brilliant. Good morning, everyone. Welcome to our interim results. I'm Mark Lewis, the group's CEO.
As usual, I will frame the results before passing over to Silla, who will walk through the financials. Then I'll recap progress against our Reinvent strategy before taking questions. The only difference this time is we might take a commercial break halfway through proceedings. So here we are in our second year of the Reinvent strategy, and I'm pleased to report that the momentum in delivery continues. We've seen encouraging trading in the first half, having once again helped households save over GBP 1,000,000,000 already this year.
Group revenue growth is ahead of the market. And once again, we've seen our diversified revenue streams balance out a range of market conditions across the verticals in which we trade. Delivery of our strategic initiatives continues. Our work to optimize our sites and deliver conversion gains is underpinning our growth. We have relaunched the Money Supermarket brand to enable more personalized services, and we're pleased with the progress as we build out our B2B position and take steps to digitize the mortgage market.
2019 was the year we guided a return to profit growth, and we remain confident in meeting the full year market expectations. Silva, do want to go through the financials in more detail?
Thanks, Mark, and morning, everyone. I have to say it's quite nice to see some familiar faces this time around. But for those of you who don't know me, I'm Cilla Grimble, and I joined the group as CFO about six months ago. As Mark said, my role today is to take us through the financials. But just before we start, to make it really clear, for in this presentation, all of the twenty eighteen numbers have been adjusted for IFRS 16 so you can get a better sense of kind of true underlying performance.
And we've included a pre to post reconciliation in the appendix of your packs. So if we move now on to the financial highlights. And as Mark said, we've had an encouraging start to the year. We continue to do a great job for our customers, saving them over £1,000,000,000 in the half, although that's slightly lower year on year. So why is that?
Well, we're still in the soft motor premium cycle. So whilst switching volumes remain healthy, the average savings per customer has declined, and so that total savings number is slightly lower year on year. Our revenue grew 15% or adjusting for the acquisition of DecisionTech, that number would be 8%. Our adjusted EBITDA grew 15%, so in line with revenues, and that was really a story of two parts, with good cost control helping to offset the anticipated two percentage point reduction in gross margin, and I'll come on to that in a little more detail shortly. Our reported EPS grew 19%, and that was in part due to lower adjusting items year on year.
And as we've previously said, our CapEx is now beginning to stabilize as we've completed several large programs, and that's reflected in that slight reduction in reinvestment rate to 9%. Cash generation continues to be really robust, and we've delivered over £50,000,000 of operating cash. And so we had an encouraging start to the year. And as you'll have seen in the statement, the Board is pleased to announce a 5% increase in the interim dividend. So if we now look at the segmental performance, and once again, you can see the strength of us being the most diversified price comparison business.
Insurance traded well, delivering 3% growth. And growth was particularly good in Home and Car despite motor premiums still not being in growth. And trading and life insurance recovered in the second quarter. Money revenue grew five percent with robust performance in credit, and that was supported by our work on optimization, which helps improve conversion. You'll have seen, though, the performance did diminish as we moved into the second quarter, and that really reflects a reduction in both the availability and attractiveness of promotional products over the half.
So if we move on now to Home Services, and you'll remember, of course, that energy switching makes up vertical, you can see we had an exceptionally strong set of numbers with growth over 50%. And you saw that strength already in our Q1 numbers, and Mark will explain it in a little more detail shortly. But essentially, we had really strong market tailwinds that we have both the tools and skills to capitalize on. If we look forward, though, to the second half for Home Services, performance we expect will be significantly less favorable as we anticipate that the energy price cut will actually reduce in the second half, and we also have a tougher comparative year on year. For completeness, DecisionTech is included within other revenues and contributed £11,000,000 in the half, and we were very pleased with the underlying growth in that business.
If you unpick that from other revenue, you can see that Travel Supermarket had a tough half in what was a weak travel market. As I've already mentioned, our investment in optimizing the customer experience has underpinned our revenue growth. And you can see that within our average revenue per active user, which has grown 16% over two years. As a reminder, this measures the average revenue that we receive from each unique customer who comes to Money Supermarket and completes an inquiry on one of our core seven channels. And that measure is taken on a rolling twelve month basis.
Pounds 16.3 is a strong number and partly reflects our investment into product development team as they continually improve the site so that more of our customers can switch and save. So if I move on now to the full P and L, and as we've already seen, we enjoy top line growth of 15%. Our gross margin fell to two percentage points as expected to 70%. And as we signaled at the full year, broadly half of that fall is due to the inclusion of DecisionTech as their B2B margins are structurally lower than the B2C margins of the rest of the group. We also have the continuing ongoing shift to a customer two mobiles, which, as we previously said, costs us in the region of one percentage point of gross margin a year.
And in this half, we also had a bit of a mix effect, which caused a drag in margin due to the exceptional performance of Cheap Energy Club within MSE, which gives cash back to customers on switch. A disciplined approach to cost allowed us to offset some of that gross margin reduction, so our adjusted EBITDA grew 15%, in line with revenues. Moving down through the P and L. Our depreciation and amortization was in line with plans, and we have 2,000,000 of adjusting items. About onethree of those are cash, and the balance is the amortization of acquired intangibles.
So all in all, a good year, and we grew net profit by 19%. If we look now at our adjusted cost base in a bit more detail, and at the headline level, adjusted costs grew 15%. But again, if you exclude the DecisionTech costs, then costs grew 8% or £9,000,000 And that £9,000,000 is really driven by a couple of things: marketing, as you can clearly see on the slide, but also an increase in our amortization charges due to some larger programs going live late in 2018. So let's move on to marketing. And we're pleased with the success of our brand relaunch, as Mark will describe shortly.
And you'll remember, we signaled at the full year that, that relaunch didn't mean a large step up in TV and radio spend. And in fact, as you can see in the half, that was basically flat year on year. And that's really what explains why our marketing margin at 61% is only one percentage point lower on the year compared to that two percentage point reduction we saw in gross margin. But at a headline level, marketing costs did grow 17%, and you can see that most of that was within the Other category. So again, it's a story of two parts.
It's going be a familiar theme. Other marketing is where the majority of our decision tech costs sit, but also the growth in other reflects the exceptional growth we've seen in energy because that's where the cost of cash back sit that we provide to customers when they switch through Chief Energy Club. In online auctions, we continued with our strategy of bidding to breakeven, and our online spend increased 7%. And if you look at the left hand side of the slide and look at revenue by source, and remember that we attribute this on last click, over threefour of our revenue continues to come direct to site. So we move on to technology.
And as I've already mentioned, our tech investment is stabilizing. And now a clear majority of that spend is OpEx. Our reinvestment rate reflects our stabilization, falling slightly to 9%. We still expect full year tech CapEx to be £11,000,000 and other CapEx to be £3,000,000 as we consolidate our three Manchester sites into one permanent home in Springfield at the end of summer. And finally, for cash.
We've enjoyed strong cash generation in the half. After investing organically in the business, we generated over £40,000,000 of operating cash flow before returns to shareholders. The working capital outflow reflects a seasonal shape to our business, and the dividend payments reflect both the final ordinary dividend and the £40,000,000 enhanced distribution, which we paid as a special dividend in May. And so we finished the half with net debt of £13,000,000 So in summary then, our trading in the first half was encouraging, and we enjoyed exceptional performance in Energy. In the second year of Reinvent, we're pleased with the progress we've made, and our guidance for the full year remains unchanged.
Thanks very much, and I'll hand you back to Mark.
Brilliant. Thank you very much. Okay. Right. So let's have a look at our delivery against our strategy.
Before we do, I want to remind ourselves about the fundamentals of the business, which remains strong. In terms of our market outlook, we're not changing our view on the growth outlook for the market, which remains about 4% to 5% over the next couple of years. But if we look at the moving parts within that, first off, we still forecast a somewhat subdued motor insurance premium cycle. We see prices remaining suppressed, and we expect it is next year before we see any significant movements towards premium inflation. As you've seen, we are trading well within this market, but I do want to be clear that we're not forecasting a meaningful change in the market conditions in the second half.
It's no surprise that I'll report a tough market in travel. This is well documented, and we expect to see the trends from the first half continue into the second. By contrast, in Energy, within Home Services, the market factors combined to provide an exceptional set of conditions in the first half, which we were able to take full advantage of using the strength of the group. We do expect these conditions to correct in the second half, though, as we trailed in our first quarter update. I'm going to walk through this in a little bit more detail in a couple of minutes.
Looking at our users, I'm pleased with the levels of user engagement. Group Net Promoter Score remains ahead of the pack at 73, and revenue from each of our tracked 13,000,000 active users on Money Supermarket has once again stepped forward to £16.3 from £15.9 at the full year. Our marketplace model remains efficient. Silhouette has just covered the margin performance, and I'll note that the cash generation has supported not just the investments we're making in the business but also £83,000,000 of dividend payments in the first half. So let's recap on progress on our Reinvent strategy.
We are very proud to fulfill our purpose of helping households save money. And as you know, there are two sides to our Reinvent strategy. On the left, we have the work to reaccelerate core growth, the main element of which is focusing on optimizing the customer experience of our traditional price comparison model. On the right, we have the broader aspiration to unlock new market growth through the initiatives such as the personalization of the Money Supermarket experience, using B2B to take price comparison to the user and, of course, mortgages. So let's start with reaccelerating core growth.
This focus on optimizing the customer experience continues to work for us. It's increasing our conversion rates and underpinning our growth. Having built out these teams in Manchester over the last year or so, we are now consolidating that product engineering hub into a single permanent office space in the spinning fields area of the city. It's currently being fitted out. We anticipate moving in, in the third quarter.
And we are also relocating a number of the remaining front end engineering teams from our EULO office, which will take the headcount in Manchester to about two fifty around the year end. We're delivering gains across the key verticals, whether that be insurance, energy or money. And as you can see, these teams are now working across both money supermarket and money saving expert. Right. Let's talk about energy and what we've seen in the market since the introduction of the price cap and what we think about our outlook for the second half.
So what did we see? Quite frankly, we saw actually ideal conditions. Why? Well, the price cap came into play at the January. And then a month later, it was announced that it was going to go up 117 and that actually took it to a level that was higher than a typical standard variable rate before the introduction of the price cap.
So any fear that we might have had that public might become a little bit complacent and think that the government had their back was blown out of the water because the media jumped on it with headlines such as the price cap has backfired. And of course, those providers were obliged to communicate to their own customers that their prices and payments would be going up. In the meantime, the prices of the best switchable rates on our sites was falling, and so customers had bumper savings of over £350 to be made by switching. So ideal conditions for us. And as I'll show, we were able to deploy our unique assets to maximize the opportunity for our customers.
At an absolute level of switches, this actually took us back to the levels that we had last seen in 2016 when we had those blockbuster collective deals. I do want to be clear, we do expect that the volatility that the cat mechanic has now brought to the market will see a correction in the second half. The new level for the cat will be announced on the August 7 and will come into force on early October. And we anticipate that price cap will now fall by about £80 with that announcement. So the communication landscape will be one of falling prices for those customers remaining on standard variable rates.
We don't know yet what will happen to the switchable tariffs on our site. We anticipate that there will still be savings, that these will be meaningful savings, discounts to remaining on a standard variable rate, but a correction from the levels that we had seen in the first half. So market conditions were great and ideal, but I'm also pleased by how the business was able to execute both across Money Supermarket and also Money Saving Expert. Our scale allows us to source very strong deals for our customers. In fact, had exclusive switchable tariffs on the site throughout the key period.
As you know, we got our Money Supermarket Energy Journeys up to scratch last year, but we have found further conversion gains since, and we're also driving enhancements to the Money Saving Expert, Cheap Energy Club from our learnings. And of course, in conditions like these, the editorial strength of Money Saving Expert really comes to the fore. We were able to highlight the situation in the market with authority and galvanize users to action to switch and save. Right. Now let's have a look at the progress on new market growth.
Remember, these are longer term initiatives to unlock further growth ahead of the market and our current price comparison model. First, our road map to personalize the Money Supermarket experience is progressing. Since we last met, we have made the credit score available to all users on the web in addition to the CreditMiner app, which we launched late last year, which continues to grow and receive strong reviews in the app stores. But the big event of the half was the relaunch of the Money Supermarket branding, which I'll talk to in a minute. I'm pleased with our progress that we're making in B2B since the acquisition of DecisionTech to pursue our goal of taking price comparison to the user, not just on our own sites.
The impact of DecisionTech is now evident in these first half results, but not yet on a like for like basis. But I'm pleased with the growth rate of that business, which was up 30% on the year. For now, this is driven by growth in their home communications business, but they have also grown the number of energy partnerships, too. On mortgages, we've taken further steps towards digitizing the category. Remember, this is a multiyear effort, but we're pleased with our progress, enhancing the eligibility factors in the journey and deepening our broker and lender integrations.
A number of you have noticed and commented on the trade press coverage of our work with Nationwide in this regard, and so I'll also walk through that. But now let's talk about the Money Supermarket branding. One of our key goals for the half was to relaunch the Money Supermarket brand with an enhanced positioning, building on the inherent trust in that brand but modernizing it to enable us to take to market the broader range of personalized, proactive monetary services that we are scaling. The old advertising, though very compelling and very salient, didn't provide a communication platform for such messaging. At the heart of the new positioning is a deep insight into the anxiety our customers face when dealing with their finances and bills and our unique ability to bring a sense of calm through helping them save money encapsulated by the money supermarket branding device.
And, of course, the Get Money Calm promise. So let's watch the launch
They're always piling up. It's enough to put anyone in a spin. What the futon.
Let it
take you and your money from Ah. To ah. Breathe in as money supermarket gives you lots of clever ways to save a lot by doing very little. Breathe out as you feel a lot more ah, just like Bernice here. Bye, Bernice.
Get money,
Great. Thank you. So the advertising has changed, but of course, that's not all. We have smoothly rolled out a full repositioning and identity across all the customer touch points, including updating about 4,000 pages on our site. I've done a few of these over the years.
There's always quite a lot of risk involved, but I'm pleased to say the team rose to the challenge and oversaw a very smooth launch with none of the negative impacts that you can see to conversion rates when you make a change of this order of magnitude. The brand metrics we are tracking are encouraging, and we're pleased with the progress to date. You will have seen the current advertising promoting the credit monitor proposition, and you'll see further executions in this campaign throughout the year. I mentioned the media coverage of the work we've been doing with Nationwide on mortgages, and we are excited to be working on direct integrations with the largest mortgage lender in The U. K.
I said before, these are early integrations, so let's not get carried away at this stage, But what we have launched is the first version of a direct lender integration. It's a product transfer journey. Remember, transfer is when a customer remortgages but stays with their current provider. This is a valuable transaction for the lender and carries a procurement fee in the market as with other mortgages. So how does it work?
Well, our remortgage journey is getting smarter with the podium capabilities that we established last year. In this case, it can now recognize an existing nationwide customer. It will pull in the very specific product transfer rates from the lender into a personalized result set for the user and offer a direct linkage to the user should they want to take it further. So early days, but I think a very nice sign of the progress and direction that we are taking as we digitize this category. So look, before taking questions, let me close-up.
I'm pleased with the delivery and momentum halfway through the second year of the Reinvent strategy. We're reporting encouraging trading from our first half, supported by continued delivery against our strategy. We've guided 2019 to be a year of return to profit growth. And today, we restate our confidence in meeting the full year market expectations. So let me pause there, and we will open up the floor to questions.
Great. We've also got the phones as well, but why don't we start here?
The first question is on the Money segment. Just wondering if you could give us a bit of a sense of how much promotional activity was there in H2 last year? And what is the underlying growth excluding maybe the volatility? Second question on policy monitoring and credit scoring. Do you have any early indication of how many consumers maybe have started signing up to those particular products?
And maybe a longer term one, but once you get to a stickier consumer, would you consider plugging in some value added services like a home serve would do something like that? A home serve?
You want
to do that?
You want to leave the first. I'll do the scoring thing. Okay.
So if we sort of step back a little bit on money in the first half before I go on into the second half, It was a bit of a story of two quarters and two sides of the business. So what's just as a reminder, what we said at Q1, where we delivered good performance of plus 9% was bear in mind, there was a weaker comp in the prior year, so on average a kind of four year CAGR for that quarter. And then obviously, the reduction to negative 1% in Q2. That was again sort of break it down into the performance of credit and the performance of savings. We've said that we've been pleased with performance in credit in the half.
And if you think about that, there's much more as a sort of risk based product. Clearly, we're able, if you like, to leverage some of our eligibility tools and other things in order to kind of continue to secure growth on that side of the business. On the savings side, it's tended to have been much more promotional side of the business. And certainly, if you look at some of our performance in Q2 and compare it with this time last year, there were some very strong offers available within current accounts in terms of cash back incentives and so on. So it's of it's quite difficult on that side of the business to forecast on a quarter on quarter basis.
We get quite short term visibility on those products, and it can swing quite a lot in the quarter. In terms of then looking out to the second half, remember, second half of last year, we had some very good easy access savings accounts that I think we particularly called out at Q3 because it was a time when Goldman launched its Marcus account. So it was a combination of an attractive rate on a well known brand. So that would be what I would call out in terms of remembering what was driving some of the performance last year.
Yes, think that's absolutely right. So your second question was around proactive monitoring and credit monitoring and so on and how we're thinking about that. So we're pretty pleased, actually. So if you remember, we launched the Credit Monitor app right at the tail end of last year. And one of the things that we said we wanted to do this year was to take that functionality of the score and actually make it available to the broad base of users.
And that's what you've seen us deliver. If you had a look at the web as well as the app, you can now access your credit score from your existing Money Supermarket account. In terms of the app itself, it's getting great ratings in the app stores, the two that it's in. And it's now taking its sort of fair share of downloads in that area. So we're pleased with the progress there.
What you've seen us do in the first half, though, is bring the score functionality right into the core of the accounts on Money Supermarket. So that gives you more of a clue of how we're progressing with this stuff, and you'll see more on the second half in this area. If I understood your third question correctly, it's what do we see this going in terms of where do we see the policy monitoring and so on actually consolidating. And I guess what you're trying to see and encapsulated with the branding for Money Supermarket as building towards a position where we're providing that single place for the customer where they can stay on top of various bills that cause them anxiety and where they would benefit from our help. So you can see a piecing together of the work that we've been doing across the different categories to try and pull that together.
So I don't really have too much I want to say today in terms of what that would get to, to additional categories. But just to remind you, we're already active in a very broad range categories, and that's one of the unique features of ourselves versus the competition and why we think that we have a unique ability to play in this space versus some others in the market. Hi.
It's Ian Wittaker from Liberum. Three questions, please. First of all, if you could just give us an indication just in terms of the amounts that you get for switching. So that you've obviously talked about the absolute amounts, but more interested in sort of trends that you see sort of historically how they've gone and sort of in the future sort of whether you would expect as there were any inflation or indeed deflation in those sorts of the amount that you actually get? The second thing is just in terms of obviously, of your competitors has taken a different route in terms of sort of with WeFlip.
Sort of I know you've been sort of at the view that sort of your strategy obviously is better. But if it turned out that actually they were having better success than expected, how quickly could you switch to a similar model in terms your systems? And I guess the third question is just in terms of and it goes back to the first one. Obviously, of your key KPI metrics now is the average revenue per active user. I just wonder if you sort of imagine that in the future is more of an active KPI, more of a passive one, I.
E. Essentially, sort of would you have control over that amount? Could you, for example, in the future set a target on that? Is it really a function of things that are sort of fairly outside your control?
Why don't you do one? I'll do auto switching. You can talk to three and then I think I might have to build on it.
I'm sure you So let's start with sort of switching. So just so we're all really clear, we basically, nearly all of our revenue comes when somebody comes to our side, runs the inquiry and then passes effectively go through to the provider and completes the switch. So it's all on that sort of success model. And nearly all of it is on a flat fee. So there's small elements where there's an element of commission, but it's not nearly all the flat fee.
So what do we see? We have been we do see variation, as you'd expect, in terms of the product. I'm not going to give you the precise numbers, Ian. But therefore, some of that will swing around depending on what's performing particularly strongly in terms of the vertical mix. Year on year, we do normally get sort of inflationary increases within those CPAs.
Okay. Very good. So let's talk about auto switching. So our position has not changed since the last time that we spoke. So we continue to see lots of sort of innovation around this area.
And we continue to think that actually the market is not quite ready for it just yet. So we haven't seen anyone pull together a very strong and compelling proposition in this area yet. In terms of what we are doing though, we do have all the pieces in place that will allow us to get there when we think the time is right for the market. So we have put in all the work around policy monitoring, identifying when there are savings, giving those options to the user. The final step, though, the delegated authority step, really depends on whether the customer really wants to hand over that trust.
And we believe they are more likely to do it to a very trusted proposition. And then also whether that works for the provider side of the marketplace as well. And so the two sides of that have to align. And our position is we are putting everything in place for that eventuality. We're beginning to see that, that could become a possibility, but we don't think that we've seen it yet.
And just to be clear on that, you just have to do that very, very quickly.
We're not worried that we will miss out on this, if that's the root of your question. Revenue per active user.
Revenue per active user. So you'll remember when Mark took over as CEO, he sort of set out five very clear strategic KPIs. Average revenue per active user was there for a reason. So your question really, think, Ian, was how much of it was is active versus passive. So I've been taking that to mean kind of how much can we directly influence it.
And there are a couple of things, if you look at our strategy, whereby that KPI is particularly relevant. So if you think about a lot of our optimization work, which is really there to drive conversion, clearly, to the extent to which we're improving conversion, that drives an increase in that number and as I talked to. The other piece is really about engagement. And as we continue to move forward with our personalization strategy, the engagement of those users should increase. And over time, therefore, you're more likely to get them transacting across a number of different verticals.
Clearly, is an element to which you're influenced by the market. So I think if when we spoke at some prelims, we talked about the number of active users being sort of flat on the year. So and that was particularly related to the motor premium cycle. So that active user number can change, and therefore, you might get a little bit of movement of that driving into the ARPU. But effectively, the reason it's chosen is because it's core to the strategy.
I am not going to give you a target at this stage.
I'm going do a tiny build to it. So remember, this is a relatively new metric for us. We were able to count an active user on the back of the investments we've made into the platform to give us that single view of the customer across the main categories on money supermarket. So when we launched these, we didn't have enormous amounts of historical data on them, which is one of the reasons that we positioned them in the way that we did. But I would just encourage you to think about the drivers of that metric.
I think we've been pretty clear in that the work to date around our conversion gains, helping those people who start the journey to actually find the right deal for them and choose to act, which triggers a revenue event and the savings for the customer. That is probably the piece that's been underpinning it in the first stages of our delivery. But then, of course, you've got the engagement metrics and you've got the other factors that can drive that growth going forward. Okay. Thank you very much.
Right. We're next. Let's go to Andrew.
Thanks. I've got three questions as well. First one on B2B. And if you can share with us in terms of how Yolked is going, I guess, in terms of engagement, conversion, incremental versus cannibalistic? Anything you can share would be helpful.
The second question also on B2B in terms of kind of how you see that market playing out. It's been interesting that GoCo signed up a contract last week, but some other players playing in that space. So maybe you can give us a sense as to how you see the competitive dynamics evolving in your market position? And then third question is one on 2020. You kind of talked about a return to profitable growth this year, which you clearly achieved on an underlying basis.
What would you use to characterize your thinking for 2020 at this point? Can we be better than profitable growth, like high single digit or not? Or better than this year?
I think I had two questions, not three in there. Did I were there two in B2B? Two parts of B2B. Okay, two parts of B2B.
I can do another one if you want.
No, no, that's absolutely fine. The three question rule will apply, I think. Yes, think that's the right split. So Jalt, we're very pleased with. I think both sides of that partnership are very pleased.
It's now live. It's now trading. It's a great customer experience. I think can't give you any information around sort of scale or cannibalization or those factors other than we remain absolutely confident that there is an incremental opportunity from B2B partnerships. And you don't have to believe any Herculean assumptions to get to that.
In terms of the pipeline, that's looking strong. So DecisionTech are now live powering confused.com's energy proposition, and so they're continuing to grow the energy proposition. We're seeing that we think we have a very strong position in the competitive set of B2B providers. There have always been a small number that provide energy services in that regard, but we think that our proposition is very compelling in the marketplace, and pleased with the progress there. 2020, I want to see how you answer this.
Well, we are not in the game of giving multiyear guidance, Andrew, as you know. And so we've reiterated comfort with where we are for the year, and I will update you as we go through the year on 2020.
Let's stay over here, Joe, then we'll come back in a second.
Please, I'm going to shatter the three question rule and only ask one. So with regard to Home Services and Energy, you gave that slide sort of explaining the differences between 1H and 2H. One thing you didn't really refer to is the fact that you're going to have noise in both halves from the press. Now we don't have a huge amount of back history of energy price caps, but historically, when there have been meaningful fluctuations or just a lot of press coverage, that is generally good. So your sort of characterization that H2 is going to be tough because there's an energy price cap reduction.
I'm interested at the degree to which you think that outweighs the fact that there'll be a lot of noise.
Yes. I mean and then in some ways, this is slightly uncharted territory. But if you think about what we sort of said that full year when we were just about to see the introduction of the price cap, We kind of really said sort of three things, right? The first is the cap has been set at levels where there remain meaningful savings for customers, okay? So it was set at a level where the average savings from moving from a standard variable rate to a fixed well priced tariff from a high service provider would be on average about £250 But the mechanism of the cap and the way that it is determined and the phasing means that we said there would be some more short term volatility around that, and we would see periods where the savings would be above £250 on average, and this is all about average usage.
Or we would see periods where the savings would be below £250 okay? And then we said that we thought the risk would be that people might just get a little bit complacent, right? And remember, best part of twothree of households are still sitting on a standard variable rate despite the fact that they could save in five minutes on our sites. So what did we see in the first half? We saw a couple of things.
We saw that the dynamic of the mechanism meant that the price savings really opened up. So they were good £350 we think that, that is more likely to be a period of under £250 in the second half, so smaller level for savings. We can't tell you exactly what they will be. The mechanic of the cap is pretty clear. That will go down about £80 and we're reasonably confident on that number.
So we still think there'll be meaningful savings, but they will be lower. But I think the communications piece that we saw in the first half, I suspect will be slightly different in the second half. And there's really two sides to it. The first is what is the media reaction? And you had very aggressive sort of headlines.
This energy price cap has backfired was the headline in the Telegraph. And you saw a number of those. I suspect we'll see a lot less of those. And then the providers themselves are obliged to actually communicate to their own customers on a standard variable rate about what is happening to their tariff. And of course, they will be receiving communications in the second half saying that their prices are coming down.
So I think you'll have a very different set of dynamics. We will be working hard to remind people that there are real meaningful savings to be had there. But we do want to flag to you that the first half conditions were truly exceptional, and we will see a correction in the second half.
Thank you. I just wanted to come back to your improved conversion rates. I appreciate you don't like to give the exact figures there, but I get a sense that all the companies are making improvements to their conversion rates or at least the ones where we have visibility. Is that the case? Or are we is yours translating into share gains?
And are you able to quantify on a market share perspective by vertical what those gains might be?
Yes. Well, look, if I were running any of the others, I would also be trying to get conversion gains. So I think you would expect that, that would be the case. For us, remember, there was a specific situation coming out of the replatforming where we had an opportunity to really accelerate that, and we've built that capability now into the business. So I'm really pleased that it's now become a core capability for the business, and you're seeing us consolidate that into a permanent home in Manchester later this year.
And we're continuing to see increasing gains. So this time last year, we reported quite a big step up, for example, on the money supermarket energy conversion position. We've been able to move that forward again. So I'm often asked, is that it? Is the job now done?
And we think that there are a number of opportunities for us to keep going on that journey. Market share data is really hard in this industry. The stuff that we have access to comes with a contractual obligation not to really comment on it. So you will see the reporting of some of our peers, and you will draw your own conclusions. But as we look at the first half, we do think that we've outperformed growth in the market, And you can see some very evident situations of where we have done that, I think.
We're pleased.
Gareth? Davies, Numis. Just a follow-up on the gross margin. 200 bps fall in the first half, presumably two of those factors effectively drop away in H2 with cash back less significant decision tech already in last year. So looking forward and thinking about it sort of medium term, is it just that continued shift to mobile that should impact or how are you thinking about the sort of longer term gross margin?
So when when we sort of gave guidance at the beginning of the year, we said we expected to get a further kind of broad 1% reduction on the back of Decision Tech. They are broad numbers. So you're correct, we won't get the further deterioration in the second half as a result of that from DT. We continue to see the ongoing shift to mobile. So we're still continuing to see significant increases in visitors coming through from mobile in the first half, and we expect that sort of one percentage point reduction to continue into the medium term.
Great. Let's go then.
It's Bob Liao from Macquarie. Just had a question on sort of the idea of accelerating core growth that you're seeing, which is obviously the objective. But when I look at the financials, we're seeing degradation, if anything, at least excluding the energy, side of things. And clearly, I would have thought the energy side of things was more driven by the market rather than any sort of initiative that you guys are taking. I can see all the sort of conversion sort of figures improving things.
But when does that translate into genuine acceleration in financials, genuine improvement in marketing margin?
Yes. So I think you'll probably want to build on this a little bit. If you step back from what we said, though, we've also reported 15 growth, including DecisionTech. And when you strip that out, we think that we have grown in the first half above the market growth rates, which we still hold at about 4% to 5% on a two- to three year view. So we think that we are achieving that goal and have done in the first half.
Yes, you can point to energy performance as exceptional, and then we took full advantage of that situation as well. But I think if you look across the verticals, whether that is the more risk based pricing that we've seen elements of money that you've seen or whether indeed that is the insurance market, we're pretty pleased with our position relative to the market in those situations. Do want you to talk a little bit more about the P and L leverage?
Sure. I just I mean, remember in Energy, Bob, as well, I mean, in addition to all of the sort of marketing sorry, market points, there's an awful lot that we have done ourselves. It means that we've grown significantly ahead of the market, we believe, in that half, and that's optimization. That's the work that our commercial guys have done to secure really good deals pretty much all the way through the half. And it's the ability of MSE to kind of launch all of that with editorial strength.
So I think there are things which play to our heartland in that piece as well. In terms of then what it looks like in terms of marketing margin, clearly, you've seen at the and we talked about this at the full year as well, marketing margin reducing by a lower level than gross margin. We're comfortable with where we are in terms of brand spend. We think that, that gives us a good kind of national share of voice. And so we expect that you'll continue to see that hold at a lower level of growth than top line.
What we are seeing and what we've I've already talked to you in terms of gross margin is that continuing shift to mobile. We still expect to continue to see that reduction in gross margin for the medium term. But clearly, what we're looking to do within personalization is intended to offset that again over the medium term.
Anything on the phone? No. Looks like we are done. In which case, you very much. Enjoy the rest of your days, and thanks for coming