commission
receivable range between 8.0% and 12.5%.

The key assumptions underlying the fair value calculations of trail
revenue receivable at reporting date include but are not limited to:
lapse and mortality rates, commission term, premium increases and
discount rate, incorporating risk free rates and estimates of the likely
credit risk associated with the funds and credit providers.

It is the Directors’ responsibility to determine the assumptions used
and the fair value of trail revenue. In undertaking this responsibility,
the Group engages Deloitte Actuaries & Consultants Limited, a
ﬁrm of consulting actuaries, to assist in reviewing the accuracy
of assumptions and the fair value model utilised to determine
the fair value of health, life, mortgages and general fund trail
revenue and the accompanying asset. The trail commission is a
Director valuation and is based on the same principles as outlined
above. Subsequent to initial recognition and measurement, the
trail revenue asset is measured at amortised cost. The carrying
amount of the trail revenue asset is adjusted to reﬂect actual
and revised estimated cash ﬂows by recalculating the carrying
amount through computing the present value of estimated future
cash ﬂows at the original effective interest rate. The resulting
adjustment is recognised as income or expense in the statement
of comprehensive income.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

Interest

Revenue is recognised as interest accrues (using the effective
interest method, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the ﬁnancial
instrument) to the net carrying amount of the ﬁnancial asset.

Click-through revenue
Revenue is recognised based on the contractual arrangement with
the relevant Product Provider. This can occur at one of three points,
either when an internet click user clicks on a paying advertiser’s link,
submits an application, or a submitted application is approved.

Other Business Revenue
Revenue for contracted services, including advertising and
subscription revenue, is recognised systematically over the term of
the contract. Revenue for services provided other than pursuant to
a deﬁned period contract is recognised during the month services
are provided.

i) LEASES
The determination of whether an arrangement is or contains a
lease is based on the substance of the arrangement and requires
an assessment of whether the fulﬁlment of the arrangement
is dependent on the use of a speciﬁc asset or assets and the
arrangement conveys a right to use the asset.

Finance leases, which transfer to the Group substantially all the
risks and beneﬁts incidental to ownership of the leased item, are
capitalised at the inception of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum
lease payments. Lease payments are apportioned between the
ﬁnance charges and reduction of the lease liability so as to achieve
a constant rate of interest on the remaining balance of the liability.

Finance charges are recognised as an expense in proﬁt and loss.
Capitalised leased assets are depreciated over the shorter of the
estimated useful life of the asset or the lease term if there is no
reasonable certainty that the Group will obtain ownership by the
end of the lease term.

Leases where the lessor retains substantially all the risks and beneﬁts
of ownership of the asset are classiﬁed as operating leases. Initial
direct costs incurred in negotiating an operating lease are added
to the carrying amount of the leased asset and recognised over the
lease term on the same basis as the lease income.

Operating lease payments are recognised as an expense in the
statement of comprehensive income on a straight-line basis over the
lease term. Lease incentives are recognised when they are received
and amortised over the life of the lease.

j) CASH AND CASH EQUIVALENTS
Cash and short-term deposits in the statement of ﬁnancial position
comprise cash at bank and on hand and short-term deposits with an
original maturity of three months or less.

For the purposes of the statement of cash ﬂows, cash and cash
equivalents consist of cash and cash equivalents as deﬁned above,
net of outstanding bank overdrafts.

k) TRADE AND OTHER RECEIVABLES
All trade and other receivables recognised as current assets are due
for settlement within no more than 30 days for marketing fees and
within one year for trail commission. Trade receivables are measured
on the basis of amortised cost and trail commission is initially
measured at fair value and subsequently at amortised cost.

Recoverability of trade and other receivables is reviewed on an
ongoing basis. Debts which are known to be uncollectible are written
off. A provision for doubtful debts is raised where some doubt as to
collection exists.

INCOME TAX

l)
Tax expense comprises current and deferred tax. Current and
deferred tax is recognised in proﬁt or loss except to the extent that
it relates to a business combination, or items recognised directly in
equity or in other comprehensive income.

Current tax
Current tax is the expected tax payable or receivable on the taxable
income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in
respect of previous years. Current tax payable also includes any tax
liability arising from the declaration of dividends.

Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for ﬁnancial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:

–

temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable proﬁt or loss

temporary differences related to investments in subsidiaries and
associates and jointly controlled entities to the extent that it is
probable that they will not reverse in the foreseeable future

taxable temporary differences arising on the initial recognition
of goodwill

tax beneﬁts acquired as part of a business combination, but
not satisfying the criteria for separate recognition, would
be subsequently recognised if new information about facts
and circumstance changed. The adjustment would be either
treated as a reduction to goodwill (as long as it does not exceed
goodwill) if it was incurred during the measurement of or in the
proﬁt or loss.

Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date.

In determining the amount of current and deferred tax the Group
takes into account the impact of uncertain tax positions and whether
additional taxes and interest may be due. The Group believes that its
accruals for tax liabilities are adequate for all open tax years based
on its assessment of many factors, including interpretations of tax
law and prior experience. This assessment relies on estimates and
assumptions and may involve a series of judgements about future
events. New information may become available that causes the
Group to change its judgement regarding the adequacy of existing
tax liabilities; such changes to tax liabilities will impact tax expense in
the period that such a determination is made.

iSelect Annual Report 2013

Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and
liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent
that it is probable that future taxable proﬁts will be available
against which they can be utilised. The Group’s tax advisors,
PricewaterhouseCoopers, have provided an opinion on the
probability of availability as at 30 June 2013. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax beneﬁt will be realised.

Additional income tax expenses that arise from the distribution of
cash dividends are recognised at the same time that the liability
to pay the related dividend is recognised. The Group does not
distribute non-cash assets as dividends to its shareholders.

Tax consolidation legislation
iSelect Limited and its wholly-owned Australian controlled entities
have implemented the tax consolidation legislation. Members of the
tax consolidated group have entered into a tax funding agreement.
Each entity is responsible for remitting its share of the current tax
payable (receivable) assumed by the head entity.

In accordance with Group accounting policy, the Group has
applied UIG 1052, in which the head entity, iSelect Limited, and
the controlled entities in the tax consolidated Group continue to
account for their own current and deferred tax amounts.

In addition to its own current and deferred tax amounts, iSelect
Limited also recognises the current tax liabilities (or assets) and
the deferred tax assets arising from unused tax losses and unused
tax credits assumed from controlled entities in the tax
consolidated Group.

The allocation of taxes to the head entity is recognised as an
increase/decrease in the controlled entities intercompany accounts
with the tax consolidated Group head entity.

m) CASH AND CASH EQUIVALENTS OTHER TAXES
Revenues, expenses and assets are recognised net of the amount of
GST except:

– where the GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of the asset
or as part of the expense item as applicable; and

–

receivables and payables are stated with the amount of
GST included.

The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables in
the statement of ﬁnancial position. Cash ﬂows are included in the
statement of cash ﬂows on a gross basis and the GST component
of cash ﬂows arising from investing and ﬁnancing activities, which is
recoverable from, or payable to, the taxation authority, are classiﬁed
as operating cash ﬂows.

Commitments and contingencies are disclosed net of the amount of
GST recoverable from, or payable to, the taxation authority.

n) PROPERTY, PLANT AND EQUIPMENT
Plant and equipment is stated at cost less accumulated
depreciation. Such cost includes the cost of replacing parts that
are eligible for capitalisation when the cost of replacing the parts is
incurred. Similarly, when each major inspection is performed, its cost
is recognised in the carrying amount of the plant and equipment as
a replacement only if it is eligible for capitalisation.

Depreciation is calculated over the estimated useful life of the asset
as follows:

Computer software/
equipment

Useful Life

2 to 5 years

Method

Straight-line method

Furniture, ﬁxtures and
ﬁttings

8 years

Straight-line method

Leasehold
improvements

5 to 6.5 years

Straight-line method

Motor vehicles

3 years

Straight-line method

An item of property, plant and equipment is derecognised upon
disposal or when no future economic beneﬁts are expected to arise
from the continued use of the asset. Any gain or loss arising on
derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the item) is
included in the statement of comprehensive income in the period
the item is derecognised.

Impairment
The carrying values of plant and equipment are reviewed for
impairment at each reporting date, with the recoverable amount
being estimated when events or changes in circumstances indicate
that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of
fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash ﬂows are discounted to their present
value using a pre-tax discount rate that reﬂects current market
assessments of the time value of money and the risks speciﬁc to
the asset.

For an asset that does not generate largely independent cash
inﬂows, recoverable amount is determined for the cash-generating
unit to which the asset belongs, unless the asset’s value in use can
be estimated to be close to its fair value. Impairment exists when
the carrying value of an asset or cash-generating units exceeds its
estimated recoverable amount. The asset or cash-generating unit is
then written down to its recoverable amount.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

o) INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
business combination is measured at fair value as at the date of
acquisition. Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and any accumulated
impairment losses. Internally generated intangible assets, excluding
capitalised development costs, are not capitalised and expenditure
is recognised in proﬁt or loss in the year in which the expenditure
is incurred.

The useful lives of intangible assets are assessed to be either ﬁnite
or inﬁnite. Intangible assets with ﬁnite lives are amortised over the
useful life and tested for impairment whenever there is an indication
that the intangible asset may be impaired. The amortisation period
and the amortisation method for an intangible asset with a ﬁnite
useful life are either reviewed at the end of each reporting period or
amortised over the life of the asset. Changes in the expected useful
life or the expected pattern of consumption of future economic
beneﬁts embodied in the asset are accounted for prospectively by
changing the amortisation period or method, as appropriate, which
is a change in accounting estimate.

Amortisation is calculated over the estimated useful life of the asset
as follows:

Amortisation of the asset begins when development is complete
and the asset is available for use. Any expenditure so capitalised
is amortised over the period of expected beneﬁt from the
related project. Web site development costs, customer lists and
brand names capitalised as an intangible asset are amortised on a
straight-line basis with a useful life as detailed above.

Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included
in intangible assets. For the measurement of goodwill at initial
recognition, see Note 2(e). Subsequent measurement of goodwill is
measured at cost, tested for impairment annually. For the purpose
of impairment testing, goodwill acquired in a business combination
is, from the acquisition date, allocated to each of the Group’s cash-
generating units that are expected to beneﬁt from the combination,
irrespective of whether other assets or liabilities of the acquiree are
assigned to those units.

Where goodwill forms part of a cash-generating unit, and part of
the operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount of
the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured
based on the relative values of the operation disposed of and the
portion of the cash-generating unit retained.

p) INVESTMENTS
Investments in controlled entities are carried at the lower of cost
and recoverable amount.

q) IMPAIRMENT OF ASSETS
The Group monitors throughout the year to see whether there is
an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of its fair value less
costs to sell and its value in use and is determined for an individual
asset. Unless the asset does not generate cash inﬂows that are
largely independent of those from other assets or groups of assets
and the asset’s value in use cannot be estimated to be close to its
fair value. In such cases the asset is tested for impairment as part
of the cash-generating unit to which it belongs. When the carrying
amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired
and is written down to its recoverable amount.

In assessing value in use, the estimated future cash ﬂows are
discounted to their present value using a discount rate that reﬂects
current market assessments of the time value of money and the
risks speciﬁc to the asset. Impairment losses relating to continuing
operations are recognised in those expense categories consistent
with the function of the impaired asset.

Development costs (including
website development)

Trademarks and domain names

Computer software

Goodwill

Consumer contracts

Useful Life

2 to 5 years

Indeﬁnite

2 to 4 years

Indeﬁnite

3 months

The amortisation expense on intangible assets with ﬁnite lives is
recognised in proﬁt or loss in the expense category consistent with
the function of the intangible assets.

Intangible assets with indeﬁnite useful lives are tested for
impairment annually, either individually or at the cash-generating
unit level. Such intangibles are not amortised. The useful life of an
intangible asset with an indeﬁnite life is reviewed at each reporting
period to determine whether indeﬁnite life assessment continues to
be supportable. If not, the change in the useful life assessment from
indeﬁnite to ﬁnite is accounted for as a change in an accounting
estimate and is made on a prospective basis.

Research and development costs
Research costs are expensed as incurred. An intangible asset arising
from development expenditure on an internal project is recognised
only when the Group can demonstrate the technical feasibility of
completing the intangible asset so that it will be available for use or
sale, its intention to complete and its ability to use or sell the asset,
how the asset will generate future economic beneﬁts, the availability
of resources to complete the development and the ability to
measure reliably the expenditure attributable to the intangible
asset during its development. Following the initial recognition of
the development expenditure, the asset is carried at cost less any
accumulated amortisation and accumulated impairment losses.

iSelect Annual Report 2013

An assessment is also made at each reporting date as to whether
there is any indication that previously recognised impairment losses
may no longer exist or may have decreased, except in relation
to goodwill. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed
only if there has been a change in the estimates used to determine
the asset’s recoverable amount since the last impairment loss was
recognised. If that is the case the carrying amount of the asset is
increased to its recoverable amount. That increased amount cannot
exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for the
asset in prior periods. Such reversal is recognised in the statement of
comprehensive income.

After such a reversal the depreciation charge is adjusted in future
periods to allocate the asset’s revised carrying amount, less any
residual value, on a systematic basis over its remaining useful life.

r) TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at amortised cost
and represent liabilities for goods and services provided to the
Group prior to the end of the reporting date that are unpaid and
arise when the Group becomes obliged to make future payments in
respect of the purchase of these goods and services.

s) LOANS AND BORROWINGS
Loans and borrowings are recognised initially at fair value plus
directly attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently measured
at amortised cost using the effective interest rate method. Gains
and losses are recognised in the statement of comprehensive
income when the liabilities are derecognised as well as through the
effective interest rate method amortisation process.

Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the effective interest rate method. The effective interest
rate method amortisation is included in ﬁnance costs in the
income statement.

t) PROVISIONS
Provisions are recognised when the Group has a present obligation
(legal or constructive) as a result of a past event, it is probable
that an outﬂow of resources embodying economic beneﬁts will
be required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation.

Where the Group expects some or all of a provision to be
reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when
the reimbursement is virtually certain. The expense relating to any
provision is presented in the statement of comprehensive income
net of any reimbursement.

If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash ﬂows at a pre-
tax rate that reﬂects current market assessments of the time value
of money and the risks speciﬁc to the liability.

Where discounting is used, the increase in the provision due to the
passage of time is recognised as a borrowing cost.

u) EMPLOYEE BENEFITS
Provision is made for employee beneﬁts accumulated as a
result of employees rendering services up to the reporting date.
These beneﬁts include wages and salaries, annual leave and
long-service leave.

Liabilities arising in respect of wages and salaries, annual leave
and any other employee beneﬁts expected to be settled within
twelve months of the reporting date are measured at their nominal
amounts based on remuneration rates which are expected to be
paid when the liability is settled. All other employee beneﬁt liabilities
are measured at the present value of the estimated future cash
outﬂow to be made in respect of services provided by employees
up to the reporting date. In determining the present value of future
cash outﬂows, the market yield as at the reporting date on national
government bonds, which have terms to maturity approximating
the terms of the related liability, are used.

Employee beneﬁts expenses and revenues arising in respect of
wages and salaries, non-monetary beneﬁts, annual leave,
long-service leave and other leave beneﬁts, and other types of
employee beneﬁts are recognised against proﬁts on a net basis in
their respective categories.

v) SHARE-BASED PAYMENTS
The Group provides beneﬁts to its employees (including key
management personnel) in the form of share-based payments,
whereby employees render services in exchange for shares or rights
over shares (equity-settled transactions).

During the year there were two plans in place to provide
these beneﬁts:

–

The Long-Term Incentive Plan (LTIP), which provides beneﬁts
to employees and key management personnel; and

The Employee Share Option Plan, comprising the 2010
Option Plan and 2011 Option Plan, which provides beneﬁts
to employees, including Directors.

The cost of these equity-settled transactions with employees is
measured by reference to the fair value of the equity instruments at
the date at which they were granted. The fair value was determined
by the Directors and management using a Binomial model.

The cost of equity-settled transactions is recognised, together with
a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulﬁlled (the vesting
period), ending on the date on which the relevant employees
become fully entitled to the award (the vesting date).

At each subsequent reporting date until vesting, the cumulative
charge to the statement of comprehensive income is the product
of: (i) the grant date fair value of the award; and, (ii) the current
best estimate of the number of awards that will vest, taking into
account such factors as the likelihood of employee turnover during
the vesting period and the likelihood of non-market performance
conditions being met; and, (iii) the expired portion of the vesting
period. The charge to the statement of comprehensive income
for the period is the cumulative amount as calculated above
less the amounts already charged in previous periods. There is a
corresponding credit to equity.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

y) INTEREST EXPENSE
Interest expense comprises interest expense on borrowings and is
recognised in proﬁt or loss using the effective interest method.

z) CONTRIBUTED EQUITY
Ordinary shares are classiﬁed as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.

aa) EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is calculated as net proﬁt attributable to
members of the parent, adjusted to exclude any costs of servicing
equity (other than dividends), divided by the weighted average
number of ordinary shares outstanding during the ﬁnancial year.

Diluted earnings per share
Diluted earnings per share adjusts the ﬁgures used in the
determination of basic earnings per share to take into account:

–

the after-tax effect of interest and other ﬁnancing costs
associated with dilutive potential ordinary shares; and

the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of
all dilutive potential ordinary shares.

v) SHARE-BASED PAYMENTS (CONTINUED)
Until an award has vested, any amounts recorded are contingent
and will be adjusted if more or fewer awards vest than were
originally anticipated to do so. Any award subject to a market
condition is considered to vest irrespective of whether or not that
market condition is fulﬁlled, provided that all other conditions
are satisﬁed.

If the terms of an equity-settled award are modiﬁed, as a minimum
an expense is recognised as if the terms had not been modiﬁed. An
additional expense is recognised for any modiﬁcation that increases
the total fair value of the share-based payment arrangement, or
is otherwise beneﬁcial to the employee, as measured at the date
of modiﬁcation.

If an equity-settled award is cancelled, it is treated as if it had vested
on the date of cancellation, and any expense not yet recognised
for the award is recognised immediately. However, if a new
award is substituted for the cancelled award and designated as a
replacement award on the date that it is granted, the cancelled and
new award are treated as if they were a modiﬁcation of the original
award, as described in the previous paragraph.

w) COMPARATIVE BALANCES
Accounting policies adopted are consistent with those of the
previous year. Where expenses have been reallocated between
departments or within expense lines, the comparatives for the
previous year have been reallocated also to assist comparability
between the years.

x) ONEROUS CONTRACTS
A provision for onerous contracts is recognised when the expected
beneﬁts to be derived by the Group from the contract are lower than
the unavoidable cost of meeting its obligations under the contract.
The provision is measured at the present value of the lower of the
expected cost of terminating the contract and the expected net cost
of continuing with the contract. Before a provision is established,
the Group recognises any impairment loss on assets associated with
the contract.

iSelect Annual Report 2013

3. SEGMENT INFORMATION
For management purposes, the Group is organised based on its products and services and has two reportable segments as follows:

– Health and Car Insurance segment, which offers comparison services across private health insurance and car insurance categories; and

– Household Utilities and Financial segment, which offers comparison services across a range of household utilities and personal ﬁnance
products, including life insurance, broadband, retail energy products, home loans, savings accounts, term deposits, credit cards and
personal loans.

No operating segments have been aggregated to form the above reportable segments. Management monitors the operating results
of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment
performance is evaluated based on operating proﬁt or loss in the consolidated ﬁnancial statements. However, Group ﬁnance costs and
income, income taxes and certain corporate overhead costs that are not considered to be appropriate to be allocated, are not allocated
to operating segments. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with
third parties.

The following tables present revenue and results by operating segments for the years ended 30 June 2013 and 30 June 2012.

Operating revenue

Health and Car Insurance

Household Utilities and Financial

Consolidated Group operating revenue

Proﬁt before interest, tax, depreciation and amortisation

Health and Car Insurance

Household Utilities and Financial

Unallocated (Corporate)

Consolidated Group proﬁt before interest, tax, depreciation and amortisation (EBITDA)

Depreciation and amortisation

Net ﬁnance costs

Consolidated Group proﬁt before income tax

Income tax expense

Consolidated Group net proﬁt for the year

30 June 2013
$’000

30 June 2012
$’000

93,090

24,947

97,983

13,945

118,037

111,928

36,532

3,063

(14,591)

25,004

(5,150)

(1,698)

18,156

(4,787)

13,369

40,447

(5,552)

(10,813)

24,082

(4,054)

(895)

19,133

(6,204)

12,929

GEOGRAPHICAL LOCATIONS
All revenue and operating assets are attributed to geographic location based on the location of customers, which are entirely in Australia.

4. REVENUE AND EXPENSES

Upfront Fee Revenue

Upfront fee revenue

Click-through revenue

Other business revenue

Trail Commission Revenue

Trail commission revenue – current sales period

Trail commission revenue – expected cash ﬂow adjustments to historical trail receivable

Trail commission revenue – interest income relating to the unwind of discount on historical trail receivable

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

63,960

2,843

8,003

74,806

36,212

(687)

7,706

43,231

52,602

2,034

2,667

57,303

44,106

3,081

7,438

54,625

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

Employee beneﬁts expense

Cost of sales and administration expenses include the following employee beneﬁts expenses:

Remuneration, bonuses, on-costs and amounts provided for beneﬁts (i)

Share based payments

Depreciation and amortisation

Depreciation

Amortisation of previously capitalised development costs

Occupancy related expenses

Operating lease rental expense

Other expenses included in the income statement

Initial public offering costs (ii)

Doubtful debt expense

Relocation costs (iii)

Acquisition costs (iv)

Finance costs

Interest expense

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

40,725

668

41,393

2,818

2,332

5,150

36,498

557

37,055

1,985

2,069

4,054

1,743

1,560

1,479

–

1,499

–

(813)

1,260

510

2,998

1,770

Employee beneﬁts expense is net of amounts capitalised as website development costs of $2,543,000 (2012: $2,809,000).

(i)
(ii) Initial public offering costs include amounts incurred and/or paid to consultants, advisors and other parties in relation to the public listing of iSelect Limited on the Australian Securities Exchange,

effective 24 June 2013 that did not meet capitalisation criteria.

(iii) Relocation costs relate to the expenditure incurred as a result of moving to premises at Bay Road, Cheltenham. Makegood and onerous contract provisions were reversed in the prior year to the extent no

longer required.

(iv) Acquisition costs relate to the legal and due diligence costs associated with the acquisition of InfoChoice during the prior year.

5. INCOME TAX

Current income tax

Current income tax beneﬁt

Adjustment in respect of current income tax of previous years

Deferred income tax

Relating to origination and reversal of temporary differences

Adjustments in respect of deferred income tax of previous years

Income tax reported in income statement

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

230

(734)

(5,360)

1,077

(4,787)

2,054

(298)

(7,890)

(70)

(6,204)

iSelect Annual Report 2013

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

18,156

(5,447)

(734)

1,077

(200)

(43)

500

19,133

(5,740)

(298)

(70)

(167)

(71)

272

(130)

(4,787)

(6,204)

367

2,209

708

7,960

3,217

104

768

2,166

–

8,450

–

140

14,565

11,524

(32,092)

–

(1,100)

(99)

(33,291)

(18,726)

(27,438)

(7)

(1,723)

(98)

(29,266)

(17,742)

A reconciliation of income tax beneﬁt/(expense) applicable to account proﬁt before income tax at the statutory
income tax rate is as follows:

Accounting proﬁt before income tax

Statutory income tax rate of 30%

Adjustments in respect of current income tax of previous years

Adjustments in respect of deferred income tax of previous years

Share-based payments

Entertainment

Research and development concessional deduction

Other

Total income tax expense

Deferred tax assets relate to the following:

Deferred tax assets from temporary differences on:

Trade and other payables

Provisions

Fixed assets

Carried forward losses

Expenditure for initial public offering costs

Other

Total deferred tax assets

Deferred tax liabilities from temporary differences on:

Trail commission receivable

Accrued interest

Development costs

Other

Total deferred tax liabilities

Net deferred tax liabilities

TAX CONSOLIDATION
The iSelect Group formed an income tax consolidated group as at 30 April 2007. iSelect Limited continues to act as the head entity of this
Group. Upon the 100% acquisition of InfoChoice Limited, it became part of the tax consolidated group.

Members of the Group entered into a tax-sharing agreement at that time that provided for the allocation of income tax liabilities between
the entities, should the head entity default on its tax payment obligations. No amounts are expected to be recognised in the ﬁnancial
statements in respect of this agreement on the basis that the probability of default is remote. The head entity and the controlled entities
in the likely tax consolidated group continue to account for their own current and deferred tax balances.

UNRECOGNISED DEFERRED TAX ASSETS
Deferred tax assets of $2.9 million (gross tax loss of $9.6 million) in respect of losses acquired as part of the InfoChoice Limited
acquisition have not been recognised as at 30 June 2013.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

6. CASH AND CASH EQUIVALENTS

Cash at bank and on hand

Term deposits

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

63,173

22,142

85,315

10,870

9,142

20,012

Cash at bank and on hand earns interest at ﬂoating rates based on daily bank deposit rates. Short-term deposits are made for varying
periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rates.

RECONCILIATION OF PROFIT AFTER TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES

Net proﬁt after tax

Adjustments for non-cash income and expense items:

Depreciation and amortisation

Share-based payments expense

Interest income classiﬁed as ﬁnancing cash ﬂow

Interest expense classiﬁed as ﬁnancing cash ﬂow

Changes in net assets and liabilities:

(Increase)/decrease in trade receivables

(Increase)/decrease in trail commission receivable

(Increase)/decrease in other assets

Increase/(decrease) in trade and other payables

Increase/(decrease) in deferred taxes

Increase/(decrease) in provisions

Increase/(decrease) in other liabilities

Net cash ﬂow provided by/(used in) operating activities

7. TRADE AND OTHER RECEIVABLES

Current

Trade receivables

Allowance for credit losses

Other receivables

Non-Current

Trade receivables (secured NIA facility)

Allowance for credit losses

Refer to Note 20 for information on the credit risk management policy of the Group.

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

13,369

12,929

5,150

668

(1,300)

2,998

(3,354)

(15,514)

285

(3,085)

4,787

121

4,209

4,054

557

(875)

1,425

(9,173)

(29,979)

(40)

11,158

6,204

3,396

(18)

(362)

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

18,843

(151)

–

18,692

15,378

–

15,378

34,070

10,973

(131)

4,496

15,338

–

15,338

iSelect Annual Report 2013

IMPAIRED TRADE RECEIVABLES
As at 30 June 2013, current trade receivables with a nominal value of $151,000 (2012: $131,000) were impaired.

Movements in the allowance account for credit losses were as follows:

Carrying value and the beginning of the year

Allowance for credit losses recognised during the year

Receivables written off during the year as uncollectable

Unused amount reversed

Carrying value at the end of the year

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

131

–

(69)

151

–

131

TRADE RECEIVABLES PAST DUE BUT NOT IMPAIRED
As at 30 June 2013, trade receivables of $1,011,000 (2012: $1,003,000) were past due but not impaired. These relate to customers for
whom there is no recent history of default or other indicators of impairment.

The ageing analysis of trade and other receivables that were not impaired is as follows:

Neither past due nor impaired

Past due 1 – 30 days

Past due 31 – 90 days

Past due 90+ days

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

17,681

14,335

385

576

514

338

151

18,692

15,338

With respect to trade receivables that are neither past due nor impaired, there are no indications as of the reporting date that the debtors
will not meet their payment obligations. It is the Group’s policy that all key partners who wish to trade on credit terms are subject to credit
veriﬁcation procedures. Receivable balances are monitored on an ongoing basis.

OTHER RECEIVABLES – CURRENT
Other receivables in the prior year represent an amount owing by NIA to iSelect. This receivable amount has now been settled through a
draw-down on the NIA facility. This facility is discussed in further detail below.

SECURED NIA FACILITY
In April 2012, NIA Limited launched health.com.au the ﬁrst major new health insurance fund in Australia for over 20 years. health.com.au
has an online-focused marketing strategy and a suite of products that have been designed to appeal to under-serviced consumer segments
within online comparison. NIA has appointed the Group as a distributor of health.com.au’s private health insurance products.

The Group has provided a secured facility to NIA Health Pty Ltd (NIA Health) for the sole purpose of allowing NIA Health to defer the time
at which it is required to make payments under distribution arrangements with the Group. The facility does not allow NIA Health to draw
down cash amounts; rather, it creates a deferred payment obligation for which NIA Health provides security and pays interest. The key
terms are as follows:

i. NIA must pay interest every three months to the group on the amount outstanding under the facility. Interest is payable at

variable rates.

ii. Unless repaid earlier by NIA, all amounts drawn under the facility shall be ﬁnally repaid by NIA Health on 31 July 2014, unless:

a. An extension is requested by NIA Health to 31 July 2015 by NIA Health giving notice that it is unable to reﬁnance the facility;
b. An event of default or review event occurs under the facility which will entitle the group to accelerate repayment of the facility.

iii. The maximum size of the facility is $75 million. As at 30 June 2013, a further $59.6 million may be drawn down (if the facility is extended

to 31 July 2015).

iv. NIA Health has provided a ﬁxed and ﬂoating charge over all its present and after-acquired property. In addition, NIA Health’s parent
company, NIA, has provided a share of mortgage over all the present and after-acquired shares in NIA Health and a guarantee from
NIA to the Group in respect of the facility.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

8. TRAIL COMMISSION RECEIVABLE

Current

Trail commission receivable

Non-Current

Trail commission receivable

Total trail commission receivable

Reconciliation of movement in trail commission receivable:

Opening balance

Trail commission revenue – current period

Trail commission revenue – expected cash ﬂow adjustment to historical trail receivables

Trail commission revenue – interest income relating to the unwind of discount on historical trail receivables

Cash receipts

Closing balance

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

33,166

73,807

106,973

91,459

36,212

(687)

7,706

(27,717)

106,973

26,534

64,925

91,459

61,480

44,106

3,081

7,438

(24,646)

91,459

SENSITIVITY OF TRAIL COMMISSION RECEIVABLE
A combined premium price decrease of 1% and termination rate increase of 1% would have the effect of reducing the carrying value by
$8,272,000 (2012: $7,774,000). A combined premium price increase of 1% and termination rate decrease of 1% would have the effect of
increasing the carrying value by $9,024,000 (2012: $8,471,000). Individually, the effects of these inputs would not give rise to any additional
amount greater than those stated.

9. OTHER ASSETS

Current

Prepayments – Facility Fees

Prepayments – Other

Other Assets

Non-Current

Prepayments – Facility Fees

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

425

766

268

1,459

765

–

1,124

1,160

–

iSelect Annual Report 2013

10. PROPERTY, PLANT AND EQUIPMENT

Leasehold
Improve-
ments
$’000

Ofﬁce &
Computer
Equipment
$’000

Motor Vehicles
$’000

Computer
Software
$’000

Furniture,
Fixtures &
Fittings
$’000

As at 30 June 2013

Cost

Accumulated depreciation

Net carrying amount

Net carrying amount at 1 July 2012

Additions

Disposals

Depreciation expense

Net carrying amount at 30 June 2013

As at 30 June 2012

Cost

Accumulated depreciation

Net carrying amount

Net carrying amount at 1 July 2011

Acquired through acquisitions

Additions

Disposals

Depreciation expense

Net carrying amount at 30 June 2012

8,462

(3,953)

4,509

5,777

–

(1,336)

4,509

8,394

(2,617)

5,777

–

6,625

–

(848)

5,777

3,896

(2,558)

1,338

1,837

156

–

(655)

1,338

3,740

(1,903)

1,837

909

–

1,438

–

(510)

1,837

(36)

–

(19)

(34)

(2)

–

(2)

3,304

(2,355)

949

1,556

158

–

(765)

949

3,146

(1,590)

1,556

1,016

940

214

–

(614)

1,556

1,038

(911)

127

–

(28)

127

1,010

(883)

127

–

(11)

127

Total
$’000

16,766

(9,813)

6,953

9,380

410

(19)

(2,818)

6,953

16,375

(6,995)

9,380

1,969

940

8,456

–

(1,985)

9,380

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

11. INTANGIBLE ASSETS

As at 30 June 2013

Cost

Accumulated amortisation and impairment

Net carrying amount

Net carrying amount at 1 July 2012

Additions

Amortisation

Net carrying amount at 30 June 2013

As at 30 June 2012

Cost

Accumulated amortisation and impairment

Net carrying amount

Net carrying amount at 1 July 2011

Acquired through acquisitions

Additions

Amortisation

Net carrying amount at 30 June 2012

Development
Costs
$’000

Trademarks &
Domain Name
$’000

Goodwill
$’000

Brand Names
$’000

Customer
Contracts
$’000

14,872

(6,060)

8,812

7,162

3,982

(2,332)

8,812

10,890

(3,728)

7,162

3,477

–

4,948

(1,263)

7,162

229

–

229

201

–

229

201

–

201

–

23,235

–

23,235

–

6,450

–

6,450

–

23,235

6,450

23,235

–

23,235

–

23,235

–

6,450

–

6,450

–

6,450

–

201

23,235

6,450

806

(806)

–

806

(806)

–

806

–

(806)

–

Total
$’000

45,592

(6,866)

38,726

37,048

4,010

(2,332)

38,726

41,582

(4,534)

37,048

3,678

30,491

4,948

(2,069)

37,048

DESCRIPTION OF INTANGIBLE ASSETS
i) Development costs
Development costs relate to the development of the Group’s various websites and customer conversion systems and are carried at cost
less accumulated amortisation and accumulated impairment losses. This intangible asset has been assessed as having a ﬁnite life and
is amortised using the straight line method over a period of between two to four years. The amortisation has been recognised in the
statement of comprehensive income in amortisation. If an impairment indication arises, the recoverable amount is estimated and an
impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount.

ii) Trademarks and domain names
Trademark and domain names are carried at cost and are not amortised. These intangible assets have been determined to have inﬁnite
useful lives. These assets were tested for impairment as at 30 June 2013, on a ‘value-in-use’ basis. Also refer Note 2(q) and below.

iii) Goodwill
Goodwill relates to the acquisition of InfoChoice Limited. Goodwill has been tested for impairment on a value-in-use basis as at
30 June 2013, refer to Note 2(q) and below.

iv) Brand Names
The brand name acquired as part of the InfoChoice Limited acquisition was initially recognised at fair value. This intangible asset has been
determined to have indeﬁnite useful life. These assets were tested for impairment as at 30 June 2013, refer to Note 2(q) and below.

v) Customer Contracts
The customer contract asset acquired as part of the InfoChoice Limited acquisition is carried at cost less accumulated amortisation and
accumulated impairment losses. This intangible asset has been assessed as having a ﬁnite life and is amortised using the straight line
method over the remaining period of the contract terms. The amortisation has been recognised in the statement of comprehensive income
in amortisation. This asset is fully written down.

iSelect Annual Report 2013

Growth rate estimates
For each CGU, ﬁve years of cash ﬂows have been included in the
discounted cash ﬂow models. These are based on projections from
2013 ﬁnancial results and growth rates ranging from 2% to 5%
for all CGUs’ other than Home Loans. The Home Loans CGU is an
immature business and its operations to-date has incurred losses.
However, the performance of the business for the 2013 ﬁnancial was
better than expected and management believes signiﬁcant growth
will be experienced over the next three years. The cash ﬂows for
Home Loans are based on management projections, with a positive
net cash ﬂow forecast for the 2014 ﬁnancial year. Substantial
growth is projected to continue into the 2015 and 2016 ﬁnancial
years, and thereafter more modest growth is expected. A long-term
growth rate of 2% into perpetuity has been determined for 2018
onward, and is in line with other assessment for other CGUs.

Market share assumptions
These assumptions are important because management assesses
how the unit’s position, relative to its competitors, might change
over the budget period. Management expects the Group’s share
of its respective markets to grow over the budget period.

IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLE
ASSETS WITH INDEFINITE LIVES
Goodwill acquired through the InfoChoice Limited acquisition has
been allocated to the cash generating units (CGUs) for impairment
testing as follows:

Segment

Health and Car Insurance

CGU

Health

Car

Household Utilities and Financial

Home loans

Money

Life

$’000

4,634

1,659

10,088

6,801

23,235

Brand names acquired through the InfoChoice Limited acquisition
have an indeﬁnite useful life and are allocated to a Group level.
Trademarks and domain names also have an indeﬁnite useful life
and are allocated to a Group level. The Group performed its annual
impairment test as at 30 June 2013. The recoverable amount of
CGUs has been determined based on a value-in-use calculation
using a combination of cash ﬂow projections from ﬁnancial year
2013 actual results with a growth rate increment applied for
subsequent years, and ﬁnancial year 2014 forecasts approved by
senior management with a growth rate increment for subsequent
years. A pre-tax discount rate is applied to the cash ﬂow projections.
As a result of this analysis, no impairment was identiﬁed for the
CGUs for which goodwill or brand names are allocated.

KEY ASSUMPTIONS USED IN VALUE IN USE CALCULATION
Discount rates
Discount rates represent the current market assessment of the risks
speciﬁc to each CGU, taking into consideration the time value of
money and individual risks of the underlying assets that have not
been incorporated in the cash ﬂow estimates. The discount rate
calculation is based on the speciﬁc circumstances of the Group and
its operating segments and is derived from its weighted average
cost of capital (WACC). The WACC takes into account both debt and
equity. The cost of equity is derived from the expected return on
investment by the Group’s investors.

The cost of debt is based on the interest-bearing borrowings the
Group is obliged to service. Segment-speciﬁc risk is incorporated by
applying individual beta factors. The beta factors are evaluated
annually based on publicly available market data. As a result, the
pre-tax discount rate applied is 13.6%.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

11. INTANGIBLE ASSETS (CONTINUED)
SENSITIVITY TO CHANGES IN ASSUMPTIONS
With regard to the assessment of ‘value-in-use’ of the CGUs other than the Home Loans CGU, management believes that no reasonable
change in any of the above key assumptions would cause the carrying value of the units to materially exceed its recoverable amount.

For the Home Loans unit, the estimated recoverable amount is $4,030,000 greater than its carrying value and, consequently, any adverse
change in a key assumption may result in an impairment loss. The implications of the key assumptions for the recoverable amount are
discussed below:

– Growth rate assumptions – management recognises that the Home Loans CGU is a new entrant to the market and the possibility of

the speed of its growth may have a signiﬁcant impact on growth rate assumptions applied. As an indication of the potential impact on
impairment, if conversion and growth rates achieved are in excess of 11% less than projected for ﬁnancial years 2014 and 2015, this
would result in impairment.

– Discount rate assumptions – to have an adverse impact on the forecasts included in the budget, an increase of the pre-tax discount rate

to 16.6% would result in an impairment of the Home Loans CGU.

12. TRADE AND OTHER PAYABLES

Trade Payables

Other Payables

Trade payables and other payables are non-interest bearing and are normally settled on 30-day terms.

13. PROVISIONS

Current

Employee Beneﬁts – Annual Leave

Employee Beneﬁts – Long Service Leave

Lease Incentive

Clawback

Other

Non-Current

Employee Beneﬁts – Long Service Leave

Lease Incentive

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

10,088

10,113

20,201

4,684

16,562

21,246

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

2,047

334

319

1,825

–

4,525

451

2,235

2,686

1,581

224

319

1,856

252

4,232

304

2,554

2,858

NATURE AND TIMING OF PROVISIONS
i) Clawback provision
The Group has recognised a provision for expected clawback of marketing fees receivable from health, life and general funds due to early
termination of policies by new members. This is based on historical and average industry rates of attrition. Clawback of fees is incurred
within two to twelve months of the sale of the relevant policies.

ii) Provision for lease incentive
Relates to the receipt of lease incentive payments in relation to the Group’s campus. This revenue has been deferred and is being recognised
in the statement of comprehensive income over the life of the lease.

iSelect Annual Report 2013

MOVEMENT IN PROVISIONS
Movements in each class of provision during the ﬁnancial year, other than provisions relating to employee beneﬁts, are set out below:

Carrying amount at
beginning of year

Arising during the year

Utilised

Unused amounts reversed

Carrying amount
at end of year

CLAWBACK

LEASE INCENTIVE

2013
$’000

1,856

5,320

(5,351)

–

2012
$’000

1,162

5,179

(4,485)

–

2013
$’000

2,873

–

(319)

–

2012
$’000

3,192

(367)

–

1,825

1,856

2,554

2,873

OTHER

2013
$’000

252

–

(42)

(210)

–

2012
$’000

1,049

252

(235)

(814)

252

14. BORROWINGS
This Note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at
amortised cost. For more information about the Group’s exposure to interest rate, foreign currency and liquidity risk, see Note 20.

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

–

35,000

–

35,000

b) Revolving facility
The Group entered into a $40 million facility with the
Commonwealth Bank of Australia (CBA). The arrangements include
a term debt revolving facility of up to $35 million and a secured
letter of credit facility of up to $5 million. The term of the facility
is three years, from 18 April 2013 to 17 April 2016. The purpose of
the facility is to provide funding for general corporate purposes,
including ongoing working capital requirements and to meet the
ongoing liquidity requirements of the Group. Interest is payable at a
rate calculated as BBSY plus a pre-determined margin.

The revolving facility contains ﬁnancial covenants that are required
to be met. As at 30 June 2013, the Group has complied with
these covenants.

A drawdown under the facility agreement was made on
19 April 2013 to repay the $25 million Credit Suisse AG facility.

Part of the equity raised through the initial public offering of the
Group, effective 24 June 2013, was used to repay the outstanding
CBA facility on 26 June 2013.

The Group has provided a General Security Deed over all the present
and after-acquired property of all entities in the consolidated Group.

Current

Term loan (a)

Revolving facility (b)

FUNDING ACTIVITIES
During the year, a number of borrowing arrangements were in
place; however, overall borrowings reduced to nil as at 30 June 2013.
The recent listing on the Australian Securities Exchange and the
associated raising of equity has facilitated the extinguishment of all
borrowings for the Group. The Group currently maintains a revolving
facility with CBA, on the terms outlined in in Note 14 (b) below.

a) Term loan
The prior year borrowings represent a term loan with Goldman
Sachs Lending Partners LLC (Facility Agent) & Goldman Sachs &
Partners Australia Capital Markets Limited (Arranger)
(“Goldman Sachs”).

On 28 September 2012 and 5 October 2012, a total of $28.829
million was raised through the issue of 1,558,351 shares at $18.50 a
share to institutional and sophisticated investors. These funds were
used to repay $20.729 million of the borrowings with
Goldman Sachs.

On 30 October 2012, a new $25 million facility was entered into
with Credit Suisse AG under normal commercial terms, with an initial
repayment date of 20 December 2013. $14.271 million of these
funds were used to repay the balance of the amount owing
to Goldman Sachs.

The facility and drawdown established with Credit Suisse AG was
repaid in full on 19 April 2013, using a newly established revolving
facility with CBA, the terms of which are noted below in Note 14(b).

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

15. CONTRIBUTED EQUITY

Issued capital

ISSUED CAPITAL – ORDINARY SHARES

Opening balance – ordinary fully paid shares – 1 July 2011

Issue of shares

Balance at 30 June 2012

Issue of shares – September and October 2012 capital raise1

Issue of shares – ESOP

Transfers of exercised options

Share split

Issue of shares – Initial Public Offering2

Total quoted shares outstanding at 30 June 2013

Issue of shares – Long-term incentive plan3

Share split of LTIP shares

Total balance at 30 June 2013

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

171,313

49,759

Movement in shares on issue Number of Shares

Share Capital
$’000

14,692,314

4,116,635

18,808,949

1,558,351

133,784

–

184,509,756

54,054,054

259,064,894

888,367

7,995,303

36,582

13,177

49,759

27,716

1,035

871

–

91,932

171,313

–

267,948,564

171,313

1 Net of transaction costs of $1,459,000 and associated tax of $(346,000).
2 Shares issued as part of Long Term Incentive Plan which are unquoted ordinary shares. Refer to Note 28 for further details.
3 Net of transaction costs of $11,525,000 associated tax of $(3,457,000).

ORDINARY SHARES
Ordinary shares entitle the holder to the right to receive dividends as declared and, in the event of winding up the Group, to participate in
the proceeds from the sale of all surplus assets in proportion to the number and amount paid up on shares held. Ordinary shares entitle their
holder to one vote, either in person or by proxy, at a meeting of the Group.

SHARE SPLIT
On 31 May 2013, the Company undertook a share split whereby each share converted on the basis that every one share became ten shares.

16. RESERVES

Share-based payment reserve

Business combination reserve

30 June 2013
$’000

30 June 2012
$’000

858

5,571

6,429

2,384

5,571

7,955

a) Share-based payment reserve
This reserve records the value of shares under the iSelect Long Term Incentive Plan and historical Employee and CEO Share Option
plans offered to the CEO, executives and employees as part of their remuneration. Refer to Note 28 for further details of these plans.
During the year, the exercised options balance was transferred into issued capital whilst the lapsed options balance was transferred
into retained earnings.

b) Business combination reserve
This reserve records the difference between the consideration paid and the ‘equity’ acquired from the internal group restructure
performed in the 2007 ﬁnancial year. Refer to Note 2(f) for further details.

iSelect Annual Report 2013

30 June 2013
$’000

30 June 2012
$’000

35,292

13,369

1,323

49,984

22,363

12,929

–

35,292

30 June 2013
$’000

30 June 2012
$’000

–

17. RETAINED EARNINGS

Balance at beginning of period

Proﬁt for the period

Transfers of lapsed options

Balance at end of period

18. DIVIDENDS

Dividends provided for or paid during the year

Franking credit balance

The Group is not in a tax payable position therefore there are no payments of tax to generate franking credits.

19. EARNINGS PER SHARE
Basic earnings per share is calculated as net proﬁt attributable to members of the parent by the weighted average number of ordinary
shares outstanding during the ﬁnancial year.

Diluted earnings per share are calculated as above with an adjustment for the weighted number of ordinary shares that would be issued on
conversion of all dilutive ordinary shares.

Basic and dilutive earnings per share are calculated as follows:

Proﬁt attributable to members of the parent

Weighted average number of ordinary shares for basic earnings per share

Effect of dilution

Weighted average number of ordinary shares adjusted for effect of dilution

Earnings per share:

Basic for proﬁt for the year attributable to ordinary members of the parent

Diluted for proﬁt for the year attributable to ordinary members of the parent

Shares numbers at 30 June 2012 have been restated on a 1-for-10 basis so they are comparative with 30 June 2013 share numbers,
which are post the 1-for-10 share split that took place on 31 May 2013.

CONSOLIDATED

30 June 2013
$’000

30 June 2012
$’000

13,369

12,929

Shares (m)

Shares (m)1

201,763

1,709

203,472

Cents

6.6

165,105

19,697

184,802

Cents

7.8

7.0

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal ﬁnancial instruments comprise receivables, payables, borrowings, bank and other loans, and cash and short-term
deposits. The Group does not use derivative ﬁnancial instruments such as foreign exchange contracts and interest rate swaps to hedge
certain risk exposures. It does not operate internationally and is not exposed to either securities price risk or commodity price risk. Foreign
exchange risk is limited to minimal transactional currency exposure for some purchases in currencies other than the functional currency.

The main risks arising from the Group’s ﬁnancial instruments are:

– Market risk (including interest rate risk and foreign currency risk);

– Credit risk; and

–

Liquidity risk.

The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels
of exposure to interest rate risk and assessments of market forecasts for interest rates and exchange rates. Ageing analyses and monitoring
of speciﬁc credit allowances are undertaken to manage credit risk, and liquidity risk is monitored through the development of future rolling
cash ﬂow forecasts and comprehensive capital management planning.

The Board of Directors continues to review the Group’s risk and capital management framework and has an Audit and Risk Management
Committee to aid and oversee this process.

The Group’s policies in relation to ﬁnancial risks to which it has exposure are detailed below.

(a) MARKET RISK
Market risk is the risk that the fair value of future cash ﬂows of a ﬁnancial instrument will ﬂuctuate due to changes in market prices.
Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such as equity price
risk. Financial instruments affected by market risk include loans and borrowings, trail commission receivables, deposits, available-for-sale
investments and derivative ﬁnancial instruments.

i) Cash ﬂow and fair value interest rate risk
The Group’s main interest rate risk arises from cash and cash equivalents, trail commission receivables and borrowings. Interest on
borrowings is denominated in the currency of the borrowing and that are matched by the cash ﬂows generated by the underlying
operations of the Group. This provides an economic hedge without derivatives being entered into and therefore hedge accounting
is not applied in these circumstances. The following sensitivity analysis is based on the interest rate risk exposures in existence at the
reporting date:

Financial Assets

Current

Cash and cash equivalents

Trade and other receivables

Trail commission receivable

Non-Current

Trade and other receivables

Trail commission receivable

Financial Liabilities

Current

Trade and other payables

Borrowings

Net Exposure

30 June 2013
$’000

30 June 2012
$’000

85,315

18,692

33,166

15,378

73,807

226,358

20,201

–

20,201

206,157

20,012

15,338

26,534

–

64,925

126,809

21,246

35,000

56,246

70,563

iSelect Annual Report 2013

At 30 June 2013, if interest rates had moved as illustrated in the table below, with all other variables being held constant, post-tax proﬁt
would have been higher/(lower) as follows:

TOTAL

Consolidated

+1% (100 basis points)

-1% (100 basis points)

CASH AT BANK

Consolidated

+1% (100 basis points)

-1% (100 basis points)

30 June 2013
$’000

30 June 2012
$’000

597

(597)

597

(597)

140

(140)

140

(140)

JUDGMENTS OF REASONABLY POSSIBLE MOVEMENTS
The movements in proﬁt are due to higher/lower interest income from cash balance.

ii) Foreign currency risk
The Group has minimal transactional currency exposure. Such exposure arises from purchases by an operating entity in currencies other
than the functional currency. No hedging instruments have been or are in place.

b) CREDIT RISK
Credit risk is managed on a Group basis. Credit risk arises from cash and cash management equivalents, trade and other receivables and trail
commission receivable in future periods. The Group’s maximum exposure to credit risk at reporting date in relation to each class of ﬁnancial
asset is the carrying amount of those assets as indicated in the balance sheet.

Exposure to credit risk
The carrying amount of the ﬁnancial assets represents the maximum credit exposure. The maximum credit risk at the reporting date was
as follows:

Cash and cash equivalents

Trade and other receivables

NIA receivable

Trail commission receivable

30 June 2013
$’000

30 June 2012
$’000

85,315

34,070

15,378

106,973

241,736

20,012

15,338

–

91,459

126,809

Credit risk related to trade receivables and future trail commission
The Group has exposure to credit risk associated with the health, life and general funds and mortgage providers, with regard to the
calculation of the trail commissions (as discussed in Note 2(e) and outstanding receivables). Estimates of the likely credit risk associated with
the health, life and general funds and mortgage providers are incorporated in the discount rates (one of the assumptions used in the fair
value and amortised cost calculation). Any risk in relation to other revenue has been reﬂected in allowance for credit losses.

The Group’s exposure to credit risk is inﬂuenced mainly by the individual characteristics of each customer. However, management also
considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate,
as these factors may have an inﬂuence on credit risk, particularly in the current deteriorating economic circumstances.

It is the Group’s policy that all key partners who wish to trade on credit terms are subject to credit veriﬁcation procedures. Receivable
balances are monitored on an ongoing basis. Note 7 provides an ageing of receivables past due.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables
and investments. The main components of this allowance are a speciﬁc loss component that relates to individually signiﬁcant exposures.
The Group otherwise does not require collateral in respect of trade and other receivables.

Credit risk related to cash and cash equivalents
Investments of surplus funds are made only with approved counterparties and for approved amounts, to minimise the concentration of
risks and mitigate ﬁnancial loss through potential counterparty failure.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

c) LIQUIDITY RISK
The Group aims to maintain the level of its cash and cash equivalents at an amount to meet its ﬁnancial obligations. The Group also
monitors the level of expected cash inﬂows on trade and other receivables together with expected cash outﬂows on trade and other
payables through rolling forecasts. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical
region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes
in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments
affecting a particular industry.

In order to avoid excessive concentrations of risk, the Group’s internal policies and procedures include speciﬁc guidelines to focus on
maintaining a diversiﬁed portfolio. Identiﬁed concentrations of credit risks are controlled and managed accordingly.

The following are the contractual maturities of ﬁnancial liabilities, including estimated interest payments and excluding the impact of
netting agreements:

Carrying Amount
$’000

Contractual
Cash Flows
$’000

<3 months
$’000

3-12 months
$’000

2-5
years
$’000

>5
years
$’000

As at 30 June 2013

Non-derivative ﬁnancial liabilities

Borrowings

Trade payables

Total

As at 30 June 2012

Non-derivative ﬁnancial liabilities

Borrowings

Trade payables

Total

–

20,201

35,000

21,246

56,246

–

20,201

35,704

21,246

56,950

–

20,201

35,704

21,246

56,950

–

The gross inﬂows/(outﬂows) disclosed in the previous table represent the contractual undiscounted cash ﬂows relating to derivative ﬁnancial
liabilities held for risk management purposes and which are usually not closed out prior to contractual maturity.

As disclosed in Note 14, the Group has a debt facility, which contains a debt covenant. A breach of this covenant may require the Group
to repay the loan; however, as at 30 June 2013, iSelect has not drawn down on this facility.

As at 30 June 2012 and during the year ended 30 June 2013, the Group held a borrowing facility with Goldman Sachs.
On 28 September 2012 and 5 October 2012, a total of $28.829 million was raised through the issue of 1,558,351 shares
at $18.50 a share to institutional and sophisticated investors.

These funds were used to repay $27.535 million of the current borrowings. The remaining $7.465 million of current borrowings were rolled
into a new $25 million facility under normal commercial terms and a repayment date of 31 December 2014 with Credit Suisse AG and the
old facility with Goldman Sachs extinguished.

In April 2013, facilities totalling $40 million were entered into with the CBA. An initial drawdown of $25 million was used to repay in full
the Credit Suisse AG borrowings.

$100 million was raised through the initial public offering. Costs associated with the initial public offering were $13 million (including
both capitalised amounts (before tax effect) and expensed amounts). Part of the funds raised were used to repay the CBA in full.

iSelect Annual Report 2013

d) FAIR VALUES
The fair values of ﬁnancial assets and liabilities, together with the carrying amounts shown in the statement of ﬁnancial position are as
follows.

Financial Assets

Cash and cash equivalents

Trade and other receivables

Trail commission receivable

Financial Liabilities

Trade and other payables

Borrowings

$’000

CARRYING AMOUNT

FAIR VALUE

Note

2013

2012

2013

2012

85,315

34,070

106,973

226,358

20,201

–

20,201

20,012

15,338

91,459

126,809

21,246

35,000

56,246

85,315

34,070

105,382

224,767

20,201

–

20,201

20,012

15,338

91,459

126,809

21,246

35,000

56,246

The methods and assumptions used to estimate the fair value of ﬁnancial instruments are as follows:

Cash
The carrying amount is fair value due to the liquid nature of these assets.

Receivables/payables
Due to the short-term nature of these ﬁnancial rights and obligations, their carrying amounts are estimated to represent their fair values.

Other ﬁnancial assets/liabilities
The fair value of other ﬁnancial assets and liabilities have been calculated by discounting the expected future cash ﬂows at prevailing
interest rates using market observable inputs.

Interest-bearing liabilities
Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held or based on discounting
expected future cash ﬂows at market rates.

e) CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market conﬁdence and to sustain operations
and future development of the business. Capital consists of ordinary shares and retained earnings. The Board of Directors monitors the
return on capital and seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and
the advantages and security afforded by a sound capital position.

21. COMMITMENTS & CONTINGENCIES

Commitments

Non-cancellable operating lease commitments

Not later than 1 year

Later than 1 year and not later than 5 years

Later than 5 years

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

2,334

9,310

7,768

19,412

2,181

9,252

10,161

21,594

During the 2012 ﬁnancial year the Group entered into a commercial lease for the current premises which had an initial term of ten years
with the option to renew at the end of the contract period. During the 2011 ﬁnancial year the Group also entered into several hire purchase
motor vehicles leases with a term of three years. There are no restrictions placed on the lessee by entering into these leases.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

Contingencies

Guarantees

Trading guarantees

Consolidated
30 June 2013
$’000

Consolidated
30 June 2012
$’000

2,193

2,130

The Group has issued a number of bank guarantees and letters of credit for various operational purposes. It is not expected that these
guarantees will be called upon. All trading guarantees are issued in the name of iSelect Limited.

Other
On 24 October 2011, iSelect Life Pty Ltd reported to the Australian Securities & Investment Commission a breach in relation to its
Australian Financial Services Licence relating to life insurance policies sold between April 2009 and March 2011. As a result of this breach,
an internal review of all life insurance policies sold during that period is being undertaken. The review and remediation work commenced
in October 2011 and will continue until completion, which is expected to be by December 2013. As at 30 June 2013, over 72% of policies
subject to review and remediation had been completed. The amount, if any, of any liability associated with those policies yet to be reviewed
cannot be reliably determined at this time, and accordingly no amounts have been recorded in the ﬁnancial statements for the year ended
30 June 2013. Potential liabilities for the Group, should any obligation be identiﬁed, are expected to be covered by insurance maintained by
the Group.

In March 2012, Bupa Australia Pty Ltd issued legal proceedings against iSelect in the Federal Court. In October 2012, Bupa Australia
joined Directors Damien Waller and Matt McCann to the proceedings. iSelect brought its own claim against Bupa Australia Pty Ltd and its
Managing Director for misleading and deceptive conduct. This matter was settled in March 2013 by way of consent orders as follows:

– all proceedings commenced by the parties were dismissed;

–

iSelect provided certain undertakings to the Federal Court and to Bupa regarding representations around waiting periods
that cannot be made;

– parties bear their own costs of the proceedings;

–

iSelect paid the sum of $125,000 to a registered charity nominated by Bupa Australia within 30 days of Bupa Australia providing
notiﬁcation of the charity.

22. EVENTS AFTER BALANCE SHEET DATE
On 24 June 2013, iSelect listed on the Australian Securities Exchange. The Group has adopted a cash management strategy speciﬁcally
for funds raised to ensure the best return are obtained whilst strategies for the use of the funds are formulated and implemented.
Post-year end, $60 million in rolling term-deposits were set up.

No other matters or circumstances have arisen since the end of the ﬁnancial year that have signiﬁcantly affected or may signiﬁcantly
affect the operations of the company, the results of those operations, or the state of affairs of the company in future ﬁnancial years.

iSelect Annual Report 2013

23. PARENT ENTITY INFORMATION
The accounting policies of the parent entity, iSelect Limited, which have been applied in determining the ﬁnancial information shown below,
are the same as those applied in the consolidated ﬁnancial statements. Refer to Note 2 for a summary of accounting policies relating to
the Group.

Financial Position

Assets

Current Assets

Non-Current Assets

Total Assets

Liabilities

Current Liabilities

Non-Current Liabilities

Total Liabilities

Net Assets

Equity

Issued Capital

Reserves

Retained Earnings

Total Equity

Financial Performance

Proﬁt of the parent entity

Total comprehensive income of the parent entity

Period to
30 June 2013
$’000

30 June 2012
$’000

74,428

133,218

207,646

349

34,302

34,651

172,995

171,313

858

824

172,995

14,706

82,218

96,924

36,380

7,533

43,913

53,011

49,759

2,384

868

53,011

(1,367)

(1,312)

There are no contractual or contingent liabilities of the parent as at reporting date (2012: $nil).

iSelect Limited has issued bank guarantees and letters of credit to third parties for various operational purposes. It is not expected these
guarantees will be called on. The amount of trading guarantees in place at reporting date is disclosed in Note 21.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

24. SUBSIDIARIES
The consolidated ﬁnancial statements include the ﬁnancial statements of iSelect Limited as the ultimate parent, and the subsidiaries listed
in the following table:

NAME OF SUBSIDIARY

iSelect Health Pty Ltd^

iSelect Life Pty Ltd

iSelect General Pty Ltd

iSelect Media Pty Ltd^

iSelect Mortgages Pty Ltd^

Mobileselect Pty Ltd^

InfoChoice Pty Ltd

iSelect Services Pty Ltd^

Tyrian Pty Ltd^

COUNTRY OF
INCORPORATION

FUNCTIONAL
CURRENCY

EQUITY INTEREST

30 June 2013

30 June 2012

Australia

AUD

100%

^ A Deed of Cross Guarantee has been entered into by iSelect Limited and these entities. Refer to Note 25 for further details

25. DEED OF CROSS GUARANTEE
Pursuant to the iSelect Deed of Cross Guarantee (“the Deed”) and in accordance with ASIC Class Order 98/1418, the subsidiaries identiﬁed
with a ‘^’ in Note 24 are relieved from the requirements of the Corporations Act 2001 relating to the preparation, audit and lodgement of
their ﬁnancial reports.

iSelect Limited and the subsidiaries identiﬁed with a ‘^’ in Note 24, together referred to as the “Closed Group”, entered into the Deed on
26 June 2013. The effect of the Deed is that iSelect Limited guarantees to each creditor payment in full of any debt in the event of winding
up any of the entities in the Closed Group.

The consolidated income statement of the entities that are members of the Closed Group is as follows:

Consolidated income statement

Proﬁt from continuing operations before income tax

Income tax expense

Net proﬁt for the year

Retained earnings at the beginning of the period

Net proﬁt for the year

Retained earnings at the end of the year

+ The iSelect Deed of Cross Guarantee became effective during the year ended 30 June 2013, and accordingly no comparatives are provided.

Period to
30 June 2013
Deed
$’000

30 June 2012
Deed+
$’000

787

(236)

551

59,493

551

60,044

–

iSelect Annual Report 2013

The consolidated income balance sheet of the entities that are members of the Closed Group is as follows:

30 June 2013
Deed
$’000

30 June 2012
Deed+
$’000

Consolidated balance sheet

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

Net present value of future trail commission

Other assets

Total current assets

Non-current assets

Trade and other receivables

Other assets

Investments

Net present value of future trail commission

Property, plant and equipment

Intangible assets

Total non-current assets

Total assets

Liabilities

Current liabilities

Trade and other payables

Provisions

Borrowings

Total liabilities

Non-current liabilities

Trade and other payables

Provisions

Net deferred tax liabilities

Total non-current liabilities

Total liabilities

Net Assets

Equity

Issued Capital

Reserves

Retained Earnings

Total Equity

+ The iSelect Deed of Cross Guarantee became effective during the year ended 30 June 2013, and accordingly no comparatives are provided.

80,305

15,303

30,482

1,443

127,533

32,814

765

48,418

63,570

6,816

5,809

158,192

285,725

18,034

3,305

–

21,339

14,742

2,554

14,875

32,171

53,510

232,215

171,313

858

60,044

232,215

–

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

26. RELATED PARTY TRANSACTIONS
The following table provides the total amount of transactions that were entered into with related parties for the relevant ﬁnancial year.

30 June 2013

Shareholder related entities – Advertising services

30 June 2012

Shareholder related entities – Advertising services

Director related entities – Consultancy fees

Sales to Related
Parties
$

Purchases from
Related Parties
$

Other
Transactions with
Related Parties
$

Balances at
Reporting Date
$

–

304,412

57,362

28,779

–

304,412

57,362

28,779

The related party transactions undertaken during ﬁnancial year related to advertising services provided by ninemsn. As at 30 June 2013,
ninemsn is no longer a related party.

In the prior year, Director, related entities fees paid relate to advisory services rendered by Martin Dalgliesh in his capacity as a director.
The fees paid we completed on an arm’s length basis at normal market prices and on normal commercial terms. Martin Dalgliesh ceased
as a Director on 16 March 2012.

27. REMUNERATION OF AUDITORS

(a) Ernst & Young

Audit and review of ﬁnancial statements

Other assurance services

(cid:242) Regulatory compliance

(cid:242) Tax compliance

(cid:242) Assurance-related services

(cid:242) Due diligence

(cid:242) Equity raising

(cid:242) Finance raising

Total remuneration of Ernst & Young

30 June 2013
$

30 June 2012
$

194,000

36,000

10,000

46,015

–

1,016,815

105,000

1,407,830

36,000

44,700

13,500

65,000

–

79,000

432,200

28. SHARED-BASED PAYMENTS
The recognised expense arising from equity settled share-based payment plans during the period is shown in Note 4. During the year ended
30 June 2013, the Company had the following share-based payment plans in place (described below):

– 2013 Long-Term Incentive Plan (LTIP); and

–

Employee Share Option Plan (ESOP) consisting of the 2011 Option Plan and the 2010 Option Plan.

There have been no cancellations or modiﬁcations to any of the plans during the period.

iSelect Annual Report 2013

(a) DESCRIPTION OF SHARE-BASED PAYMENT PLANS
2013 Long-Term Incentive Plan (LTIP)
The 2013 LTIP has been established as the long-term incentive
component of remuneration in order to assist in the attraction,
reward and retention of certain employees. The LTI Plan is designed
to link long-term reward with the ongoing creation of shareholder
value, through the allocation of LTIP Shares which are subject to
satisfaction of long-term performance conditions.

The key terms of the LTI Plan are as follows:

–

Participants are provided with a limited recourse loan from
iSelect for the sole purpose of subscribing for LTIP Shares in the
Company. Participants are not charged interest on the loan;

The LTIP Shares are issued to each participant upfront, with
the number of LTIP Shares determined by dividing the ‘loan
amount’ by the market value of the LTIP Shares at the time
of allocation;

The LTIP Shares will only vest upon satisfaction of conditions set
by the Board at the time of the offer;

If the conditions are met and LTIP Shares vest, the loan
becomes repayable and participants have up to ﬁve years
from the date of allocation of the LTIP Shares to repay the
outstanding balance. The LTIP Shares cannot be dealt with
(other than to repay the loan) until the loan in respect of the
vested LTIP Shares is repaid in full;

Until the LTIP Shares vest, the participant is not entitled to
exercise any voting rights attached to the LTIP Shares. Any
dividends paid on the LTIP Shares while the loan remains
outstanding are applied (on a notional after-tax basis) towards
repayment of the loan; and

In general, if the conditions are not satisﬁed by the relevant
testing date for those conditions, or if the participant ceases
employment before the LTIP Shares vest, the participant forfeits
all interest in the LTIP Shares in full satisfaction of the loan.

2013 offer under LTI Plan
The performance condition for the 2013 offer is a compound annual
growth rate (CAGR) in total shareholder return (TSR).

TSR measures the total change in the value of the Shares over a
period, plus the value of any dividends and other distributions being
treated as if they were reinvested in Shares. In relation to the 2013
offer, vesting starts where CAGR over the period is 12%.

At this level, 50% of the LTIP Shares will vest. All LTIP Shares will vest
if CAGR over the period is 15% or more. Between these points, the
percentage of vesting increases on a straight line basis. In respect
of the ﬁrst offer made under the LTI Plan, in order to provide for
direct LTIP Share ownership by participants and alignment with
shareholder interests as soon as possible following establishment
of the Plan, LTIP Shares may vest in three tranches if the relevant
condition is met in respect of that period. The ﬁrst testing date
(in respect of 20% of LTIP Shares under the 2013 offer) was
30 June 2013. The performance condition for this test was not met,
and the ﬁrst tranche did not vest.

The remaining LTIP Shares may vest in two equal tranches (tested
as at 30 June 2014 and 30 June 2015) if the performance condition
is met. It is the Board’s current intention that the performance
condition will be tested over the full performance period in respect
of any future offers under the LTI Plan. If the performance condition
is not satisﬁed, any LTIP Shares which remain unvested following
testing of Tranche 1 and/or Tranche 2 (as applicable) will be
aggregated and tested on a cumulative basis at subsequent testing
dates (i.e. subject to the TSR CAGR being met over the period
through to ﬁnancial years ending FY14 or FY15 (as applicable)).

Any LTIP Shares which remain unvested following testing of
Tranche 3 will be forfeited and surrendered in full satisfaction of the
loan, in which case participants will have no further interest in the
LTIP Shares. In this event, the iSelect Board believes that the loss
of any remuneration value from the LTI Plan is sufﬁcient penalty to
the participants.

Cessation of employment
Except where the Board determines otherwise in a speciﬁc instance,
where a participant ceases employment with iSelect prior to any
conditions attaching to LTIP Shares issued under the LTI Plan being
satisﬁed, their LTIP Shares will be forfeited and surrendered (in full
satisfaction of the loan) and the participant will have no further
interest in the LTIP Shares. However the Board has discretion to
approve the reason for a participant ceasing employment before
LTIP Shares have vested in appropriate circumstances. Such
circumstances may include ill health, death, redundancy or other
circumstances approved by the Board.

Where the Board has approved the reason for ceasing employment,
it has discretion to determine any treatment in respect of the
unvested LTIP Shares it considers appropriate in the circumstances
– for example, that a pro-rata number of LTIP Shares are eligible to
vest, having regard to time worked during the performance period
and the extent the performance condition has been satisﬁed at the
time of cessation.

In relation to vested LTIP Shares that remain subject to the loan,
the participant will have 12 months from the date of the cessation
of their employment to repay the loan. Once the loan is repaid, the
participant may deal in the LTIP Shares.

For the purposes of Sections 200B and 200E of the Corporations
Act, iSelect Shareholders have approved the giving of any potential
beneﬁts under the LTI Plan provided in connection with any future
retirement of a participant who holds a ‘managerial or executive
ofﬁce’ such that for the purposes of the provisions, those beneﬁts
will not be included in the statutory limit.

Change in control
Unless the Board determines otherwise, all LTIP Shares will vest
upon a ‘change of control’ (this excludes the IPO undertaken on
24 June 2013), and participants’ loans will become repayable
(including in respect of any outstanding loan where LTIP Shares
had already vested prior to the ‘change of control’). If the Share
price has fallen, LTIP Shares will be forfeited and surrendered in
full satisfaction of the loan.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

CEO Performance Plan (Ceased in 2012 ﬁnancial year)
The CEO Performance Plan (CEO Plan) was a contract between the
Group and the then Chief Executive Ofﬁcer (CEO), Damien Waller,
for the grant of share options in iSelect Limited. The share options
under the CEO Plan were granted on 20 December 2005 by iSelect
Health Pty Ltd and novated to iSelect Limited on 27 April 2007.
The CEO Plan was designed to align the CEO’s interests with those
of shareholders by increasing the value of the Group. If all vesting
conditions were met and the Group’s valuation was equal to or
exceeded $265 million then all options could be exercised. The share
options had an exercise price of $2.22 and fully vested to 30 June
2008. During the 2012 ﬁnancial year all CEO performance plan
options were exercised and the plan ceased.

Ninemsn Pty Ltd Agreement (Ceased in 2012 ﬁnancial year)
The Ninemsn Pty Ltd Agreement was an agreement with
ninemsn Pty Ltd relating to the purchase of shares in the Group on
31 March 2006 granted ninemsn Pty Ltd share options in the
Group. The exercise price of the options was $4.25. The number of
exercisable options was calculated, so that ninemsn Pty Ltd had the
same equity interest in the Group. During the 2012 ﬁnancial year all
ninemsn Pty Ltd options were exercised and the plan ceased.

Employee Share Option Plan (ESOP)
2011 Option Plan
Under the iSelect ESOP, share options may be granted to Company
Directors, Company Secretary, Senior Executives and employees.
The ESOP is designed to align participant’s interests with those
of shareholders, by increasing the value of the Group’s shares.
Under the ESOP, the exercise price of the options is set at or above
the market price of the shares on the date of grant. The typical
vesting period for options granted under the 2011 Option Plan is
the equivalent of two and a half years. The term of the options is
typically three years. For all participants, in the event of a change in
control or departure from iSelect, after the required service period,
the issued options will be pro-rated to determine the applicable
qualifying options based on the service term. In addition, all shares
have an attached Group performance condition hurdle that needs
to be achieved in order for options to be exercisable. Speciﬁc
conditions exist in relation to a takeover where more than 90% of
the share capital is acquired by another entity.

When a participant ceases employment prior to the service period
of their share options, the non-vested share options are pro-rated
based on the proportion of the service period completed. The
vested options will also be forfeited in circumstances where the
participant has breached their contract of employment. All ESOP
options are forfeited on the insolvency of iSelect Limited. There are
no cash settlement alternatives.

2010 Option Plan
Under the iSelect ESOP, share options are granted to Company
Directors, Company Secretary, senior executives and employees.
The ESOP is designed to align participant interest with those of
shareholders by increasing the value of the Group’s shares. Under
the ESOP, the exercise price of the options is set at or above the
market price of the shares on the date of grant. For all participants,
excluding Company Directors, and Secretary, 50% of deemed
options granted will vest over the prescribed vesting period subject
to CEO performance assessment. The typical vesting period for
options granted under the 2010 Option Plan varies from three to
four years. The term of the options is typically ﬁve years. For all
participants, excluding Company Directors and secretary, vested
options can be exercised on an Initial Public Offering (IPO) event or
trade sale event or within six months prior to their expiry or at the
discretion of the board. For all participants, 75% of any unvested
options immediately vest on an IPO or trade sale event.

When a participant ceases employment prior to the vesting of
their share options, the non-vested share options are forfeited.
The vested options will also be forfeited in circumstances where the
participant has breached their contract of employment. All ESOP
options are forfeited on the insolvency of iSelect Limited or iSelect
Health Pty Ltd. There are no cash settlement alternatives.

iSelect Annual Report 2013

(b) SUMMARY OF SHARES ISSUED UNDER THE 2013 LTIP
The following table illustrates the number of, and movements in, shares issued under the LTIP during the year:

Outstanding at the beginning of the period

Granted during the period

Forfeited during the period

Exercised during the period

Outstanding at the end of the period

2013 Number

2012 Number

–

8,883,670

–

8,883,670

–

(c) SUMMARY OF OPTIONS ISSUED UNDER ESOP
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options during
the year.

Outstanding at the beginning of the period

Granted during the period

Forfeited during the period

Exercised during the period+

Outstanding at the end of the period

Exercisable at the end of the year

2013 Number

24,341,350

500,000

(17,822,150)

(1,800,000)

5,219,200

5,026,629

2013
WAEP

2012^ Number

1.98

2.39

2.25

1.05

1.43

1.39

67,937,310

349,750

(2,284,980)

(41,660,730)

24,341,350

7,033,260

2012^
WAEP

0.98

2.37

2.24

0.34

1.98

1.50

^
+

For comparative purposes 2012 has been re-stated for the 1-for-10 share split that took place on 31 May 2013.
During the 2013 ﬁnancial year, after obtaining approval from the Board of Directors and its Remuneration sub-committee, 90,000 options (pre-share split) were exercised on a cashless basis, receiving a
number of shares (at fair value at the exercise date) equal in value to the premium of the fair value of the shares at exercise date over the exercise price of the option. There was no additional net beneﬁt
to the option holder as a result of this transaction. Further detail is provided in section (d) of this note.

The outstanding balance as at 30 June 2013 is represented by:

– 1,069,450 options over ordinary shares with an exercise price of

– 799,750 options over ordinary shares with an exercise price of
$2.37 exercisable upon meeting the ESOP conditions; and

$1.00 exercisable upon meeting the ESOP conditions;

– 50,000 options over ordinary shares with an exercise price of

– 1,500,000 options over ordinary shares with an exercise price of

$1.25 exercisable upon meeting the ESOP conditions;

– 1,800,000 options over ordinary shares with an exercise price
of $0.75 to $2.00 (WAEP of $1.38), exercisable upon meeting
the ESOP conditions;

$2.65 exercisable upon meeting the ESOP conditions.

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

(d) CASHLESS CONVERSION OF OPTIONS GRANTED UNDER ESOP
(cid:100)(cid:346)(cid:286)(cid:3)(cid:296)(cid:381)(cid:367)(cid:367)(cid:381)(cid:449)(cid:349)(cid:374)(cid:336)(cid:3)(cid:410)(cid:258)(cid:271)(cid:367)(cid:286)(cid:3)(cid:393)(cid:396)(cid:286)(cid:400)(cid:286)(cid:374)(cid:410)(cid:400)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:374)(cid:437)(cid:373)(cid:271)(cid:286)(cid:396)(cid:3)(cid:381)(cid:296)(cid:3)(cid:381)(cid:393)(cid:415)(cid:381)(cid:374)(cid:400)(cid:3)(cid:286)(cid:454)(cid:286)(cid:396)(cid:272)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:381)(cid:374)(cid:3)(cid:258)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:367)(cid:286)(cid:400)(cid:400)(cid:3)(cid:271)(cid:258)(cid:400)(cid:349)(cid:400)(cid:3)(cid:282)(cid:437)(cid:396)(cid:349)(cid:374)(cid:336)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:455)(cid:286)(cid:258)(cid:396)(cid:855)

Exercise Date

Number of options exercised on a cashless basis

Exercise price ($)

Fair value of shares at exercise date ($)

Premium of fair value of shares over option exercise price ($ per option)

Premium of fair value of shares over option exercise price ($)

Number of shares

20 December 2012

900,000

0.95

1.85

0.90

810,000

437,840

(e) WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE
The weighted average remaining contractual life for the share options outstanding as at 30 June 2013 is 0.97 years.

(f) RANGE OF EXERCISE PRICE
The range of exercise prices for options outstanding at the end of the period was $0.75 to $2.65.

(g) WEIGHTED AVERAGE FAIR VALUE
The weighted average fair value of options granted during the year was $0.11 (2012: $0.09).

(h) ESOP OPTION PRICING MODEL
The fair value of the equity settled share options granted under the ESOP is estimated as at the date of grant using a Binomial Model taking
into account the terms and conditions upon which the options were granted.

The following table lists the inputs to the models used for the period ended 30 June 2013 (restated for the 1-for-10 share split that took
place on 31 May 2013):

ESOP Post-Oct
2012

ESOP Post-Feb
2012 – 30 Sept
2012

ESOP Post-1 July
2010 – Feb 2012

ESOP Pre-1 July
2010

CEO Plan*

Dividend Yield (%)

Years 0 to 3

Years 4 to 5

Years 6 to 7

Years 8 plus

Expected Volatility (%)

Expected Life of Options (Years)

Option Exercise Price (WAEP) ($)

Weighted average share price at
measurement date ($)

Inclusive of the ninemsn Pty Ltd agreement

–

21.50

2.50

2.65

1.85

–

23.50

2.80

2.37

1.65

–

42.00

3.00

2.25

1.55

–

1.00

1.50

2.00

40.00

4.98

0.63

0.38

–

1.00

1.50

2.00

40.00

5.97

0.27

0.24

The expected volatility was determined by considering volatility for similar sized and industry listed companies. The expected volatility
therefore reﬂects the assumption that the comparison volatility is indicative of future trends, which may also not necessarily be the
actual outcome.

29. KEY MANAGEMENT PERSONNEL DISCLOSURES
For a list of key management personnel and additional disclosures, refer to the Remuneration Report.

i) COMPENSATION OF KEY MANAGEMENT PERSONNEL

Short-term employee beneﬁts

Post-employment beneﬁts

Long-term employee beneﬁts

Termination beneﬁts

iSelect Annual Report 2013

30 June 2013
$

30 June 2012
$

3,800,767

3,202,058

244,785

455,875

240,861

215,424

270,168

166,412

4,742,288

3,854,062

Detailed remuneration disclosures are provided in the Remuneration Report on pages 20 to 28.

ii) SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
The number of shares in the company held during the ﬁnancial year (directly and indirectly) by each non-executive director of iSelect
Limited and other key management personnel of the Group, including their personally related parties, are set out below.

Balance at the
start of the year1

Granted as
remuneration

On exercise of
option

Other changes3

Balance at the end
of the year

30 June 2013

Non-executive directors

Ordinary shares

Shaun Bonètt

Greg Camm

Pat O’Sullivan

Leslie Webb

Michael McLeod*

Other key management personnel

Ordinary shares

Damien Waller

Matt McCann

David Chalmers^

Chris Billing

Roger McBride#

Elise Morris@

Jo Thomas~

Scott Wilson&

Trevor Jeffords~~

Chris Brant^^

David May##

300,000

–

2,400,000

149,350

34,471,550

70,350

–

20,000

–

1,351,350

1,891,890

702,700

621,620

540,540

621,620

540,540

81,080

–

60,000

–

(350,000)

(149,350)

300,0004

60,0004

–

2,050,0005,6

–

(3,093,890)

32,729,0107

437,8402

(272,960)

2,127,1208

–

5,406

–

702,700

641,620

540,540

621,620

545,946

81,080

–

37,411,250

6,891,880

437,840

(3,800,794)

40,940,176

1 Shareholdings, including the opening balance, have been re-stated where appropriate to reﬂect

the 1-for-10 share split on 31 May 2013.

2 Converted on a cashless basis (refer Note 28 for further detail).
3 Other changes consist of share purchases, transfers and sales by non-executive directors and

key management personnel.

4 Escrowed until the date on which the half year accounts for the period ending

31 December 2013 are released to the ASX.
850,000 shares owned by ITV Consulting (controlled by Leslie Webb) escrowed until the date
on which the full year accounts for the year ended 30 June 2013 to the ASX. 1,200,000 shares
escrowed until the date on which the half-year accounts for the period ending
31 December 2013 are released to the ASX.
The number of shares for Leslie Webb excludes 3,750,000 which are held by a superannuation
fund of which Leslie Webb is a member, and in which he has an indirect interest. These shares
are not subject to any escrow arrangements.

31,377,660 shares escrowed until the date on which the half-year accounts for the period
ending 31 December 2013 are released to the ASX. 1,351,350 LTIP shares subject to restrictions
disclosed in Note 28.
235,230 shares escrowed until the date on which the half-year accounts for the period ending
31 December 2013 are released to the ASX. 1,891,890 LTIP shares subject to restrictions
disclosed in Note 28.

* Ceased 30 November 2012
^ Appointed 23 August 2012
# Appointed 20 August 2012
@ Appointed 2 February 2012
~ Appointed 3 May 2012
& Appointed 4 February 2013
~~ Ceased 5 April 2013
^^ Ceased 23 August 2012
## Ceased 31 July 2012

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

29. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)
ii) SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL (CONTINUED)
Shareholdings in the table below have not been restated for the 1-for-10 share split that took place during the 2013 ﬁnancial year.

Balance at the
start of the year

Granted as
remuneration

On exercise of
option

Other changes

Balance at
the end of
the year

30,000

–

240,0001

14,935

–

30,000

–

30,000

–

2,572,074

(285,714)

3,447,155

–

93,750

–

2,000

7,035

2,000

–

32,258

100,785

–

2,725,824

(283,714)

4,249,168

30 June 2012

Non-executive directors

Ordinary shares

Shaun Bonètt

Pat O’Sullivan

Leslie Webb

Michael McLeod*

Martin Dalgliesh**

Other key management personnel

Ordinary shares

Damien Waller

Matt McCann

Chris Billing

Elise Morris@

Jo Thomas~

Roger McBride#

Trevor Jeffords~~

Chris Brant^^

David May##

Mark Blackburn%

Gerald Brown%%

Alla Keogh%%%

–

210,000

14,935

–

1,160,795

7,035

–

32,258

7,035

–

1,807,058

–

The number of shares for Leslie Webb excludes 375,000 (before share split) held by a
superannuation fund of which Leslie Webb is a member, and in which he has an indirect interest.

Ceased 30 November 2012
*
Ceased 16 March 2012
**
Appointed 20 August 2012
#
Appointed 2 February 2012
@
Appointed 3 May 2012
~
Ceased 5 April 2013
~~
Ceased 23 August 2012
^^
Ceased 31 July 2012
##
Ceased 4 October 2011
%
%%
Ceased 14 May 2012
%%% Ceased 19 September 2011

iSelect Annual Report 2013

iii) OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL
The number of share options in the company held during the ﬁnancial year (directly and indirectly) by each non-executive director of iSelect
Limited and other key management personnel of the Group, including their personally related parties, are set out below.

Balance at
start of year

Granted as
remuneration1

Options
exercised

Options
lapsed

Balance at
end of year

Total
vested

Exercisable

Not
exerciseable

30 June 2013

Non-executive directors

Ordinary shares

Shaun Bonètt

Greg Camm

Pat O’Sullivan

Leslie Webb

Michael McLeod*

Other KMP

Ordinary shares

Damien Waller

Matt McCann

David Chalmers^

Chris Billing

Roger McBride#

Elise Morris@

Jo Thomas~

Scott Wilson&

Trevor Jeffords~~

Chris Brant^^

David May##

–

450,000

–

450,000

–

(4,500,000)

(900,000)

(1,500,000)

–

(1,000,000)

200,000

–

600,000

–

(500,000)

200,000

–

(500,000)

–

(600,000)

–

4,500,000

2,400,000

–

1,200,000

600,000

–

700,000

–

500,000

–

600,000

10,500,000

450,000

(900,000)

(9,600,000)

1,450,000

Option holdings, including opening balance, have been re-stated where appropriate to reﬂect the 1-for-10 share split on 31 May 2013.

* Ceased 30 November 2012
^ Appointed 23 August 2012
# Appointed 20 August 2012
@ Appointed 2 February 2012
~ Appointed 3 May 2012
& Appointed 4 February 2013
^^ Ceased 23 August 2012
## Ceased 31 July 2012
~~ Ceased 5 April 2013

–

Notes to the Consolidated Financial Statements (continued)
for the year ended 30 June 2013

29. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)
iv) OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL (CONTINUED)
Option holdings in the table below have not been restated for the 1-for-10 share split that took place during the 2013 ﬁnancial year.

Balance at
start of year

Granted as
remuneration

Options
exercised

Options
lapsed

Balance at
end of year

Total
vested

Exercisable

Not
exerciseable

30 June 2012

Non-executive directors

Ordinary shares

Shaun Bonètt

Pat O’Sullivan

Leslie Webb

Michael McLeod*

30,000

–

30,000

–

Martin Dalgliesh**

180,000

34,975

(30,000)

–

(30,000)

–

(2,572,074)

–

(40,000)

(60,000)

–

214,975

183,284

180,000

3,284

450,000

240,000

120,000

–

70,000

60,000

50,000

–

60,000

40,000

359,083

209,934

97,016

–

57,037

60,000

39,978

–

60,000

40,000

–

90,000

–

359,803

119,934

97,016

–

57,037

60,000

39,978

–

60,000

40,000

125,000

46,667

3,022,074

240,000

120,000

–

70,000

60,000

50,000

–

100,000

243,750

100,000

–

(93,750)

(25,000)

125,000

–

(53,333)

46,667

4,345,824

34,975

(2,725,874)

(178,333)

1,476,642

1,278,719

270,000

1,008,719

Other KMP

Ordinary shares

Damien Waller

Matt McCann

Chris Billing

Elise Morris@

Jo Thomas~

Roger McBride#

Trevor Jeffords~~

Chris Brant^^

David May##

Mark Blackburn%

Gerald Brown%%

Alla Keogh%%%

Ceased 30 November 2012
Ceased 16 March 2012
Appointed 20 August 2012
Appointed 2 February 2012
Appointed 3 May 2012
Ceased 5 April 2013
Ceased 23 August 2012
Ceased 31 July 2012
Ceased 4 October 2011

*
**
#
@
~
~~
^^
##
%
%% Ceased 14 May 2012
%%% Ceased 19 September 2011

iSelect Annual Report 2013

Directors’ Declaration

In accordance with a resolution of the Directors of iSelect Limited we state that:

1. In the opinion of the directors:

the consolidated ﬁnancial statements and notes that are set out on pages 35 to 78 and the Directors’ Report, are in accordance
with the Corporations Act 2001, including:

giving a true and fair view of the Group’s ﬁnancial position as at 30 June 2013 and of its performance, for the ﬁnancial year
ended on that date; and

ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and

iii.

there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.

There are reasonable grounds to believe that the Company and the Group entities identiﬁed in Note 24 will be able to meet
any obligations or liabilities;

The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Ofﬁcer
and Chief Financial Ofﬁcer for the ﬁnancial year ended 30 June 2013;

The directors draw attention to Note 2 to the consolidated ﬁnancial statements, which includes a statement of compliance with
International Financial Reporting Standards.

As at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identiﬁed in Note 24
will be able to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross Guarantee.

On behalf of the Directors

Damien Waller
Director

Melbourne
29 August 2013

Matt McCann
Director

Melbourne
29 August 2013

Independent Auditor’s Report

Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001

Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au

(cid:4)(cid:17)(cid:10)(cid:11)(cid:19)(cid:11)(cid:17)(cid:10)(cid:11)(cid:17)(cid:22)(cid:2)(cid:7)(cid:23)(cid:10)(cid:14)(cid:22)(cid:18)(cid:20)(cid:3)(cid:21)(cid:2)(cid:20)(cid:11)(cid:19)(cid:18)(cid:20)(cid:22)(cid:2)(cid:22)(cid:18)(cid:2)(cid:22)(cid:13)(cid:11)(cid:2)(cid:16)(cid:11)(cid:16)(cid:8)(cid:11)(cid:20)(cid:21)(cid:2)(cid:18)(cid:12)(cid:2)(cid:14)(cid:6)(cid:11)(cid:15)(cid:11)(cid:9)(cid:22)(cid:2)(cid:5)(cid:14)(cid:16)(cid:14)(cid:22)(cid:11)(cid:10)

(cid:3)(cid:6)(cid:14)(cid:13)(cid:15)(cid:16)(cid:2)(cid:13)(cid:12)(cid:2)(cid:16)(cid:8)(cid:6)(cid:2)(cid:7)(cid:9)(cid:12)(cid:4)(cid:12)(cid:5)(cid:9)(cid:4)(cid:10)(cid:2)(cid:15)(cid:6)(cid:14)(cid:13)(cid:15)(cid:16)(cid:2)

We have audited the accompanying financial report of iSelect Limited, which comprises the
consolidated statement of financial position as at 30 June 2013, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors' declaration of the consolidated entity
comprising the company iSelect Limited and the entities it controlled at the year's end or from time to
time during the financial year.

Directors' responsibility for the financial report

The directors of iSelect Limited are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal controls as the directors determine are necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error. In Note
2(b), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial statements comply with International Financial Reporting
Standards.

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal controls relevant to the entity's
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.

iSelect Annual Report 2013

Opinion

In our opinion:

the financial report of iSelect Limited is in accordance with the Corporations Act 2001,
including:

giving a true and fair view of the consolidated entity's financial position as at 30 June
2013 and of its performance for the year ended on that date; and

complying with Australian Accounting Standards and the Corporations Regulations
2001; and

the financial report also complies with International Financial Reporting Standards as
disclosed in Note 2(b).

(cid:3)(cid:6)(cid:14)(cid:13)(cid:15)(cid:16)(cid:2)(cid:13)(cid:12)(cid:2)(cid:16)(cid:8)(cid:6)(cid:2)(cid:15)(cid:6)(cid:11)(cid:17)(cid:12)(cid:6)(cid:15)(cid:4)(cid:16)(cid:9)(cid:13)(cid:12)(cid:2)(cid:15)(cid:6)(cid:14)(cid:13)(cid:15)(cid:16)(cid:2)

We have audited the Remuneration Report included in pages 10 to 17 of the directors' report for the
year ended 30 June 2013. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of iSelect Limited for the year 30 June 2013, complies with
section 300A of the Corporations Act 2001.

Ernst & Young

Ashley Butler
Partner

Melbourne, Australia
29 August 2013

ASX Additional Information

Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as of 22 August 2013.

(a) DISTRIBUTION OF SHAREHOLDINGS

Size of Holding

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Fully paid ordinary shares
Number of shares^

27,364

538,128

1,170,548

8,552,333

249,676,521

The total number of shares on issue as at 30 June was 259,064,894. On 21 August 2013, 900,000 options were exercised and as a result the total number of shares on issue as at 22 August 2013 per the
above table is 259,964,894.

(b) MARKETABLE PARCEL
The number of holders holding parcels of less than $500 was 17 as at 22 August 2013.

(c) SHARES SUBJECT TO VOLUNTARY ESCROW
As at 22 August 2013, there are shares subject to voluntary escrow, which are detailed in Note 29 (ii) to the ﬁnancial statements.

(d) TWENTY LARGEST SHAREHOLDERS
The twenty largest shareholders of fully paid ordinary shares as at 22 August 2013 were:

Name

HSBC Custody Nominees (Australia) Limited

National Nominees Limited

J P Morgan Nominees Australia Limited

Damien Michael Trevor Waller

Spectrum VI IS LLC

Aurielle Pty Ltd (iSelect Class A/C)

Citicorp Nominees Pty Limited

BNP Paribas Noms Pty Ltd (DRP)

CS Fourth Nominees Pty Ltd

George Tauber Management Pty Ltd

RBC Investor Services Australia Nominees Pty Limited

AMP Life Limited

Lambrook Pty Ltd (Raymonde Superfund A/C)

RBC Investor Services Australia Nominees Pty Limited (GSAM A/C)

Signiﬁcant Other Pty Ltd (The iSelect Class No 2 A/C)

Starﬁsh Technology Fund II Nominees A Pty Ltd (Trust A A/C)

Starﬁsh Technology Fund II Nominees B Pty Ltd (Trust B A/C)

Argo Investments Limited

HSBC Custody Nominees (Australia) Limited – A/C 3

Finico Pty Ltd

Number of
ordinary shares

held % of issued capital

40,561,714

36,191,305

25,695,250

23,355,780

13,263,454

8,021,880

6,084,093

6,060,869

5,005,725

4,715,100

4,578,251

4,118,419

3,450,000

3,275,372

3,160,330

3,041,470

3,000,000

2,625,632

2,580,650

15.60

13.92

9.88

8.98

5.10

3.09

2.34

2.33

1.93

1.81

1.76

1.58

1.33

1.26

1.22

1.17

1.15

1.01

0.99

The percentage holding of the 20 largest shareholders of iSelect Ltd fully-paid ordinary shares was 77.64%.

iSelect Annual Report 2013

(e) SUBSTANTIAL SHAREHOLDERS AS AT 22 AUGUST 2013

Name

Damien Michael Trevor Waller

FMR LLC and FIL

The Goldman Sachs Group, Inc. and its subsidiaries, and Goldman Sachs Holdings
ANZ Pty Limited and its subsidiaries

^ Includes LTIP shares which are subject to restrictions, as per Note 29 (ii) to the ﬁnancial statements.

Number of
ordinary shares
held

32,729,010^

24,574,933

14,285,898

% of issued capital

12.59

9.45

5.50

Guidance versus Reported Results

This summarised schedule details adjustments made to the reported results for the current year to reﬂect the guidance we provided in our
Prospectus document issued on 6 June 2013. Our earnings guidance excluded costs directly associated with the Initial Public Offering.

REPORTED

ADJUSTMENTS

GUIDANCE BASIS

PROSPECTUS

FY13
$’000

FY12
$’000

FY13 IPO
Costs $000

Operating revenue

118,037

111,928

Cost of sales

Gross proﬁt

Total expenses (excluding IPO costs)

Initial public offering costs

EBITDA

Depreciation and amortisation

EBIT

Net ﬁnance costs

Proﬁt Before Income Tax Expense

Income tax expense

Proﬁt for the Period

(61,155)

56,882

(30,399)

(1,479)

25,004

(5,150)

19,854

(1,698)

18,156

(4,787)

13,369

(56,970)

54,958

(30,876)

–

24,082

(4,054)

20,028

(895)

19,133

(6,204)

12,929

–

1,479

–

1,479

–

1,479

(444)

1,035

FY13
$000

118,037

(61,155)

56,882

(30,399)

–

26,483

(5,150)

21,333

(1,698)

19,635

(5,231)

14,404

FY12
$’000

111,928

(56,970)

54,958

(30,876)

–

24,082

(4,054)

20,028

(895)

19,133

(6,204)

12,929

FY13
$’000

121,559

(61,766)

59,793

(33,765)

–

26,028

(4,894)

21,134

(1,317)

19,817

(5,294)

14,523

Corporate Directory

DIRECTORS
Damien Waller,
Executive Chairman

Greg Camm,
Deputy Chairman

Shaun Bonètt
Pat O’Sullivan
Leslie Webb
Bridget Fair

COMPANY SECRETARY
David Christie

REGISTERED OFFICE
294 Bay Road
Cheltenham, Victoria 3192 Australia
Phone: +61 3 9276 8000

PRINCIPAL PLACE
OF BUSINESS
294 Bay Road
Cheltenham, Victoria 3192 Australia
Phone: +61 3 9276 8000

SHARE REGISTER

Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, Victoria 3067 Australia

iSelect Limited shares are listed on the
Australian Securities Exchange (ASX: ISU).

SOLICITORS
Gilbert + Tobin
Level 22, 101 Collins Street
Melbourne, Victoria 3000 Australia

BANKERS
Commonwealth Bank of Australia
385 Bourke Street
Melbourne, Victoria 3000 Australia

AUDITORS
Ernst & Young
8 Exhibition Street
Melbourne, Victoria 3000 Australia.

www.iselect.com.au

DISCLAIMER
Although care has been taken by iSelect, its related companies and their contractors and agents (iSelect parties) in the preparation of this document to ensure that the information provided
is accurate, the contents of the document have not been independently veriﬁed by the iSelect parties (other than to the extent that Ernst & Young have carried out veriﬁcation). No liability
other than that which may not be excluded by law is accepted for any damage, loss, injury or expense caused by errors or omissions in this document or arising from any action taken by any
person in reliance upon it. The information in this document is subject to variation if changes occur after the document has been prepared. Nothing in the contents (express or implied) of this
document will be taken to constitute any warranty or representation by any iSelect party. Any person using the information in this document does so at his or her own risk and should conduct
independent enquiries to verify the accuracy of the information. The contents of this document are the conﬁdential information of iSelect and its related companies. This document is provided
on the condition that the contents must not, in whole or in part, be disclosed to any person except to the extent that any part of the document is already in the public domain through no breach
of this conﬁdentiality obligation. ©2013 All rights reserved. No part of this document may be reproduced, stored on a retrieval system or transmitted in any form or by any means without the
prior written consent of iSelect Ltd, other than as permitted under the Copyright Act 1968 (Cth).