In this model Go Compare is to be spun off from its parents and separately listed. Firstly, we're told to adjust the group and subsidiary balance sheets for the new debt that Go Compare Will take on and the dividend that it'll pay to its parent Esure that's been done. So in this model we're gonna move on to the secondly, adjust the group balance sheet for the spinoff. Here's our group balance sheet for Esure and we can see that Go Compare Its subsidiary is separately shown here. The step one adjustment of taking on that debt and dividend is shown in the this first adjustment column. And then Esure's figures have been restated and go compares restated. What we now move on to in step two is now trying to make an adjustment for the spinoff to try and find Esure's excluding Go Compare figures. So I'm gonna start by taking the Esure figures and adding on this adjustment column. The Esure figures are group figures. So they already include Go Compare. I'm going to copy that down to each line item.

I've missed out those subtotals and I'll copy them across from the left hand side.

So we're all set up. What we now need to do is start making some adjustments and remember step two is spinning off of the subsidiary, spinning off. Go Compare. So first thing I'm going to do is I'm going to subtract out Go Compares figures. I'm going to de consolidate it. So the group's cash of 106.9, which already included the Go Compare 14.1. We've now said let's get rid of that 14.1. So 106.9 of cash goes down to 92.8.

I can copy that down. So every line item apart from equity, we're not gonna deconsolidate equity. We need to do something slightly different there. So that was the first thing, but there are some extra adjustments that need to be made because of what's happened in this model. Let's have a look at what happened in the spinoff. We can see that there was Goodwill created on the initial acquisition of Go Compare by Esure. So this may have happened many years ago. That 127.7 of Goodwill is no longer going to be included in Esure's financial statements. So we need to get rid of that 127.7. So I'll go down to my Goodwill and I'm now going to subtract off that 127.7.

What other adjustments could we make if we go up again, we see that the fair value of Go Compare at Listings 301.1, but the book value of Go Compare listing was only 73.6. As we've got a fair value, we should record that and that will give rise to a gain on sale and that gain on sale. The difference between the two figures, 227.5. We need to work out where those figures are going to go. In our adjustment column, we're down looking at the equity. We've already mentioned that we don't deconsolidate equity when you're spinning off a company, you didn't consolidate equity when you bought it. You don't de consolidate when you divest of it. However, in our retained earnings, we are going to have that gain on disposal going through so I press equals I go up to that gain on disposal 227.5. But my balance sheet's still not quite balancing and the reason for that is that we have given something to our shareholders, we've given them a dividend in kind. The dividend in kind. Here is the fair value of the company. We've effectively handed it to them and so we need to take it out of the group's figures. So through retained earnings, again, I'm going to subtract out the fair value of Go Compare 301.1. My balance sheet now balances. So what did we have to do in step two? We had to deconsolidate all of the individual line items apart from equity. Then we had to put through that dividend in kind the value of the company being handed away. But that was a fair value rather than a book value. So we also had to put through the gain on sale and that went through retained earnings.