Hello, and welcome to the Money Supermarket Group prelims for 2020. I'm Peter Duffy, the CEO, having joined six months ago now. And I'm also gonna be joined this morning by Silla Grimble, our CFO, for this prerecorded presentation. We're gonna be holding a q and a session at 09:30 today. That's Thursday, February 18.
The details of which are gonna be on our investor relations website, but also in today's r and s. Now I'm gonna say a few words. I'll then hand over to Silla for the financials, and I'll then come back and talk you through the priorities going forward. But can I begin by saying that Money Supermarket is a great business? We we operate in attractive markets with a lot of potential, and that means we can confidently and optimistically look forward.
And what makes us different? Well, I start by our purpose, which is helping households to save money. It's the reason why I joined the group. I think it runs through the organization like like the letters in a stick of rock. Like many companies, we have a skilled and capable team.
But the thing that fuels us is this desire to do the right thing by customers. Now a second difference, also appealing for me, is the range of brands and routes to markets that we have. So so that's Money Saving Experts, a publishing led, whole of market offer, which is based on independent editorial advice for anybody who wants to understand financial issues, and it's one of the most recommended financial brands in The UK. We've got Money Supermarket itself, a leading price comparison website that offers customers numerous ways to save through advertising led model. And then we've got DecisionTech, which is our our b to b brand, providing comparison services through other people's brands.
And then, of course, travel supermarket with its particular strength in the package holiday comparison market. Now they're all strong brands. They operate in defined markets, and we have the opportunity to underpin them with common technology and data platforms, essentially building once for multiple brands. And remember, the breadth of what we offer people, so many ways to save money across our range of products, is a great opportunity to win share of wallet. Now coming into 2020, we forecast that our markets will grow by around mid single digits.
Now, of course, we then face COVID challenges, particularly with travel and money, But we should still expect that kind of growth rate once we're through this pandemic recovery period. And in the meantime, I'm proud of how this business has adapted to the challenges of the COVID period. Productivity, but importantly, colleague well-being have been well maintained, and we've continued to contribute to the community through our partnership with The Princess Trust as just one example. Importantly, we've also achieved beyond carbon neutral status. So let me now hand over to Silla, who'll take you through the 2020 results, and I'll be back in just a moment.
Thanks, Peter, and good morning, everyone. Looking first at the financial highlights then, clearly, 2020 was a year dominated by COVID. In the circumstances, our performance was reasonable. Revenue fell 11% or 4% if we exclude our travel channels of travel supermarket and travel insurance. They were heavily impacted by COVID restrictions and from q two onwards, ran on average at about 10% of prior year levels.
EBITDA fell by 24%, more than revenue reflecting gross margin pressures, which was slightly offset by lower OpEx, and reported EPS fell 27%. We remained committed to our tech investment, holding it flat year on year at £34,000,000. And as a result, our reinvestment rate grew given the decline in revenue. Cash flow remained strong with no deterioration in working capital and that cash flow strength, our strong balance sheet and our confidence in the business mean we're pleased to hold our full year dividend in line with prior year levels. I do appreciate visibility is difficult currently, so I'm going to spend some time describing the dynamics we saw last year to help guide as much as possible on what we may see going forward.
So let's start with the overview of revenue by vertical before moving into the shape of revenue we saw through the year. We were pleased with our Home Services performance with revenue flat year on year despite a very strong 2019. In Insurance, revenue fell 8%, but excluding travel was flat year on year. This was a tale of strong market growth in car, particularly in the second half, offsetting weaker home and poor life performance. Money was the hardest hit of all of our verticals.
As we've previously highlighted, it was supply challenges that caused this, whether that was a lack of promotional products in banking or tighter lending criteria in borrowing. In other, DecisionTech continued to perform very well with good double digit growth, mainly driven by strong home comps performance, but that was offset by travel supermarket, which as I've said has struggled given the travel restrictions. Let's look at the shape of performance through the year now, give you a sense of the 2020 exit rate, but also what we've seen more recently in the latest lockdown. So starting with insurance, our largest vertical, and here, 2020 started well with performance benefiting from a tailwind in travel and life as the prospect of the pandemic loomed. In the spring lockdown, we had major disruption across all channels, so revenue in Q2 fell significantly, down 22% year on year.
As we exited Q2 and went into Q3, we enjoyed a particularly strong car insurance market, which we think included some pent up demand. Car still grew in Q4, but to a lesser extent than Q3. Home insurance fell year on year in Q3, but recovered to low growth in the final quarter, and Life remained in decline throughout the second half, reflecting trends seen in the broader market. As we've moved into 2021, our Insurance performance is reflecting lockdown measures again. We currently expect Q1 to be similar to Q2 last year in terms of year on year percentage decline.
So whilst recent declines in car, home and life are less marked than we saw in April, will shortly be lapping that strong life and travel insurance performance I've already mentioned. So moving on to money, and again, 2020 started well with both banking and borrowing returning to growth early in the year. But after that, we saw a material decline driven by COVID. The initial drop in consumer demand that we saw early in the spring lockdown soon rebounded, and indeed our visitors grew ahead of the market for the full year. But as I've said, it was supply issues that challenged performance.
For us in borrowing, it's both about the number of providers we have on-site, and that strongly recovered as we went through the year, But it's also about the lending appetite of those providers. That's what impacts the number and attractiveness of results a customer sees. Providers tightened their scorecard significantly in the spring lockdown, which heavily impacted our conversion, and we saw only a modest recovery in conversion as we moved into q four as those criteria loosened slightly. As we moved into 2021, those tight lending conditions have been compounded by a market wide drop in demand similar to that we saw in the spring, and that's amplified in January as it's traditionally a peak demand month for borrowing. Finally then to Home Services.
And in the first half, we were pleased with revenue growth of 11% driven by strong tariffs and our ability to amplify them through MSE Editorial. Throughout the year, COVID helped by focusing consumers on the need for resilient and fast broadband, so we saw good growth here in both Home Services and Decision Tech. As we moved into the second half, the energy price cap fell by £84 and wholesale prices also began to rise sharply. That meant savings available to customers fell dramatically. In the first half, they were over £400 but by Q4, that had fallen to under £200 impacting our conversion.
Savings levels continue to be very low as we've moved into 2021. Revenue to date is down significantly year on year as we're also lapping a strong comp when savings levels were high. Of course, we've recently had the announcement of a price gap increase, this time up £96. Performance may improve then as the quarter progresses, but do remember the saving we show customers only changes once energy providers have published their new detailed rates for each region. Let's turn now to gross margin, and you can see it fell just over two percentage points in the year.
About two thirds of that fall was due to the poorer conversion in money I've mentioned. The main driver rest of the reduction was the lower SEO positions we saw in insurance in h one. The impact of that SEO in the second half was negligible given we were lapping already weaker positions in 2019. And Peter's going to come on to describe the changes we're making to help improve SEO going forwards. I thought it worth also describing some mix impacts, although they've broadly netted out in 2020, are important to understand going forward.
We've previously talked about the shift to mobile creating a headwind on margin, and this did continue in 2020. But across the year, this was offset by a significant decline in tablet traffic, which particularly in the second half shifted to desktop, which has higher margins than tablet. The other call out I'd make in mix is within channels. Margin benefited from a mix out of travel insurance, which is a lower margin channel for us, but that was offset though by the strong relative growth of the DecisionTech B2B business, which as you all know has structurally lower margins than the rest of the group. Moving on to costs, and these fell 4% in the year.
Whilst we took actions to control costs, for example, redeploying people from channels that were COVID impacted into vacant roles elsewhere in the group, we also continued to invest for future growth. The main driver of the lower cost was staff costs, which was £6,000,000 lower year on year, driven mainly by lower incentive accruals. Whilst marketing costs were broadly flat at £150,000,000, the mix of these did change as I'll come on to. Looking forward into 2021, I expect OpEx, and here I mean admin and distribution expenses before depreciation and amortization. I expect that OpEx to be slightly higher than 2019.
This reflects both the consolidation of CYTI and the ongoing shift to OpEx from CapEx. Moving on to marketing costs in more detail then, you can see that changing mix in spend I mentioned in the chart. In online spend, our approach of bidding up to breakeven on first transaction remained unchanged. Clearly, we did adapt bidding to the changes which we saw in traffic and conversion, and so online spend fell 13%. TV and radio increased £5,000,000 in line with the investment we'd flagged, and the increase in the other category is largely driven by the growth of decision tech leading to higher affiliate costs.
The marketing margin reduction of four percentage points then reflects the gross margin trend I've already covered and that increased level of brand investment. And you're going to hear from Peter on the opportunities we see for more efficient customer acquisition going forward. Looking at cash now, and I'm pleased that in the year, our cash generation has remained strong, allowing us to pay over £60,000,000 of dividends, invest into the business and still hold net cash flat year on year. Working capital was also flat. It's worth highlighting that in creditors, deferred about 8,000,000 of VAT payments into 2021 under the government scheme, but this was offset by that lower incentive accrual I've already mentioned.
Cash CapEx was 11,000,000, and we also paid £4,000,000 of deferred consideration from the acquisition of DecisionTech and 3,000,000 for the acquisition of our initial stake in CYTI. We also extended our RCF, which now matures in September 2023, So we have access to £90,000,000 of committed funds under that facility and also an accordion option over a further a £100,000,000. So as we've seen, we continue to enjoy strong cash generation and our framework for how we deploy that cash remains unchanged. Funding organic growth remains our first priority, then comes our commitment to the ordinary dividend. After this, we'll look to m and a to support and accelerate our strategy.
And finally, as ever, we remain committed to returning excess capital to shareholders. Turning finally then to outlook. And as I described, our markets continue to be impacted by COVID, and we're lapping a good q one twenty twenty performance. More broadly, the pace and shape of easing of lockdown measures and how quickly money providers ease their lending criteria will clearly determine our trading shape this year. That level of uncertainty is reflected in a very broad range of consensus for 2021 EBITDA from 129,000,000 to £96,000,000.
Whilst the macro uncertainties significantly impact visibility, reaching the upper end of that consensus range will require strong and rapid recovery in money and travel related channels. If the dynamics in Money are close to those we saw in q four and travel restrictions remain in place, we expect adjusted EBITDA to be closer to the lower end of the consensus range. Given the current trading I've described and the likely shape of trading recovery, I do expect revenue and profit performance to be firmly weighted to the second half. Despite the current uncertainty, we remain confident in the group's long term growth prospects, and I'll now hand you back to Peter to describe those in more detail.
Thanks a lot. Now I wanna unpack some of this confidence that I spoke about at the start. So here are a few observations about where I see the opportunities. And perhaps I can begin with the reinvent strategy, which essentially said we should run the core business more effectively and then look at some sensible additional ways to grow. And I certainly heard no significant challenges to that strategy.
In fact, the questions I've heard have all been about execution, and I share that view. We need to deliver against the promises already made. So that means that this morning won't be about a three year investment program or the kitchen seeking of profits. I just don't believe that's what's needed. But equally, please don't read that as a lack of ambition or indeed that we have a perfect business with a future proof tech platform because that certainly isn't the case.
But the group does need to refine its growth momentum. We do need to do m and a where it makes sense to do so, and we need to be prepared to change with the customer and the market as technology opens up new for them to save. But much of this is self help, by which I mean using efficiencies we can find in the existing model to fund the investments we need to make tomorrow. So you all know that we operate in a marketing heavy industry, partly because of how we've done this in the past, but partly because customers come to us relatively infrequently in what is a low engagement product area. So we have this extensive marketing loop, lots of advertising, lots of PPC or paid search to acquire a customer who can then frequently go on to only buy a single product.
And then we seem to go through that whole cycle again at renewal. So if I contrast that with other digital sectors, it does feel that price comparison doesn't have the same focus on customer lifetime management. We don't really look at concepts like vintage or analysis. And I think this is the thing that's really got to change. We need to get customers to come back to us directly and then keep coming back because we can offer them such a a broad number of ways to save.
So going forward, the strategy is gonna have three objectives. Firstly, we've gotta get better at attracting our customers in the most efficient way possible, whether that is through smarter PPC, strong SEO performance, or sharp differentiated advertising. Secondly, we're gonna need to retain our users better, making it easy for people to to reswitch with us on renewal, but also growing our relationships with them by getting them to buy more. And both of those that should then directly support and ultimately improve our margins. And then third and finally, the business needs to continue to expand in sensible and profitable profitable ways.
Now what underpins and enables these objectives? Well, this group has spent a lot on technology over the years, and we do have a reasonable platform as a result of that. It's not perfect for 2021. Some of that investment dates back a number of years now. But what it is is is what's known as a micro service or a componentized technology architecture.
And it also means we're almost entirely cloud based. And it also means we extensively, although not completely, use APIs. So all of that is good. But what there isn't is a common infrastructure across all our brands. And our working practices, really, they could be a lot better better in a number of areas.
And also, like many companies, we offer some level of of tech debt or or technical op obsolescence, in other words. And we certainly aren't always as consistent as we could be. But my message here is that it should be possible to remedy much of this with really limited impact. So so I see the work to do in our technology area, again, is very much self help by which I'm saying it's doable within existing spend budgets. Now data means more work.
I've delivered enhanced products for customers, new revenue streams based on data and data science in other business. I did it at Just Eat. I did it when I was at EasyJet as well. And if we're going to do this at Money Supermarket, we've really got to improve our data capability. So we've already started doing this over the last few months.
We've we've hired fresh talent. We're centering our approach on Google Cloud platform. We're bringing together all of our data for for real time reporting, marketing, but importantly, product enhancements. And in turn, this is gonna become our platform for data science, for AI, for machine learning. And, again, this is all achievable within our existing cost budgets.
And I'm hoping that you're gonna start to see some results towards the second half of the year, but I'm gonna come back to that in a moment. But can I now go on to talking through these three major objectives and what we need to do starting with attracting customers more efficiently? Firstly, PPC, which is our biggest marketing cost. We're in the process of moving to a new PPC bidding platform. That's gonna be one that allows us to optimize our bidding decisions at a much more granular level and in real time.
But importantly, it's going to allow us to use our developing capability with data science better. And the difference here is gonna be not just that we're improving our bidding strategies, but we're gonna do that through the real time application of our own data. And next is SEO, where we've speeded up changes to our content management platform. Some channels are now already live with faster page speeds. They've got leaner, more efficient pages, and a series of other technical advantages.
And this is gonna help us deploy new content faster onto the site, all of which should help our natural search rankings. Now above the line advertising is still gonna be very important, but the brand has to be simply and sharply communicated to customers. It has to hold its own in the market against some known and loved competitor campaigns. So we're in the market now to check if we've got the best creative to do that. And, of course, efficiency also includes the customer experience when they come on the site, how easy it is, and how compelling are the offers, which is essential for any online digital business.
I'm gonna speak about that in a moment as well. Now can I move on to retain and grow? We've got to make returning easy for customers, which in turn means stronger CRM or customer relationship management. So just as an example today, if you if you switch your energy provider with money supermarket, we're not emailing you when your tariff is expiring. It's the same for pet insurance and for a number of other products.
We're gonna fix this as soon as possible. Energy will be done this half. And we're gonna use our product capability to productize renewal. What do I mean by that? I mean something similar to what the market has called auto switching, which I will speak about just in a moment.
But we've got to also cross sell. Got to get people to understand how much more they could save if they use the small, not just their car insurance, but also their home insurance, their broadband, etcetera, etcetera. And this is gonna come through changes to the product. And by building a recommendation engine that generates informed suggestions for a customer that they will then see consistently across all their interactions with us. The customer dashboard is the
This is where we're gonna be combining monitoring tools, relevant articles, prompts towards further switches. You can see it here on the right. And it has to be consistent across web, mobile, app, email marketing, the same message regardless of how the customer touches us. Now up to now, we haven't had a data platform or we approached the product to do this at scale. So this is an important area for us to focus and to deliver.
And the dashboard is a good way to talk to our customers by showing them relevant and personalized content. Credit Monitor is a really good example of what we can show on it because it demonstrates what we can do if we find the right ways to engage. Credit Monitor now has almost a million users who deliver a higher profit contribution by more than 50% in their first year. And why? Because they're inquiring more often, they're inquiring across all channels, and importantly, by coming back to us directly.
Now undermitting all of this, as I mentioned earlier, is a need for excellence in data management and data science. And currently, we have data in different places, on different technologies, and as much that we actually don't even capture. So our ability to repurpose it for use across all our products, analytics, and data has really been quite limited. Now the cost investment for this fix, again, I believe can be funded through existing efficiencies. We started working with Google Cloud Platform and Braze already to bring the data together into one place.
So we can then deploy leading edge CRM, data science reporting, everything you'd expect from a modern digital business. Our first CRM campaigns are gonna be delivered in a few weeks, and we'll soon be able to then feed that data through to our product platforms such as a dashboard, and then in turn begin to start the machine learning algorithms to begin to hone the proposition. Now I said I'd speak about auto switch, and I'm gonna return to NSC's energy auto switch as an example. In energy, we actually introduced two new journeys last year. Something called pick me a tariff and also Autoswitch, which is essentially pick me a tariff configured to repeat the process annually.
And broadly speaking, we've seen a fairly even split between the traditional DIY journey and then the two new journeys. So a third, a third, a third. I guess to me, that's that's no surprise that we see that sort of mix because different people want different levels of control. And, essentially, it says we've got a good solution for everybody. Now the picking option within Pick Me A Tariff is genuinely helpful.
So we know that customers struggle to to choose a supplier. Weighing up, say, green credentials versus service versus tariff length versus price. Pick me a tariff makes this really simple by taking these preferences and then returning personalized results based on individual preferences. Energy providers like it too because they can compete on more than just price. And in turn, that means they're staying on the panel, whereas for auto switching based purely on price, that isn't always the case.
So so far, over 70,000 users have switched via Pick Me a Tariff, and with a further 60,000 switched up for the auto switch every year proposition, both are converting really well as you can see in the charts. But stepping back, the objective here is to secure free recurring traffic. It's it's key to us first stabilizing and then growing our margins. So it's a good example of what I'm describing as productized renewal and something we're exploring in in other categories, in other verticals, in other areas. Now moving on to expanding our offer.
I want us to think broadly about how we're gonna win in key markets, both organically So that means we're very open to m and a where it makes sense, particularly if it's taking us to places adjacent to our business today or where it's having complementary technology Now recently, expanding our offer has meant b to b through decision tech and mortgages. Now decision tech has been a great acquisition. We've we've taken b to b into energy.
We now have 23 partners, and you can see some of them on the right here. We've leveraged our existing group infrastructure and our commercial arrangements, joining these with DTE's account management skills. So the preexisting business has grown really successfully. But I guess the one thing I'd like to shine a light on today is the excellent engineering capabilities of DT. It's a real jewel in our crown with skills and approaches that I'm I'm keen to share more broadly across the group.
So I've been very impressed by the innovation and the drive shown by the team at Decision Tech. I I I think it's really, really great. Now moving to mortgages where the goal is to build a platform that allows customers to search out best deals, but then for the customer's application to seamlessly integrate into back end systems of the lender. Now ultimately, we're gonna do for all four use cases that you're seeing on this slide. But our focus at the moment is very much on remortgages.
Excuse me. As this is a large part of the market and and relatively easier to digitize, Over 60% of our mortgage revenue comes from remortgages. And the transformative element of this is to build deeper integrated connections into lenders. We now have seven truck product transversive lenders. We've added another five this year, which is when you remortgage with your existing lenders.
So this option is simple for the customer. It's good for the lender. It has good economics for us as well. But we've also launched the market first decision in principle integration. We did that early last year with Nationwide, and then we've added Santander in November.
And, again, here, the economics are good. But to translate this into meaningful revenue, we're gonna have to add further lenders, and we need to get more of our mix to come from these products. Now this is a slow process. It was always going to be. But mortgage lenders do want this, but they're hampered by their legacy systems.
So even if the prize is a few years away, it really is a prize that's worth us pursuing. So that's the strategy. But before we look at execution, let's take a quick look at the regulatory backdrop, two in particular, one more medium term, one more immediate. So in December, we have the government white paper on our carbon net zero future, which they're talking about implementation 2024. That contains some early thoughts on ways to drive more energy switching, and the proposals look interesting, and there may be opportunity for us.
But given the time horizon, I'm gonna park that for now. More immediately, we have the FCA general insurance pricing review. They they publish proposals in the autumn. Responses have now been submitted. And the final policy statement will come out in quarter two, and there's gonna be an implementation period of at least four months.
Now I think two relevant points for us. First, the removal of price walking in car and home insurance. Basically, a proposal to equalize pricing for new and existing customers. We support this intention. It aligns well with our purpose.
There's some commercial risk for us here. But remember, we're a well diversified business. Car insurance in '29 was a bit under half of our insurance revenue. Home insurance, quite a bit less. And remember, there are lots of reasons to switch.
Insurance risk appetites change, customer's personal circumstances change, and the one place where they can check they are getting a good deal is on a price comparison website. And my second point is that the proposal to make it easier to opt out of auto renewal, that's across all of general insurance, not just home and car. Auto renewal has been a real pain point for customers. It acts as a barrier switching. So this proposal is a very, very good thing and would likely lead to enhanced switching levels overall.
So the impact on us will depend on the final regulation and the implementation date and how that nets out, but there's risk and there's opportunity here. So, Valerie, let's talk about execution. My view on joining was that some parts of the organization were too complicated. They were unclear in terms of process ownership and direction, not everywhere, but enough to put a break on getting things done. So we've made some changes.
First, we've appointed general managers who now align and prioritize all of our commercial, product, and tech priorities. We have one leading each of our verticals. The clarity here is gonna make a big difference because previously, accountability sat within each function leading to competing priorities and a lack of single mindedness. I do think this is very important. Secondly, in insurance, we've completed the acquisition of our partner CYTI.
So we can now own those journeys ourselves and integrate pet, live, travel with home and motor rather than run them as separate businesses. Perhaps the biggest change is in in home services where we've integrated the b to c aspects of precision tech. Right? That's broadband and mobile with Money Supermarkets home services. So this is not just more efficient, but it's actually bringing DTE's expertise right into the heart of the business, that that product engineering capability that I mentioned earlier.
And finally, the exec now has data science and data engineering around the table, which is essential for for a business like ours. Now there is much more to do, but these changes alone are gonna make a difference on how we deliver and how we build on our data advantages going forwards. So I'm now gonna wrap up. This is a great business operating fundamentally attractive markets despite what we're seeing right now in in money and, of course, travel. There is a lot we can do and we will do to improve.
The work has already started. Challenging that expensive marketing loop through efficient acquisition, we're on that already. Getting our customers to stay with us and buy more from us, retain and grow, is a major prize for both revenue and margin. This is a huge area of focus as we begin to look to productize renewal and build out our data capabilities. And then, of course, expanding our offer, which we will look to do as and when the right opportunities arrive.
We're making progress on all of these fronts already. We've got the right plan, and as we set ourselves up to deliver better against that, it leaves me really excited and optimistic about the opportunities ahead. So I'm gonna be looking forward to sharing the journey with you. But, also, in the meantime, I'm gonna take your questions a little later this morning. So with that, I'm gonna thank you and hopefully speak to you later.