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1 Prospectus For the offer of million shares in iselect Limited at $1.85 per share iselect Limited (ACN ) Financial Adviser to the Company and Joint Lead Manager Joint Lead Manager

2 Contents Important notices 1 Chairman s letter 3 1. Investment overview 7 2. Industry overview Company overview Financial Information Risks Key people, interests and benefits Details of the Offer Investigating Accountant s Report Additional information 119 Appendix 1 Significant accounting policies 131 Appendix 2 Glossary 139 Corporate directory 144

3 iselect Limited Important notices Offer The Offer contained in this Prospectus is an invitation for you to apply for fully paid ordinary shares in iselect Limited ( iselect or Company ) ( Shares ). This Prospectus is issued by iselect and iselect SaleCo Pty Ltd ( SaleCo ). This Prospectus is not issued by ninemsn Pty Limited. Lodgement and Listing This Prospectus is dated 31 May 2013 and was lodged with ASIC on that date. Neither ASIC nor the ASX takes any responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. Within seven days after the date of this Prospectus, the Company will apply to the ASX for listing of the Company and quotation of the Shares on the ASX ( Listing ). No securities will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. Note to Applicants The information contained in this Prospectus is not financial product advice and does not take into account the investment objectives, financial situation or particular needs of any prospective investor. It is important that you read this Prospectus carefully and in full before deciding whether to invest in the Company. In particular, in considering the prospects of the Company, you should consider the risk factors that could affect the financial performance of the Company. You should carefully consider these factors in light of your investment objectives, financial situation and particular needs (including financial and taxation issues) and seek professional advice from your accountant, financial advisor, stockbroker, lawyer or other professional advisor before deciding whether to invest. Some of the risk factors that should be considered by prospective investors are set out in Section 5. There may be risk factors in addition to these that should be considered. You should also consider the assumptions underlying the Forecast Financial Information set out in Section 4 and the risk factors that could affect the Company s business, financial condition and results of operations. No person named in this Prospectus, nor any other person, guarantees the performance of the Company, the repayment of capital by the Company or the payment of a return on the Shares. No person is authorised to give any information or make any representation in connection with the Offer which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company, or SaleCo Directors. Exposure Period The Corporations Act prohibits the Company from processing applications to subscribe for Shares under this Prospectus ( Applications ) in the seven day period after the date of lodgement of this Prospectus. This period may be extended by ASIC by up to a further seven days. This period is an Exposure Period to enable this Prospectus to be examined by market participants prior to the raising of funds. The examination may result in the identification of deficiencies in this Prospectus, in which case any Application may need to be dealt with in accordance with Section 724 of the Corporations Act. Applications received during the Exposure Period will not be processed until after the expiry of that period. No preference will be conferred on Applications received during the Exposure Period. After the Exposure Period, this Prospectus will be made available to Australian residents, without the Application Forms, at the Company s offer website, Photographs and diagrams Photographs and diagrams used in this Prospectus that do not have descriptions are for illustration only and should not be interpreted to mean that any person shown in them endorses this Prospectus or its contents or that the assets shown in them are owned by iselect. Diagrams used in this Prospectus are illustrative only and may not be drawn to scale. Disclaimer and forward-looking statements No person is authorised to give any information or make any representation in connection with the Offer which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company, SaleCo or any other person in connection with the Offer. This Prospectus contains forward-looking statements. The Forecast Financial Information is an example of forward-looking statements. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, at the date of this Prospectus, are expected to take place (including the key assumptions set out in Section 4.6.5). Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, the Directors and management. Forward-looking statements should therefore be read in conjunction with, and are qualified by reference to, Sections 4 and 5, and other information in this Prospectus. The Company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this Prospectus will actually occur and investors are cautioned not to place undue reliance on these forward looking statements. The Company has no intention of updating or revising forward-looking statements, or publishing prospective Financial Information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where required by law. This Prospectus, including the industry overview in Section 2, uses market data, industry forecasts and projections. iselect has obtained significant portions of this information from market research prepared by third parties. There is no assurance that any of the forecasts contained in the reports, surveys and research of such third parties that are referred to in this Prospectus will be achieved. iselect has not independently verified this information. Estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed in the risk factors set out in Section 5. As set out in Section , it is expected that the Shares will be quoted on the ASX initially on a deferred settlement basis. iselect disclaims all liability, whether in negligence or otherwise, to persons who trade Shares before receiving their holding statements. Nielsen information reflects estimates of market conditions based on samples, and is prepared primarily as a marketing research tool for consumer packaged goods manufacturers and others in the consumer goods industry. This information should not be viewed as a basis for investments and references to Nielsen should not be considered as Nielsen s opinion as to the value of any security or the advisability of investing in the Company. Hitwise information and references to Hitwise should not be used as the sole basis for any business or investment decision. Hitwise does not make any representation or recommendation regarding the Company, this Prospectus or any Offer. Statements of past performance This Prospectus includes information regarding the past performance of the Company. Investors should be aware that past performance should not be relied upon as being indicative of future performance. Obtaining a copy of this Prospectus A hard copy of the Prospectus is available free of charge to any Broker Firm Offer Applicant or applicant under the Employee Priority Offer by calling from 8.30 am to 5.00 pm (Melbourne time) Monday to Friday. This Prospectus is available in electronic form via The Offer constituted by this Prospectus in electronic form is available only to persons receiving this Prospectus in electronic form within Australia. It is not available to persons in other jurisdictions (including in the United States). Persons having received a copy of this Prospectus in its electronic form may, during the Offer period, obtain a hard copy of the Prospectus by telephoning Applications for Shares may only be made on the Application Form attached to or accompanying this Prospectus or in its paper copy form which may be downloaded in its entirety from together with the electronic form of this Prospectus. The Corporations Act prohibits any person from passing on to another person the Application Form unless it is attached to or accompanies a hard copy of this Prospectus or the complete and unaltered electronic version of this Prospectus.

4 2 Financial year periods All references to FY10, FY11, FY12 and FY13F appearing in this Prospectus are to the financial years ended or ending 30 June 2010, 30 June 2011, 30 June 2012 or 30 June 2013, respectively, unless otherwise indicated. All references to 1H FY13 and 1H FY14F appearing in this Prospectus are to the half financial years ended or ending 31 December 2012 and 31 December 2013, respectively, unless otherwise indicated. All references to CY13F appearing in this Prospectus are to the calendar year ending 31 December All financial amounts contained in this Prospectus are expressed in Australian currency, unless otherwise stated. Any discrepancies between totals and sums of components in figures and tables contained in this Prospectus are due to rounding. Section 4 sets out in detail the Financial Information referred to in this Prospectus. The basis of preparation of the Financial Information is set out in Section 4. Historical Financial Information has been prepared and presented in accordance with the recognition and measurement principles prescribed by the Australian Accounting Standards (as adopted by the Australian Accounting Standards Board (AASB)). The Historical Financial Information also complies with the Australian equivalents to the International Financial Reporting Standards. This Prospectus also includes Forecast Financial Information based on the best estimate assumptions of the Directors. The basis of preparation and presentation of the Forecast Financial Information, to the extent applicable, is consistent with the basis of preparation and presentation for the Historical Financial Information. The Forecast Financial Information presented in this Prospectus is unaudited. The Historical Financial Information and the Forecast Financial Information in this Prospectus should be read in conjunction with, and are qualified by reference to, the information contained in Sections 4 and 5. Glossary Defined terms and abbreviations used in this Prospectus have the meanings defined in the Glossary. Selling restrictions This Prospectus does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. No action has been taken to register or qualify the Shares or the Offer, or to otherwise permit a public offering of Shares, in any jurisdiction outside Australia. The distribution of this Prospectus outside Australia may be restricted by law and persons who come into possession of this Prospectus outside Australia should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. In particular, the Shares to be offered and sold under the Offer have not been, and will not be, registered under the U.S. Securities Act and may not be offered or sold in the United States unless the Shares have been registered under the U.S. Securities Act, or an exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws is available. The Shares may only be offered and sold outside the United States in offshore transactions (as defined in Rule 902(h) of the Regulation S under the U.S. Securities Act) in compliance with Regulation S under the U.S. Securities Act or in the United States to Eligible U.S. Fund Managers in transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act. See Section 7.7 for more detail on selling restrictions that apply to the offer and sale of Shares in jurisdictions outside of Australia. Privacy By filling out the Application Form to apply for Shares, you are providing personal information to iselect and SaleCo through the Company s service provider, Computershare Investor Services Pty Limited ( Share Registry ), which is contracted by the Company to manage Applications. The Company, SaleCo and the Share Registry on their behalf, may collect, hold and use that personal information in order to process your Application, service your needs as a Shareholder, provide facilities and services that you request and administer the Company. If you do not provide the information requested in the Application Form, the Company, SaleCo and the Share Registry may not be able to process or accept your Application. Your personal information may also be provided to the Company s and SaleCo s members, agents and service providers on the basis that they deal with such information in accordance with the Company s privacy policy. The members, agents and service providers of the Company and SaleCo may be located outside Australia where your personal information may not receive the same level of protection as that afforded under Australian law. The types of agents and service providers that may be provided with your personal information and the circumstances in which your personal information may be shared are: The Share Registry for ongoing administration of the Shareholder register; Printers and other companies for the purpose of preparation and distribution of statements and for handling mail; Market research companies for the purpose of analysing the Shareholder base and for product development and planning; and Legal and accounting firms, auditors, contractors, consultants and other advisors for the purpose of administering, and advising on, the Shares and for associated actions. You may request access to your personal information held by (or on behalf of) the Company and SaleCo. You may be required to pay a reasonable charge to the Share Registry in order to access your personal information. You can request access to your personal information by writing to or telephoning the Share Registry as follows: Telephone: (international) (within Australia) Address: Computershare Investor Services Pty Limited GPO Box 2975 Melbourne VIC 3001 Australia. Report on Directors Forecast and Financial Services Guide The provider of the independent review is required to provide Australian retail clients with a Financial Services Guide in relation to the review under the Corporations Act. The Financial Services Guide is provided in Section 8. Company website Any references to documents included on the Company s website are provided for convenience only, and none of the documents or other information on the website is incorporated by reference. Questions If you have any questions about how to apply for Shares, please call your Broker. For any other questions about the Offer, please contact the iselect Offer Information Line on (within Australia) or (outside Australia) between 8.30 am and 5.00 pm (Melbourne time), Monday to Friday.

5 iselect Limited Chairman s letter 31 May 2013 Dear investor, On behalf of the Board of Directors, I am delighted to present you with the opportunity to become a shareholder in iselect, a leading Australian online-driven comparison service. 1 iselect s mission is to help consumers make complex purchase decisions with confidence by connecting them with the right product and in doing so, delivering an exceptional customer experience. iselect has built Australia s destination of choice for the comparison and purchase of private health insurance, life and car insurance, broadband, home loans, personal finance and energy products. Since I co-founded iselect, we have grown from one business unit in FY00 to eight in FY12. Between FY10 and FY12 annual sales lead volume (excluding our Money business unit, which was acquired in FY12) increased by 93.9%. In addition, our sales conversion ratio 2 has increased from 3.6% in FY10 to 5.7% in FY12 (excluding Money). This represents an increase in our sales lead conversion ratio of 58% over that period. In FY12, iselect generated 2.9 million sales leads 3 (excluding sales leads and associated sales from the Money business unit) and completed more than 169,000 sales transactions (excluding Money). These impressive results can be attributed to the management team s sustained focus on growth, performance and efficiency. This focus led to iselect recording $111.9 million of consolidated revenue and $24.1 million of EBITDA in FY12, representing a compound annual growth rate in EBITDA of 61% from FY10. Based on this strong historical performance, we believe the Company is well positioned to capitalise on the continued growth in Australian online comparison and achieve its forecast EBITDA of $30.0 million in CY13F. To sustain these results we will continue to invest in our brand and technology platform as these will be key drivers of our ongoing growth. Furthermore, we will continue our successful diversification into new product categories outside of private health insurance, both organically and via acquisition. Today, we are embarking on an exciting new journey to provide iselect with flexibility to realise its future growth potential and to raise capital which will strengthen the balance sheet and enable us to repay debt. By listing on the ASX, we are also creating liquidity in iselect s shares, which will allow existing and new shareholders to trade in shares on the open market. An investment in iselect is subject to risks. These include: exposure to changes in government policy (particularly regarding the private health insurance market); increased competition; the risk of lower than expected cash receipts from trail commissions; adverse decisions taken by Product Providers or deterioration of relationships with Product Providers; the risk of not attracting sufficient traffic to iselect s websites; exposure to changes in accounting standards, which may in particular affect how iselect recognises trail commission revenue; and a strong bias to earnings being generated in the second half of the financial year. Detailed information about these and other risks is set out in Section 5 of this Prospectus, which I encourage you to read carefully. If any of these risks eventuate, it may adversely impact iselect s financial performance, position and prospects, and, potentially, the value of your investment. The Directors are confident that iselect s business, in conjunction with the growth profile of the industry and the expertise of the Board and management team, provides a strong platform for growth. I look forward to you joining me as a shareholder of iselect. Best wishes, Damien Waller Executive Chairman and Co-Founder 1 Based on visits to iselect s websites (refer to Figure for details) and brand awareness. 2 Sales conversion ratio is calculated as the number of net sales divided by the number of sales leads (net of terminations and Sales Direct to Fund). Refer to Table 4.10 for further detail. 3 Key operating metrics for the Money business unit are generally reported separately to iselect s other business units, as different reporting definitions are used. Further information on the Company s key operating metrics is included in Section 4.6.

6 4 This Prospectus provides the opportunity to participate in the initial public offering of Shares in iselect, a leading Australian online-driven comparison service 4 that compares insurance, household utilities and financial products. The Offer Number of New Shares offered by iselect under this Prospectus million Number of Existing Shares offered for sale by SaleCo under this Prospectus million Total number of Shares offered under this Prospectus million Number of Shares offered under the Institutional Offer and Broker Firm Offer million Number of Shares to be issued under the Employee Priority Offer (1) 1.08 million Number of Shares to be held by Existing Shareholders at Completion of the Offer (2)(3) million Number of Shares to be held by new Shareholders at Completion of the Offer million Total number of Shares on issue at Completion of the Offer (3) million Offer Price (4) $1.85 per Share Market capitalisation at the Offer Price (5) $479.3 million (1) See Section 7.4 for further details of the Employee Priority Offer. (2) Of which 37,266,130 Shares will be subject to voluntary escrow arrangements until the date on which iselect s full year accounts for FY13F are released to the ASX by iselect. After this date and until the date on which iselect s half year accounts for the period ending on 31 December 2013 are released to the ASX, 36,416,130 Shares will be subject to voluntary escrow arrangements. See Section 7.6 for further details of these voluntary escrow arrangements. (3) Excludes: (a) any Shares acquired by Existing Shareholders under the Offer; and (b) approximately 8.88 million LTIP Shares. LTIP Shares will not be quoted on ASX until satisfaction of all conditions to vesting and repayment of the applicable LTI Loan. LTIP Shares vest and holders will be entitled to exercise their rights as ordinary Shareholders only if certain total shareholder return ( TSR ) performance hurdles and continuing employment criteria are satisfied by holders, and their LTI Loan repaid in full. Vesting of the LTIP Shares granted under the LTI Plan will occur in three tranches, ending on 30 June 2015, as detailed further in Section Until vested, LTIP Shares cannot be voted. Any LTIP Shares remaining unvested following the final testing date will be forfeited and surrendered by holders in full satisfaction of the LTI Loan. (4) Shares may not trade at the Offer Price post Listing. (5) Market capitalisation at the Offer Price is defined as the Offer Price multiplied by the total number of Shares at completion of the Offer (excluding LTIP Shares). Important dates (1) Broker Firm Offer and Employee Priority Offer open Broker Firm Offer and Employee Priority Offer close 9.00 am (Melbourne time) Tuesday, 11 June pm (Melbourne time) Monday, 17 June 2013 Issue of Shares (Completion of the Offer) Monday, 24 June 2013 Expected commencement of trading on the ASX (on a deferred settlement basis) Monday, 24 June 2013 Expected despatch of holding statements Thursday, 27 June 2013 Shares expected to begin trading on a normal settlement basis Friday, 28 June 2013 (1) These dates are indicative only and may change. iselect and SaleCo, in consultation with the Joint Lead Managers, reserve the right to amend any and all of the above dates without notice (including, subject to the ASX Listing Rules and the Corporations Act, to close the Offer early, to extend the Closing Date, to accept late Applications or to cancel the Offer before Settlement). If the Offer is cancelled before the allocation of Shares, then all Application Monies will be refunded in full (without interest) as soon as practicable in accordance with the requirements of the Corporations Act. Investors are encouraged to submit their Applications as soon as possible after the Offer opens. 4 Based on visits to iselect s websites (refer to Figure for details) and brand awareness.

7 Financial Information and investment metrics (1) Historical results (2) Forecast results (3) iselect Limited (A$000s) FY10 FY11 FY12 FY13F CY13F Financial Information Revenue 43,491 72, , , ,482 EBITDA 9,257 17,369 24,082 26,028 30,024 EBIT 7,829 14,184 20,028 21,134 25,021 NPAT 5,780 10,657 12,929 14,523 18,901 Earnings per Share (cents) (4) Investment metrics Enterprise value (5) /CY13F EBITDA (times) 13.1x Offer Price/CY13F NPAT per Share (6) (times) 25.4x (1) See Section 4 for full details of the Financial Information. The Financial Information presented in these tables is intended as a summary only and should be read in conjunction with the more detailed discussion of the Historical and Forecast Results disclosed in Section 4, as well as the risk factors set out in Sections 5. (2) See Section 4.3 for full details of the Historical Results. (3) The Forecast Results are based on assumptions and accounting policies set out in Section and Appendix 1, respectively and are subject to the risks set out in Section 5. There is no guarantee that the forecast financial results will be achieved. (4) Represents forecast NPAT divided by the total number of Shares to be on issue following Completion of the Offer (excluding approximately 8.88 million LTIP Shares), being million Shares. (5) Enterprise value at the Offer Price is defined as market capitalisation at the Offer Price of $479.3 million (excluding approximately 8.88 million LTIP Shares), less pro forma net cash of $86.4 million as at 31 December 2012, adjusted to reflect the impact of the Offer, as set out in Section 4.8. (6) This ratio is commonly referred to as a price earnings or PE ratio. A PE ratio is a ratio of a company s share price and its earnings per share. How to invest Applications for Shares can only be made by completing and lodging the Application Form attached to this Prospectus. Instructions on how to apply for Shares are set out in Section 7.2 of this Prospectus and on the back of the Application Form.

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9 Investment overview 1

10 8 1. Investment overview 1.1 Introduction and overview of iselect s business Topic Summary For more information What is iselect? iselect is a leading Australian online-driven comparison service. 5 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. Section 3.1 What are the strengths of iselect s business model? iselect has developed a successful business model that rests upon four inter-linked pillars that provide a strong foundation for the Company as it looks to grow its existing business and enter new underlying product markets. The strengths of this model lie in: Brand development and marketing iselect has achieved strong brand awareness in online comparison, investing in excess of $110 million in strategic marketing and brand development, resulting in iselect being the most recognised online-driven comparison service in Australia. Sales lead generation iselect is Australia s most visited online comparison service, with approximately 7.8 million total visits to iselect s websites for the year 31 March Sales lead conversion iselect s ability to generate lead volumes is uniquely complemented by its strength in converting those sales leads into successful sales. Between FY10 and FY12, iselect increased its consolidated sales lead conversion ratio by 58% (excluding Money, which was acquired in FY12). Product Provider relationships iselect presents value to its Product Providers by delivering a large and growing volume of consumers whose needs are matched to the products of the Provider. Due to the success-only nature of iselect s fee arrangements with most of its Product Providers, iselect represents a cost-effective customer acquisition channel. Section 3.3 How does iselect generate its revenue? What are iselect s key strengths? iselect s revenue is primarily derived from fees paid by Product Providers each time a consumer purchases a Provider s product from iselect. The fee arrangements vary by Product Provider, but will generally take the form of an upfront fee, which is a fee paid to iselect when a consumer purchases a product, and/or a trail commission, which is an ongoing fee that may be paid to iselect for a pre-determined period over a consumer s tenure with the Product Provider. iselect also generates a small amount of revenue from other activities, including online Click-throughs, display advertising and the provision of web applications, e.g. mortgage repayment calculators, to third parties. A leader in online-driven comparison A leading Australian online-driven comparison service with approximately 7.8 million total visits to its websites for the year ended 31 March An established and highly recognisable brand iselect has the highest top-of-mind (unaided) awareness 6 of any Australian online comparison service. 7 High levels of consumer awareness of the iselect brand are supported by strong marketing creative content. Over $110 million invested in strategic marketing and brand development since inception in Section 3.6 Section Section Based on visits to iselect s websites (refer to Figure for details) and brand awareness. 6 Top-of-mind (unaided) awareness (also known as front-of-mind awareness) is a measure of how readily a brand name or concept comes to respondents minds, without prompting. 7 Among a sample of Online Australians over 18 years of age who use the internet, as surveyed by Nielsen Australia as part of its Understanding the Australian Market for Online Comparison Services Consumer Research Survey in March 2013, ( Nielsen Australia March 2013 Research ).

11 iselect Limited Topic Summary Well positioned to benefit from the consumer trend towards online transacting Australian consumers are increasingly researching and purchasing products online. For more information Section Of Online Australians recently surveyed as part of the Nielsen Australia March 2013 Research, 46% said they were more likely to use an online comparison service now than in the last 12 months, and 67% stated they are likely to purchase through an online comparison service in the next 12 months. iselect is well positioned to benefit from these trends, with an established brand presence and online comparison and purchasing platform. Scalable business model underpinned by a unique and sophisticated technology platform Established platform that is amenable to the rollout of new businesses. Section Unique proprietary comparison and recommendation algorithm that enables iselect to effectively connect consumers with products appropriate to their needs and improve sales lead conversion ratios. Strong track record of executing its strategy and achieving growth Since its inception in 2000, iselect has brought online product comparison in the private health insurance market into the mainstream and has grown to become a leading Australian online-driven comparison service. Section iselect generated 2.9 million sales leads in FY12 and completed 169,000 sales transactions (excluding sales leads and associated sales from the Money business unit), over the same period. 8 Lead growth, together with the 58% growth in iselect s consolidated sales lead conversion ratio between FY10 and FY12 (excluding Money, which was acquired in FY12), has driven strong revenue and EBITDA growth. In FY12, iselect generated $111.9 million of consolidated revenue and delivered $24.1 million of EBITDA, representing compound annual growth rates of 60% and 61%, respectively, between FY10 and FY12. iselect s proven comparison model in Health has now been successfully applied and expanded to new product markets through organic growth and acquisition. Exposed to the attractive underlying dynamics of the Australian private health insurance market Established presence in online comparison in private health insurance iselect sold approximately 100,000 new policies in FY12, which iselect estimates represented between 15% and 20% of the total number of private health insurance policies sold in Australia during FY12. Section Demographic trends (e.g. Australia s ageing population) and an Australian regulatory environment that supports private health insurance underpin an attractive growth outlook. High quality management team and Board of Directors iselect s Board and management possess significant breadth and depth of industry experience. Section iselect s team has delivered strong revenue growth and product innovation for over a decade. 8 Key operating metrics for the Money business unit are generally reported separately to iselect s other business units, as different reporting definitions are used. Further information on the Company s key operating metrics is included in Section 4.6.

12 10 Investment overview Topic What are the key risks for iselect? Summary Exposure to potential changes in government policy, particularly regarding the private health insurance market In FY12, iselect derived 81% of its revenue from its Health business unit, which is the largest of the Company s businesses. The Australian private health insurance market is regulated. While the Australian private health insurance regulatory environment supports participation in private health insurance, amendments to existing regulation or Federal Government policy, such as the removal of or changes to the Federal Government Private Health Insurance Rebate ( Rebate ), could adversely affect the future demand for private health insurance. This could impact iselect s sales volumes. Each of iselect s other underlying product markets is also subject to varying degrees of government regulation and is susceptible to changes in consumer demand or compliance requirements in the event of regulatory change, which could impact iselect s sales volumes or increase the costs of compliance. Changes to government regulation could adversely impact iselect s ability to earn revenue from its current operating model. For more information Section iselect may face significant competition iselect experiences high levels of competition for the sale of products in each of its underlying product markets, including from other comparison service providers. iselect may also face competition from new entrants into the comparison sector. Increased competition could result in a reduction of iselect s ability to generate revenue, and in turn, its profitability. This could adversely impact iselect s market share and subsequently, its attractiveness to Product Providers. Future cash receipts from trail commissions may be lower than expected Trail commissions (being the ongoing fees related to the private health insurance, life insurance, car insurance and home loans consumers that iselect has referred to Product Providers and who remain with the relevant Product Provider for a pre-determined period following the initial product purchase) have historically made up the largest proportion of iselect s revenue. Trail commission income is initially recognised at fair value and at amortised cost on an ongoing basis, based on the present value of expected future cash flows, using various financial and actuarial assumptions. The assumptions and model for valuing the trail commission receivable are subject to ongoing review by actuaries (including quarterly review within the Health business unit and bi-annually within the Life business unit). However, if actual experience diverges from assumptions or if key assumptions underpinning the valuations change, including around pricing inflation and customer attrition assumptions, this could materially affect the value of the trail commission receivable, which would impact iselect s profitability, cash flows and balance sheet. If iselect is required to impair the value of the trail commission receivable recognised on its balance sheet, this could result in a significant loss. In turn, the impact of industry changes that are inconsistent with assumptions can affect iselect s profitability and resultant cash flows. Section Section 5.1.3

13 iselect Limited Topic Summary iselect is impacted by adverse decisions taken by Product Providers iselect earns the majority of its revenue (FY12: 81%) from the sale of private health insurance policies. In turn, iselect derives a majority of its private health insurance revenue from several key Product Providers. In FY12, it derived 89% of its private health insurance revenue from the intermediation of products from its top five Product Providers. Other business units also rely on key Product Provider relationships to ensure adequacy of supply. For more information Section The loss or impairment of any of these Product Provider relationships, including as a result of key Product Providers not making products available (due to various reasons, including a lack of sufficient capital or funds to enable them to do so), could adversely impact iselect s business, financial condition and results from operations, including iselect s ability to meet its financial forecasts. In order to diversify the range of Product Providers using the iselect service, the Company aims to increase the number and type of Product Providers who distribute their products through its service. There is no guarantee that the Company will be able to influence product providers to use the iselect service, which may result in a reduction in the expected growth in sales of products in each business unit. iselect relies upon attracting and retaining personnel iselect s success and growth rely to a large extent on the performance and expertise of staff. Section Loss of staff, or a failure to attract effective replacements, could have a material adverse impact on iselect s ability to effectively service consumers, and affect the delivery of its growth strategy. iselect may be unable to attract sufficient traffic to its websites The attractiveness of iselect to Product Providers is driven in part by iselect s ability to attract large volumes of consumers to its websites. Section If volumes decline (due to, for example, any adverse changes to the algorithms and terms of service of search engines which affected the ranking of iselect s websites, ineffective marketing, competitor action or other reasons), it could have a material impact on iselect s ability to receive fees from Product Providers. iselect s relationship with current and potential Product Providers may be affected by iselect s support of new market entrants iselect may from time to time assist new Product Providers with their entrance into existing product markets, with the aim of catering to consumer demand for non-existent products and product features. For example, iselect has provided a secured facility to health.com.au ( NIA ) to enable NIA to defer the time of payment of upfront fees owed by NIA to iselect. Section Whilst involvement with new entrants who provide innovative products may help increase the competitiveness of iselect s businesses, existing or potential Product Providers may become less inclined to use iselect as a distribution channel if they perceive that this may indirectly result in an increase in competition in the underlying product market or cause them to doubt iselect s comparison service. iselect is exposed to changes in Accounting Standards Australian Accounting Standards are set by the Australian Accounting Standards Board ( AASB ) and are outside the control of either iselect or its Directors. AASB is due to introduce new or updated Accounting Standards during the period from 2014 to 2018, which may affect future measurement and recognition of key income statement and balance sheet items, including revenue and receivables. Section 5.1.8

14 12 Investment overview Topic Summary Changes to Accounting Standards issued by the AASB or changes to the commonly held views on the application of those standards could materially adversely affect the financial performance and position reported in iselect s financial statements. There is currently no specific guidance in Accounting Standards about the recognition and measurement of trail commission revenue and there is a risk that if the AASB issues specific amendments or interpretation guidance relating to trail commission revenue, the Company may need to change the way in which it accounts for trail commission revenue, potentially affecting the initial and subsequent recognition of trail commission revenue, which may adversely impact key income statement and balance sheet items of the Company. For more information What is iselect s mission, vision and strategy? How does iselect expect to fund its operations? The timing of iselect s earnings is currently biased strongly towards the second half of the financial year iselect currently earns the majority of its revenue from its Health business unit (FY12: 81%), and is therefore exposed to the seasonal fluctuation in sales of private health insurance policies that is prevalent in that market. Due to seasonal factors specific to the health insurance industry, iselect generates peak volumes of private health insurance leads during the final quarter of the financial year, with peak demand typically occurring in the month of June (and in particular, in the second half of June). Given the materiality of financial performance in June to iselect s annual financial result, there is a risk that iselect may not become aware of any material divergence in its financial position and performance from its earlier expectations or published forecasts or guidance (if any) and so may not be in a position to update the market until late in the month of June (or even only after the end of June) in any given financial year. iselect s mission is to help consumers make complex purchase decisions with confidence, by connecting them with the right product and in doing so, delivering an exceptional customer experience. iselect s vision is to build the home of comparison for consumers and to be the distribution channel of choice for Product Providers. To achieve its mission and realise its vision, iselect s strategy focuses on: Continued investment in the iselect brand to drive greater consumer awareness and sales lead volumes, supporting expansion of iselect s cross-sell programme; Building out the iselect consumer offering by launching new business units and transitioning all business units to an end to end (E2E) model; Continued investment in iselect s unique technology and people to ensure consumers are provided with the best possible iselect experience; Building greater and deeper relationships with Product Providers and continued expansion of the Product Provider panel; Continued assessment of strategic acquisition opportunities; and Continued assessment of international expansion opportunities. iselect will raise net cash proceeds from the Offer of approximately $88.1 million. Post Offer, iselect will also have access to cash flow from operations, as well as access to a term debt revolving facility with CBA of $35 million. The Term Debt Revolving Facility was drawn to $25 million (as at 19 April 2013). iselect is currently in compliance with its financial covenants and expects to remain in compliance with them following completion of the Offer. Section Sections Section 4.4.1

15 iselect Limited Overview of the Offer Topic Summary For more information Why is the Offer being conducted? What is SaleCo? The purpose of the Offer is to: Provide funding flexibility to support future growth, including by acquisition; Raise capital to strengthen the Company s balance sheet and pay down debt; and Create liquidity in iselect Shares by listing on the ASX which will allow existing and new shareholders to sell their shares or buy further shares on market. SaleCo is a special purpose vehicle, established to sell Shares acquired from ninemsn who is to sell all of its existing investment in iselect and ITV Consulting, which is to sell 350,000 of its Existing Shares. SaleCo is not owned by or related to ninemsn or ITV Consulting. SaleCo will acquire 62,001,590 Existing Shares from ninemsn and 350,000 Existing Shares from ITV Consulting. The price payable by SaleCo to ninemsn for its Existing Shares will be the ninemsn Sale Price. The price payable by SaleCo to ITV Consulting for those Existing Shares will be the Other Sale Price. These Shares will be transferred to successful Applicants under this Prospectus by SaleCo. Section Section 7.1 What is the Offer size? Offer Price $1.85 per Share Total number of New Shares offered million Total number of Existing Shares offered million Total Shares offered million Total cash proceeds to iselect from the Offer $100 million Total cash proceeds to SaleCo from the Offer $115.4 million Total cash proceeds from the Offer $215.4 million Section 7.1 What are the key investment metrics? Market capitalisation at the Offer Price 9 $479.3 million Pro forma net debt/(cash) 10 $(86.4) million Enterprise value at the Offer Price 11 $392.9 million Enterprise value 12 /CY13F EBITDA (times) 13.1x Offer Price/CY13F NPAT per Share 13 (times) 25.4x Section Calculated by multiplying the Offer Price by the number of Shares on issue on Completion of the Offer (excluding approximately 8.88 million LTIP Shares). LTIP Shares will not be quoted on ASX until satisfaction of all conditions to vesting and repayment of the applicable LTI Loan. LTIP Shares vest and holders will be entitled to exercise their rights as ordinary Shareholders only if certain total shareholder return ( TSR ) performance hurdles and continuing employment criteria are satisfied by holders, and their LTI Loan repaid in full. Vesting of the LTIP Shares granted under the LTI Plan will occur in three tranches, ending on 30 June 2015, as detailed further in Section Until vested, LTIP Shares cannot be voted. Any LTIP Shares remaining unvested following the final testing date will be forfeited and surrendered by holders in full satisfaction of the LTI Loan. Shares may not trade at the Offer Price post Listing. 10 Pro forma net cash of $86.4 million as at 31 December 2012, adjusted to reflect the impact of the Offer, as set out in Section Calculated by subtracting pro forma net cash from indicative market capitalisation. 12 Enterprise value at Offer Price is defined as market capitalisation at the Offer Price of $479.3 million less pro forma net cash of $86.4 million, as at 31 December 2012, adjusted to reflect the impact of the Offer, as set out in Section This ratio is commonly referred to as a price earnings or PE ratio. A PE ratio is a ratio of a company s share price and its earnings per share.

16 14 Investment overview Topic What is iselect s historical and forecast financial performance? 14 Summary Historical Results 15 Forecast Results 16 (A$000s) FY10 FY11 FY12 FY13F CY13F For more information Section 4.3 Revenue 43,491 72, , , ,482 EBITDA 9,257 17,369 24,082 26,028 30,024 EBIT 7,829 14,184 20,028 21,134 25,021 NPAT 5,780 10,657 12,929 14,523 18,901 Earnings per Share (cents) What is the Offer? Who are the issuers of the Prospectus? What is the proposed use of funds raised pursuant to the Offer? Will the Shares be listed? How is the Offer structured? Is the Offer underwritten? The Offer is an initial public offering of million Shares that will in part be issued by iselect and in part sold by SaleCo. The Shares being offered will represent approximately 44.9% of Shares on issue on Completion of the Offer (excluding approximately 8.88 million LTIP Shares). iselect (ACN ), a company incorporated in Victoria, Australia and iselect SaleCo Pty Ltd (ACN ), a company incorporated in Victoria, Australia. The funds received pursuant to the Offer will be used as follows: $100.0 million will be paid to iselect, of which $11.9 million will be used to fund the issue of New Shares; and $113.5 million will be paid to ninemsn and $0.64 million will be paid to ITV Consulting (each of whom sold Shares to SaleCo), net of $1.2 million of fees payable in connection with the sale of those Shares. iselect will apply to the ASX for the Company s admission to the official list of the ASX and quotation of Shares on the ASX (which is expected to be under the code ISU within seven days of the date of this Prospectus). LTIP Shares will not be quoted on ASX until satisfaction of all conditions to vesting and repayment of the loan made by iselect to the participant to fund their subscription of the LTIP Shares (see Section for more details). Completion of the Offer is conditional on the ASX approving this application. If approval is not given within three months after such application is made (or any longer period permitted by law), the Offer will be withdrawn and all Application Monies received will be refunded without interest as soon as practicable in accordance with the requirements of the Corporations Act. The Offer comprises: The Broker Firm Offer; The Institutional Offer; and The Employee Priority Offer. The Offer is fully underwritten by Credit Suisse and Baillieu Holst, the Joint Lead Managers. Section 7.1 Section 7.1 Section Section Section Section See Section 4 for full details of the Financial Information. The Financial Information presented in this table is intended as a summary only and should be read in conjunction with the more detailed discussions of the Historical and Forecast Results disclosed in Section 4, as well as the risk factors, set out in Section See Section 4 for full details of the Historical Results. 16 The Forecast Results are based on assumptions and accounting policies set out in Section 4 and Appendix 1, respectively and are subject to the risks set out in Section 5. There is no guarantee that the forecast financial results will be achieved. 17 Represents NPAT divided by the total number of Shares to be on issue following Completion of the Offer, being million Shares (excluding approximately 8.88 million LTIP Shares).