tcb and quidco profits

richard@imutual
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tcb and quidco profits

Post by richard@imutual » Tue Nov 06, 2012 9:59 am

As previously discussed here and here, it's useful for imutual members to see the financial performance of the large, established cashback sites; if only to get an idea of our potential :)

tcb have just published their accounts for the year to 31 Jan 2012 (figures in brackets are for the previous year):

TURNOVER £21,185,788 (£15,511,786)
Costs of sales £18,335,076 (£13,835,296)
GROSS PROFIT £2,850,712 (£1,676,490)
Admin expenses £1,252,329 (£684,470)
OPERATING PROFIT £1,598,383 (£992,020)
Interest etc £65,181 (£50,217)
Exceptional items £1,074,255 (£0)
PROFIT BEFORE TAX £589,309 (£1,042,237)
Corporation Tax £101,773 (£281,200)
PROFIT FOR YEAR £487,536 (£761,037)

The two directors received £318,500 in remuneration and dividends.

From a corporate point of view, it shows tcb to be a successful, growing company with decent profits. Well done, tcb :) A few observations....

"Cost of sales" will largely consist of payments to members. Whether it includes anything else of significance is not stated. e.g. the £10 tell-a-friend payments must amount to quite a bit; these may or may not be included in that figure. Anyway, the gross profit (difference between income received and amount paid to members) has increased from £1.67m to £2.85m

Despite that, the pre-tax profits have actually gone down from £761k to £487k, for two reasons:
- Overheads have nearly doubled from £684k to £1.25m
- In addition, there is an "exceptional item" in the form of an advertising campaign costing over £1m

I was slightly surprised to see advertising be categorised as an exceptional item, but then again I'm not an accountancy expert and if it truly is a one-off then I guess that makes sense.

And no doubt this money spent on advertising makes sense for tcb in terms of their strategy and objectives; I expect next year's accounts will show a significant revenue increase as a result of this investment. Quidco invest similar amounts in advertising and we ought to be grateful to both for the extent to which this helps push the cashback concept in general. :thumbup:

I think imutual should tread a different path though, and actually make it a USP of our company that we spend minimal amounts on advertising. Surely it's better for us to rely on word-of-mouth recommendations by our members, so we can pass on the maximum amount of our income as cashback. That strikes me as a very "mutual" approach ;)

As shown in our latest accounts, our own overheads for the year were £37,430. Of course, quidco's and tcb's admin expenses help to pay for staff who develop new features and negotiate some really good deals. As imutual grows we will also have to accept increasing costs as a means to generate more money-saving opportunities for our members. But I'd like to see if we can contain those costs as much as possible so that we pass on the maximum benefit to you; perhaps by getting your help with aspects of the site, as with our shares-for-posting-deals initiative.

By way of comparison, quidco's results to 31/7/2011 were as follows:

Turnover £43,471,693 (£32,077,869)
Cost of sales £37,956,412 (£28,929,081)
Gross profit £5,515,281 (£3,148,788)
Admin expenses £3,682,468 (£2,216,402)
Operating profit £1,832,813 (£932,386)
Interest £22,223 (£11,027)
Pre-tax profit £1,855,036 (£943,413)

I hope this is of interest. The purpose of posting these is not to be critical of competitors but to ask the question: "If we could achieve a similar size, what would we do differently?" BTW if the answer is "nothing" I may as well pack up and go home! :shock:

Anyone got any thoughts / comments?
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Re: tcb and quidco profits

Post by kevinchess1 » Tue Nov 06, 2012 11:21 am

Can't believe we hav £1,ooo,ooo+ just sitting in bank live 2 think we distrube some amongst members, Quiditchco and Tcb haven't been goin 1o years yet either so there's proof of rapid growth
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Re: tcb and quidco profits

Post by richard@imutual » Tue Nov 06, 2012 11:38 am

As at 31 Jan, tcb had £5,125,430 "cash-in-bank / at hand", in addition to debtors of £5,861,657 i.e. money due to be paid to them by retailers. But they also had creditors of £10m (almost all of which would, I guess, be money due to members). So the argument for hoarding so much cash would be that they need it to cover potential payments to members.

Obviously, it's very important to members that their cashback is secure. imutual takes a different approach by getting its directors to personally guarantee any awarded cashback, though this would become less of a reassurance once the amounts involved got into the millions :shock: That's an issue we need to consider as we grow, but would be a nice problem to have :)
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Re: tcb and quidco profits

Post by Luke_PieStalker » Tue Nov 06, 2012 1:08 pm

No matter how big Imutuals gets, could you please take this opportunity to promise the following -

A Television advert featuring an annoying fat man dressed in green and orange will never be done in the name of imutal...PLEASE.

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Re: tcb and quidco profits

Post by richard@imutual » Tue Nov 06, 2012 1:26 pm

If that ever happens, you always have the option to vote against the directors at the AGM ;)
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Re: tcb and quidco profits

Post by sdesousa » Tue Nov 06, 2012 2:32 pm

In the seventies and eighties:
Cars made by Austin-Rover
Shop at Woolworths
Cameras from Kodak
Chemical manufactured by ICI
Where are they now?
They all lost sight of their customers believing they were too big to need to care.
I have had increasingly poor customer service from TCB and as a result am using them less than before. Quidco not worth £5 ahead of competition IMHO.
I-Mutual to my eye deliver on the cashback promised and as a result I use them increasingly for purchases as well as the dailies.
Richard, you ask how to diffentiate. Continue to demonstrate the conversion from click to payout ratios we have, continue to provide customer care that is here. Having 400, 4000 or 4m members for a site doesn't make any difference to the user (or their bank balance!). If the offer is competitive and is delivered on people will come back and build the site further.

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Re: tcb and quidco profits

Post by disneyfan » Tue Nov 06, 2012 2:45 pm

sdesousa wrote:In the seventies and eighties:
Cars made by Austin-Rover
Shop at Woolworths
Cameras from Kodak
Chemical manufactured by ICI
Where are they now?
They all lost sight of their customers believing they were too big to need to care.
I have had increasingly poor customer service from TCB and as a result am using them less than before. Quidco not worth £5 ahead of competition IMHO.
I-Mutual to my eye deliver on the cashback promised and as a result I use them increasingly for purchases as well as the dailies.
Richard, you ask how to diffentiate. Continue to demonstrate the conversion from click to payout ratios we have, continue to provide customer care that is here. Having 400, 4000 or 4m members for a site doesn't make any difference to the user (or their bank balance!). If the offer is competitive and is delivered on people will come back and build the site further.
I agree with the comments about TCB - I (and others) are constantly needing to chase up promised cashback which is taking months. Many disillusioned customers on the forum (myself included) and if I ever do get the cashback I was promised I won't be using them again. The customer service on iMutual is second to none so please keep it that way.

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Re: tcb and quidco profits

Post by roger » Tue Nov 06, 2012 5:43 pm

Potential problem with any business is that, while it remains small, it probably delivers good service because those providing the service have a real interest in doing so. Once the business grows and "customer service" becomes a department in its own right, sometimes staffed by people with little interest in anything beyond what's in their pay packet at the end of the month, that's when deterioration is likely to set in.
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Re: tcb and quidco profits

Post by uglysteve » Wed Nov 07, 2012 10:51 am

disneyfan wrote: and if I ever do get the cashback I was promised I won't be using them again.
Not saying I disagree with what you're saying, I would do the same, but I wouldn't be inclined to pay the promised cashback if it'd lead to losing a customer!

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Re: tcb and quidco profits

Post by disneyfan » Wed Nov 07, 2012 3:53 pm

uglysteve wrote:
disneyfan wrote: and if I ever do get the cashback I was promised I won't be using them again.
Not saying I disagree with what you're saying, I would do the same, but I wouldn't be inclined to pay the promised cashback if it'd lead to losing a customer!
I'm afraid they've had more than enough chances from me and it's not looking like I'm going to get the cashback anyway so I'll be voting with my feet. £50 is a lot to lose and it seems if they don't want to pay you then they don't pay you and there's not a lot you can do about it unfortunately.
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