annual report 2007 - the Admiral Group plc

18 FINANCIAL REVIEWConfused.com2007£0002006£000Confused.com profit 36,727 23,080Confused enjoyed another year of significant growth in 2007. Increased media activity (alongwith the return of large numbers of previous visitors to the site) led to an increase in the totalnumber of insurance quotes provided by Confused of 43%, to 13.0m from 9.1m in 2006. Revenueincreased by 81% to £69.2m from £38.5m.Operating profit rose 59% to £36.7m from £23.1m in 2006.Confused also increased its share of the home and travel insurance markets by improving marketcoverage and panel depth, and revenue growth has also been achieved in a number of othergeneral insurance areas including van and motorbike insurance. Home insurance quotes increasedby almost 80% to 0.9m from 0.5m, whilst Confused also gave 0.5m travel insurance quotes (upsubstantially from just over 0.1m last year).As noted in the Chief Executive’s statement, Confused faced a significant increase in the levelof competition in the motor insurance price comparison market during 2007. In spite of this,Confused maintained its position as market leader. Advertising spend by the main competitors inthis market has grown substantially over the past year and continues to grow into 2008.International operationsBalumba has completed its first full year of trading and has progressed well. Managementare pleased with the development of the business, which has grown ahead of plan and is wellpositioned to continue to grow market share and move towards profitability. The Europeanfigures above show Balumba made a loss of around £0.7m in the year (the net effect of theunderwriting loss, offset by ancillary profits).AdmiralDirekt launched successfully in Cologne, Germany during October, just under one yearafter Balumba. The German market brings new challenges, not least the large proportion ofmotor policies that incept 1 January. AdmiralDirekt sold around 9,000 policies in its short periodof trading, managing to commence operating in time to target the January renewals. The businesswill continue to develop its infrastructure over the coming months, building towards the nextpeak period in Q4 2008.The Group’s Italian motor insurer is expected to launch later in the year. The business, basedin Rome, is making made good progress towards launch in all the key areas (management team,premises, IT system, pricing and marketing).Earnings per share (EPS)Earnings per share rose 22% to 48.6p from 39.8p in 2006. The difference in the increase comparedto pre-tax profit growth (which was 23.5%) is due to the issue of new share capital in the year tothe trustees of the Group’s share schemes.TaxationThe taxation charge reported in the income statement is £54.7m (2006: £43.6m) representing30.0% of pre-tax profit (2006: 29.6%).Refer to note 13 to the financial statements for further detail on taxation.