# ISU - iSelect Limited



## System (19 June 2013)

iSelect is a leading Australian online-driven comparison service. Its service provides comparison of both price and product features for a range of:

Private health insurance and car insurance products; and
Household utilities and financial products, including life insurance, broadband, home loans, personal financial and energy products.
Proposed listing date: 24 June 2013

http://www.iselect.com.au


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## Chris1zillion (20 June 2013)

I don't like how they don't have a sister site for comparing meerkats!!


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## McLovin (24 June 2013)

These guys have recorded profits since 2009 but every year they have had negative OCF. The accounting around recognition of revenue looks "interesting" too. If I'm reading note 2(e) correctly, they have, in the last fy, changed their revenue recognition on trail commission from being when the customer starts paying to the fund, to the point at which the customer is referred to the fund. A little too creative for my liking.

Their single biggest asset is npv of trail commissions, this is a somewhat rubbery number with plenty of room for adjusting to make things look a little better.

These guys paid $33.5m for Infochoice last year. Infochoice had revenue of ~$5.3m and made a loss of $0.5m. 

It's a pass for me.


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## DJG (24 June 2013)

McLovin said:


> It's a pass for me.




Or a good short if it becomes available...

When I first read they were being floated I found it somewhat a stupid idea, without even reading any financial statements.


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## McLovin (30 August 2013)

They reported yesterday, missed revenue. Hard to believe you can do that when you float with 8 days to go before EOFY.

Interesting article in the AFR about there accounting practises. And some of the other inner workings of the company...



> In its prospectus, iSelect describes this policy of booking trailing commissions as: “Ongoing fees related to consumers referred to individual insurance funds or applied for mortgages via iSelect . . . 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.”
> 
> The payments are only received in the event the member does not churn (switch to another insurer) over a certain period of time. The payment structure meant that revenue numbers for iSelect, which receives about $800 from its health fund customers for each new member it signs up to a new health fund, could be more positive than it looked. Three years ago, the company received half its commissions as upfront payments and half as trail commissions, where the payment is staggered over an agreed period.
> 
> One fund manager labelled iSelect’s financial accounts “fiction”. “It’s a bit of a *furphy, the whole thing,” says the fund manager who declined to be identified.




- - - Updated - - -






> Another point of contention for investors is the group’s relationship with NIA or health.com.au, the first health insurer to have set up in more than a decade.
> 
> NIA has appointed iSelect as a distributor of health.com.au’s private health insurance products. Under the distribution arrangement with health.com.au, iSelect is entitled to receive an upfront fee for each completed sale of a private health insurance product.
> 
> ...




Hmm...lending money to someone to buy stuff off you...I believe in the 1980's they called that a round robin payment.

http://www.afr.com/p/business/finan..._rollercoaster_ride_of_sRWUpMxhAr0mazrtrZ6aJK


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## craft (30 August 2013)

McLovin said:


> They reported yesterday, missed revenue. Hard to believe you can do that when you float with 8 days to go before EOFY.
> 
> Interesting article in the AFR about there accounting practises. And some of the other inner workings of the company...
> 
> ...




Ebitda 25 Million vs  OCF  of 832 Thousand.

107 Million Trail commissions on the balance sheet and a corresponding 32 Million in Deferred tax liabilities. (If it ain't good enough for the tax man.....) 

Customer financing

Who buys this junk?


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## McLovin (30 August 2013)

craft said:


> Ebitda 25 Million vs  OCF  of 832 Thousand.
> 
> 107 Million Trail commissions on the balance sheet and a corresponding 32 Million in Deferred tax liabilities. (If it ain't good enough for the tax man.....)
> 
> ...




EAX don't look so bad now, does it!


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## skc (30 August 2013)

McLovin said:


> They reported yesterday, missed revenue. Hard to believe you can do that when you float with 8 days to go before EOFY.
> 
> Interesting article in the AFR about there accounting practises. And some of the other inner workings of the company...
> 
> Hmm...lending money to someone to buy stuff off you...I believe in the 1980's they called that a round robin payment.




I'd be wrestling rhinos if I bought shares in iSelect's IPO...


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## ROE (30 August 2013)

Yeah those articles keep me away  too many red flags 

AFR do some good stuff sumarise it all in a few pages and save you lot of time researching


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## ROE (2 September 2013)

http://www.afr.com/p/business/finan...ct_failure_to_disclose_DvO0rY7Fp3zzI9OuVQg51L


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## pixel (14 October 2013)

Insurance must be a tough business, especially for an upstart.
I always found their TV ads annoying anough to press the "Mute" button...

So I was quite surprised when ISU popped up as the only result in today's Trinity scan. In the absence of chart history to indicate the reliability (or otherwise) of support and momentum, I guess I'll give it a miss.


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## Knobby22 (14 October 2013)

The meerkat guys are British. They have proven hard for iSelect to knock off.


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## McLovin (14 October 2013)

pixel said:


> Insurance must be a tough business, especially for an upstart.
> I always found their TV ads annoying anough to press the "Mute" button...




I'm not sure I'd call them upstarts, they've been around since 2000.

The accounts are a bit of joke, tbh. They pretty much book revenue when someone visits their website.


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## DJG (14 October 2013)

McLovin said:


> The accounts are a bit of joke, tbh. They pretty much book revenue when someone visits their website.



Haha. That sums up my view perfectly!


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## pixel (10 February 2014)

pixel said:


> I guess I'll give it a miss.




Just as well I did.
There was a little upswing after the green T-signal, but it didn't last long.




http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01489860
Today's announcement boasts a contract extension, but at a significantly lower rate...


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## McLovin (10 February 2014)

> In an announcement made to the market on Monday, iSelect said the lower commission rates will drag down revenue and earnings before interest, tax, depreciation and amortisation in the second half of 2013-14 by $1 million to $2 million.




That's $1-$2m for the HY. $3-$4m for the full year. For a company that makes ~$25m EBITDA/year that's a fair whack. Very little detail on how exactly this will drive more customers to them either. Tbh, it looks more like they're spinning it as some sort of growth initiative because A&G have told them that's the new commission rates.


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## skc (10 February 2014)

McLovin said:


> That's $1-$2m for the HY. $3-$4m for the full year. For a company that makes ~$25m EBITDA/year that's a fair whack. Very little detail on how exactly this will drive more customers to them either. *Tbh, it looks more like they're spinning it as some sort of growth initiative because A&G have told them that's the new commission rates.*




My thoughts exactly.

I have recently been shopping around for a home equity LOC as well as new electricity supplier, and I looked at iSelect in both instances. Here's my lay person's view of their business operation from the outside.

1. Before showing the product comparisons, you need to provide your contact details. I did but I can see how this may turn a lot of people away. I wonder if there's a away to avoid leakage from that early part of the customer engagement.

2. In both instances, someone called me back the next day to follow up. Both sales rep were courteous and knowledgeable. Although I also see that as quite an expensive servicing model.

3. In the case of my LOC, they pretty clearly understood my needs and were able to offer something that's quite competitive. I haven't make a decision yet but the overall experience was positive.

4. In the case of electricity, their offerings were the same as the supplier's website. And since there was some details that was unclear on the ISU website, I went directly to the supplier's website and signed up there. So while my experience wasn't negative, they offered no real advantage.

5. It feels (although I can't verify) that their comparison list has a fairly large skew towards certain products/suppliers. While you can't blame them, anyone who consults more than a single source will see that and question if they are getting the best deal.

So overall verdict: Good place to check out if you are a consumer, nothing to suggest massive competitive advantage if you are an investor.


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## pixel (10 February 2014)

While the volume is still too small to really hang a hat on, today's candle suggests our concerns are shared by other investors/ traders. The double top may well play out way beyond the standard 200% level :1zhelp:




Looks bad enough for me to stay away.


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## McLovin (15 August 2014)

McLovin said:


> I'm not sure I'd call them upstarts, they've been around since 2000.
> 
> The accounts are a bit of joke, tbh. They pretty much book revenue when someone visits their website.




And it looks as though they overstated their expected trail commissions...What a surprise.



> iSelect said it will take a one-off hit to its full-year net profit of up to $14 million because it has overstated the commissions it will receive from people who have switched health funds using its comparison website.
> 
> In an embarrassing admission, which comes one year after the newly online company missed revenue forecasts contained in its prospectus, iSelect said it has downgraded the amount it expects to receive from commissions in future by $16 million to $20 million.




http://www.afr.com/p/business/companies/iselect_downgrades_guidance_again_2ZyjXLvP0dapGvrNIwrUhJ


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## VSntchr (17 November 2015)

McLovin said:


> And it looks as though they overstated their expected trail commissions...What a surprise.
> 
> 
> 
> http://www.afr.com/p/business/companies/iselect_downgrades_guidance_again_2ZyjXLvP0dapGvrNIwrUhJ




Well, the "materially" worse result..is now forecast to become a "significantly" worse result.
They are probably crossing their fingers and toes that the takeover bid is actually serious and something they can back!


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## skyQuake (17 November 2015)

VSntchr said:


> Well, the "materially" worse result..is now forecast to become a "significantly" worse result.
> They are probably crossing their fingers and toes that the takeover bid is actually serious and something they can back!




On the plus side, they're talking with other potential suitors.

I think its good news that after CEO and CFO leaves it was "just" a downgrade rather than systematic fraud


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## skc (17 November 2015)

skyQuake said:


> On the plus side, they're talking with other potential suitors.
> 
> I think its good news that after CEO and CFO leaves it was "just" a downgrade rather than systematic fraud




Lol... when you set your expectations low you'd never be disappointed! They are very lucky to have the takeover talk stopping them from crashing 25% today.

FWIW, the scene is set for a nice negative premium if any takeover bid was to come... and ISU will probably say "Yes! We would be huffing hippos if we say no".


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## McLovin (11 January 2016)

VSntchr said:


> Well, the "materially" worse result..is now forecast to become a "significantly" worse result.
> They are probably crossing their fingers and toes that the takeover bid is actually serious and something they can back!




Significantly worse has been upgraded to disappointing, following a further downgrade.



> iSelect is now forecasting full year earnings before interest and tax of $15 million to $18 million, compared to its November guidance of $26 million to $28 million.
> 
> Using the midpoint of each range - $27 million to $16.5 million - the company has downgraded its guidance by 39 per cent.
> 
> iSelect chief executive Scott Wilson said in a statement to the market the reduction in EBIT was "disappointing".






Read more: http://www.afr.com/technology/web/e...nings-downgrade-20160110-gm32eg#ixzz3wtKRa49b


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## skc (11 January 2016)

McLovin said:


> Significantly worse has been upgraded to disappointing, following a further downgrade.




Is this "takeover rumour/approach before profit downgrade" the new game in town? DSH, BKN, ISU (and STO if you want to include them) all had some corporate action mumbling before a big share price collapse.

For the record.... current takeover rumours include SPO, GXL and RKN. Make of it what you will...


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## Dona Ferentes (11 January 2016)

first, today ISU

_blames strategic and operational issues for reduction in full-year earnings guidance._

and now I see    

_Insurance comparison website iSelect has downgraded its full year earnings guidance, *blaming too many workers in a slow period.*
_
maybe there was a misjudgment of the size of the market?


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## ukulele (23 September 2016)

Recent price action cannot be just due to share buybacks can it? 

From downgrades to a lot of recent strength?


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## greggles (23 April 2018)

iSelect have been absolutely hammered today after the company updated its guidance for FY18 underlying EBIT. It is now expected to be between $8 million and $12 million, not between $26 million and $29 million as previously advised. Now that's a downgrade.

Scott Wilson has tendered his resignation as Managing Director & CEO of iSelect, effective immediately.

The market reacted swiftly to the announcement and the result can be seen in the chart below. Ouch!


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## JTLP (23 April 2018)

greggles said:


> iSelect have been absolutely hammered today after the company updated its guidance for FY18 underlying EBIT. It is now expected to be between $8 million and $12 million, not between $26 million and $29 million as previously advised. Now that's a downgrade.
> 
> Scott Wilson has tendered his resignation as Managing Director & CEO of iSelect, effective immediately.
> 
> ...




Really don’t understand how these guys aren’t flush with cash? They make a killing being an aggregator, and are much more expensive than Compare The Market to list with. Bizarre.


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## greggles (1 June 2018)

iSelect bouncing back well after its dramatic share price collapse in April when it reached an intraday low of 32c. Anyone who got in under 40c has done very well indeed.

This morning the company publicly acknowledged the 12.21% substantial shareholding of IHA Group, all of which has been acquired since April, and confirmed that it has recently received several unsolicited and non-binding proposals from both listed and unlisted parties in relation to mergers and change of control transactions involving iSelect.

It appears that the predators are now circling ISU. It will be interesting to see how all this plays out.


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## debtfree (7 June 2021)

Will this be the kicker to activate the break out of the 0.35 level and start the trend upwards? Time will tell.


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## debtfree (14 June 2021)

Didn't have to wait long for this breakout.


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## Dona Ferentes (10 August 2022)

greggles said:


> This morning the company publicly acknowledged the 12.21% substantial shareholding of IHA Group, all of which has been acquired since April, and confirmed that it has recently received several unsolicited and non-binding proposals from both listed and unlisted parties in relation to mergers and change of control transactions involving iSelect.
> 
> It appears that the predators are now circling ISU. It will be interesting to see how all this plays out.



Took a while, but the predator has snared this one. ISU has agreed to a deal to be acquired by IHA Group, the same company that owns its competitor Compare the Market.

30c a share, giving it a valuation of $72million. IHA had 29%, and #2 and #3 shareholders Thorney and Microequities Asset Management have accepted the offer so looking like a done deal.

_Since listing; weekly (IPO at $1.85 a share)_


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## System (3 January 2023)

On December 29th, 2022, iSelect Limited (ISU) was removed from the ASX's Official List in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement between ISU and its shareholders in connection with the acquisition of all the issued capital in ISU by Innovation Holdings Australia Pty Ltd.


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