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Zoopla Property Grp - Full year results - Part 1

Wed 2nd December, 2015 7:01am
RNS Number : 6823H
Zoopla Property Group PLC
02 December 2015

Zoopla Property Group

2 December 2015

TRANSFORMATIONAL YEAR WITH RECORD REVENUE AND PROFITS

Full year results for the year ended 30 September 2015

Zoopla Property Group Plc (LSE: ZPLA), the digital media and lead generation platform that owns and operates some of the UK's leading online consumer brands including Zoopla, uSwitch and PrimeLocation announces its full year results for the year ended 30 September 2015 (the "Period").

Financial highlights

2015

2014

YoY %

Revenue (m)

107.6

80.2

+34%

Adjusted EBITDA1 (m)

48.7

39.6

+23%

Profit for the year (m)

25.4

21.1

+20%

Net (debt)/cash (m)

(93.2)

31.0

n/a

Adjusted basic EPS2 (pence per share)

8.4

6.5

+29%

Basic EPS (pence per share)

6.2

5.1

+22%

Proposed final dividend (pence per share)

2.5

1.1

+127%

Business highlights

Revenue increase of 34% to 107.6m

Adjusted EBITDA up 23% to 48.7m

Solid ARPA3 growth in the Property Services division and continuous UK Agency membership growth since May

Over 25 million leads generated for the Group's Property partners, including over 300,000 appraisal leads

Strong performance in all verticals within the Comparison Services division since the acquisition of uSwitch

Over 9 million leads generated for the Group's Comparison partners during the last 4 months of the Period

Proposed final dividend of 2.5 pence per share, bringing the total dividend to 3.5 pence per share

Commenting on today's announcement Alex Chesterman, Founder & CEO of Zoopla Property Group Plc said, "It has been another transformational year for the business and I am very pleased with our performance as we delivered record revenue and Adjusted EBITDA of 107.6m and 48.7m respectively. We have made great progress towards our vision of becoming the consumer champion at the heart of the home with the acquisition of uSwitch, the leading home services comparison platform in the UK.

"Our Property Services division achieved solid ARPA growth across every vertical - UK Agency, New Homes, Overseas and Commercial - demonstrating the Group's exceptional value proposition as one of the most cost-effective digital marketing channels for property professionals. Traffic to our property platform remained strong with high levels of user engagement and we recently passed the significant milestone of over seven million downloads of our property apps.

"The Comparison Services division outperformed expectations in the four months since the acquisition of uSwitch, with both the Energy and Communications verticals benefitting from our market-leading position and increasingly competitive consumer deals. We continue to innovate across both divisions of the business in line with our mission of providing the most useful resources for consumers when finding, moving or managing their home and being the most effective marketing channel for related business partners."

Outlook

We have seen further growth in membership numbers in the Property Services division since the end of the Period. Management is encouraged by the trend of continued UK Agency membership growth over the past seven consecutive months and is confident of delivering further membership and ARPA growth. Switching volumes within the Comparison Services division have continued to be strong since the end of the Period, especially in Energy where our recent collective switch saw record levels of consumer participation.

The Group will continue to invest across both divisions and to develop its integrated proposition. Management remains comfortable with market expectations for the 2016 financial year and our next trading update is scheduled on the day of our AGM, 25 February 2016.

-ENDS-

For further information, please contact:

Lawrence Hall, Head of Communications - lawrence.hall@zpg.co.uk / 07890 078 945

Rachael Malcolm, Head of Investor Relations - rachael.malcolm@zpg.co.uk / 07774 671 082

James Isola at Maitland 020 7379 5151

http://www.zpg.co.uk/

A webcast of the management team presentation to analysts and investors will be made available at http://www.zpg.co.uk/ at 09.00am this morning and can be accessed here.

An audio dial in will also be made available:

UK Toll Number: 0203 139 4830

UK Toll-Free Number: 0808 237 0030

United States Toll-Free Number: 1866 928 7517

United States Toll Number: 1 718 873 9077

Participant pin: 40978295#

1. Adjusted EBITDA is defined as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items.

2. Adjusted EPS is calculated as profit for the year after adding back amortisation of intangibles arising from the acquisition of uSwitch and exceptional items, as adjusted for tax, divided by the weighted average number of shares in issue for the Period.

3. Average revenue per advertiser (ARPA) is the revenue from the Group's property partners in a given month divided by the total number of property partners during the month, measured as a monthly average over the period.

Cautionary Statement

This document contains forward-looking statements. These forward-looking statements include all matters that are not historical facts. Statements containing the words "believe", "expect", "intend", "may", "estimate" or, in each case, their negative and words of similar meaning are forward-looking.By their nature, forward-looking statements involve risks and uncertainties because they relate to events that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that the Group's actual financial condition, results of operations and cash flows, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if the Group's financial condition, results of operations and cash flows, and the development of the industry in which we operate are consistent with the forward-looking statements in this document, those results or developments may not be indicative of results or developments in subsequent periods. Important facts that could cause the Group's actual results of operations, financial condition or cash flows, or the development of the industry in which we operate, to differ from current expectations include those principal risks and uncertainties disclosed below.As a consequence, the Group's future financial condition, results of operations and cash flows, as well as the development of the industry in which we operate, may differ from those expressed in any forward-looking statements made by us or on the Group's behalf.



Business Review

The twelve month period ended 30 September 2015 has been another transformational year for Zoopla Property Group ("ZPG") as it delivered record revenue and Adjusted EBITDA of 107.6m and 48.7m respectively. The Group has made significant progress towards its vision of being the consumer champion at the heart of the home as a result of the successful acquisition of uSwitch, the UK's leading home services comparison and lead generation platform. Following this acquisition, which completed on 1 June 2015, the Group now has two key operating divisions: Property Services and Comparison Services. Full key performance indicators ("KPIs") for the Group can be found in Appendix 1 at the end of this release.

During the Period the Group's websites and mobile apps enjoyed over 550 million visits, generating over 2 million leads per month on average for our property partners and helping over 1 million consumers compare and switch their home services providers via our comparison partners. Mobile growth has continued to play a key role in the evolution of the business, accounting for over 62% of all visits during the Period.

Executing on our strategy

ZPG's mission remains to provide the most useful resources for consumers when finding, moving or managing their home and to be the most effective marketing channel for related business partners.

On 1 June 2015, the Group acquired uSwitch, the UK's number one price comparison website ("PCW") and lead generation platform in the home services sector (energy and communications) and one of the most widely recognised and trusted consumer brands in the UK. The total consideration for the acquisition was 160m, plus a performance-based earn-out of up to 30m. uSwitch has outperformed expectations since the acquisition and Management is pleased with the progress made on its integration into the Group so far.

The Group continues to lead innovation in the digital property and comparison sectors and the acquisition of uSwitch gives ZPG the unique opportunity to help consumers find, move and manage their home through a single platform. Our strategy will allow us to monetise our highly engaged audience of movers and non-movers through all stages of the property journey and the integration of services across our platform will drive enhanced user engagement and partner opportunities over time.

The Group continues to invest heavily in marketing its brands and developing new products as part of its multi-channel, multi-brand approach of becoming the consumer champion at the heart of the home. During the Period, the Group launched a number of important enhancements to its products including: Real-Time Listings, allowing the publishing of updates to property listings within minutes; FindaPro, providing users with access to thousands of local tradesmen such as builders, architects and painters; and a new iOS app for uSwitch, allowing users to scan their energy bills, get an instant comparison and then switch providers to save money.

Property Services

The Group's Property Services division has exhibited robust performance, despite the reduction in the number of UK Agency partners following the launch of a new portal operated by Agents' Mutual at the start of calendar year 2015. Agents' Mutual operates a restrictive practice preventing its members from advertising on more than one of the other more-established property portals.

Average revenue per advertiser (ARPA)

The Group experienced strong ARPA growth across all verticals as its property partners continue to recognise the value and marketing efficacy from exposure to the Group's highly engaged, property interested audience. UK Agency ARPA grew by 11% to 357 as agents continued to upgrade packages and buy additional premium products. ARPA for the New Homes vertical grew by 24% to 335, driven by additional spend on targeted email campaigns. Overseas ARPA grew by 7% to 149 whilst the Group focused on growing the number of advertising partners and inventory. ARPA for the Commercial vertical grew to 107 during its first twelve months since launch.

Partners

The launch of a new portal by Agents' Mutual negatively impacted the Group's number of UK Agency partners at the start of the calendar year but as the year progressed, churn levels slowed significantly and the Property Services division returned to positive partner growth in May. After five consecutive months of UK Agency growth, the Group ended the Period with 12,702 UK Agency partners (2014: 16,373). The number of New Homes developments remained stable at 2,706 (2014: 2,715) at the end of the Period and the Group had 737 Overseas partners (2014: 575) and 266 Commercial partners (2014: nil), taking the total number of property partners to 16,411 at the end of the Period (2014: 19,663).

Number of visits

Traffic to the Group's property platform remained strong, up 4% to 44.7 million average monthly visits, reflecting the excellent market position and high levels of recognition of the Group's property brands including Zoopla with 78% national brand awareness amongst all UK adults, up from 26% in November 2010 (Source: Harris Interactive). The Property Services division also reached the significant milestone of over 7 million total mobile app downloads to date as consumers continue to use the Group's services as one of their primary property market resources.

Number of Property Services leads

The Group generated 25.2 million leads (2014: 29.2) for its property partners during the Period, including 304,819 appraisal leads (up 65% on the same period last year) as the Group focused on the quality of leads and helping its partners win new business. The total number of property leads compared to the previous year was impacted by the reduction in UK Agency partners and corresponding inventory available.

Number of listings

The number of listings featured on the Group's property platform fluctuated throughout the Period as a result of the reduction in the number of UK Agency partners and the general shortage of supply in the market. As at 30 September 2015 the Group had 845,000 property listings advertised (2014: 1.1m).

Comparison Services

The Group's Comparison Services division has outperformed expectations in the four months since the acquisition of uSwitch, which completed on 1 June 2015.

The Energy vertical has benefitted from uSwitch's market-leading position, the availability of competitive tariffs and a supportive regulatory environment which is active in trying to encourage greater consumer engagement and increase competition amongst suppliers to promote choice, value and innovation for consumers. During the twelve months to 30 September 2015, uSwitch saved consumers 165m off their energy bills and more recently launched a market-leading collective switch with record levels of consumer participation.

The Communications vertical outperformed as a result of the highly competitive consumer deals in broadband and seasonal product launches in mobile. The Group continues to invest in marketing and building out its Financial Services vertical.

Number of Comparison Services leads (previously "total number of transactions")

The Group measures Comparison Services leads at the point when a consumer completes an application form hosted on the Group's platform or at the point the consumer is directed from the Group's platform to a third party website. In the four months since the acquisition the Comparison Services division generated 9.0 million leads, an increase of 45% compared to the same four month period in the prior year, reflecting the strong performance in Energy and Communications.

Average revenue per lead (previously "average revenue per transaction")

In the four months since the acquisition average revenue per lead (ARPL) for the Comparison Services division was 3.08, compared to an ARPL of 3.35 for the same four month period in the prior year as the number of Communications and Financial Services leads increased at a faster rate than the number of Energy leads.

Finance Review

Revenue and Adjusted EBITDA increased significantly as a result of the newly acquired Comparison Services division which performed ahead of expectations and the continued robust performance in the Property Services division.

Revenue increased by 34% to 107.6m and Adjusted EBITDA increased by 23% to 48.7m. These figures include four months of uSwitch trading which was acquired on 1 June 2015. The acquisition was funded by a mixture of existing cash and a new five-year revolving credit facility. The Group had net debt of 93.2m at the end of the Period with substantial headroom against its covenants.

The total consideration for the acquisition was 160m, plus a performance-based earn-out of up to 30m.The earn-out is based on Adjusted EBITDA and revenue performance targets payable in FY16 in cash or up to 50% in shares at ZPG's discretion, with 50% of the earn-out consideration payable to uSwitch Management to be paid in FY17 and FY18. Due to the strong performance of uSwitch over the earn-out period which runs from 1 January 2015 to 30 April 2016, Management is currently forecasting to pay the earn-out in full.

The Group maintains a dividend pay-out ratio of 35-45% of profits excluding share-based payments and exceptional items and the Directors have proposed a final dividend of 2.5 pence per share. This together with the interim dividend of 1.0 pence per share brings the total dividend to 3.5 pence per share for the Period.

When reviewing performance, the Directors use a number of adjusted measures, including Group Adjusted EBITDA to measure the Group's underlying performance. This is reconciled below:

Summary Income Statement

m

2015

2014

YoY %

Revenue

107.6

80.2

34%

Administrative expenses

(73.0)

(51.8)

41%

Adjusted EBITDA

48.7

39.6

23%

Share-based payments

(1.9)

(3.9)

(51%)

Depreciation & amortisation of other intangibles

(2.0)

(1.7)

18%

Amortisation of intangible assets arising on the acquisition of uSwitch

(2.0)

-

-

Exceptional items

(8.2)

(5.6)

46%

Operating profit

34.6

28.4

22%

Net finance (costs)/income

(1.0)

0.2

-

Profit before tax

33.6

28.6

17%

Income tax expense

(8.2)

(7.5)

9%

Adjusted Profit for the year

34.8

26.7

30%

Amortisation of intangible assets arising on the acquisition of uSwitch

(2.0)

-

-

Exceptional items

(8.2)

(5.6)

46%

Adjustment for tax

0.8

-

-

Profit for the year

25.4

21.1

20%

Adjusted earnings per share




Adjusted basic earnings per share (pence per share)

8.4

6.5

29%

Adjusted diluted earnings per share (pence per share)

8.3

6.4

30%

Revenue

m

2015

2014

YoY %

Property Services:




UK Agency

58.3

63.0

(7%)

New Homes

11.0

8.5

29%

Other

10.6

8.7

22%

Total Property Services Revenue

79.9

80.2

-

Comparison Services:




Energy

11.6

-

-

Communications

13.3

-

-

Other

2.8

-

-

Total Comparison Services Revenue

27.7

-

-





Total Revenue

107.6

80.2

34%

Despite the reduction in the number of UK Agency partners, Property Services revenues were broadly flat year-on-year at 79.9m driven by strong ARPA growth across every vertical. The Comparison Services division contributed 27.7m of revenue for the four months following the acquisition of uSwitch. The majority of Comparison Services revenues came from the Energy and Communications verticals which benefited from uSwitch's market-leading position and competitive consumer deals.

Operating costs

Total operating costs increased by 45% to 58.9m. The increase in operating costs can be attributed to the four months trading of the Comparison Services division.

m

2015

2014

YoY%

Property Services:

Staff costs

15.8

12.8

23%

Other costs

23.2

27.8

(17%)

Total Property Services operating costs

39.0

40.6

(4%)

Comparison Services:

Staff costs

3.7

-

-

Other costs

16.2

-

-

Total Comparison Services operating costs

19.9

-

-

Group:

Total staff costs

Total other costs

19.5

39.4

12.8

27.8


52%

42%

Total Operating costs

58.9

40.6

45%

Property Services operating costs were down 4% to 39.0m as the increase in staff cost was offset by the Group's planned reduction in marketing costs and other costs. Staff costs increased as a result of the Group's continued investment in technical expertise and the full year impact of operating as a plc. In Comparison Services, the Group continues to invest in marketing and product development as it seeks to further build brand awareness and develop nascent business areas. Comparison Services costs of 19.9m comprise staff costs of 3.7m and other costs of 16.2m.

Adjusted EBITDA

Adjusted EBITDA increased by 23% to 48.7m. Property Services Adjusted EBITDA increased by 3% to 40.9m with a margin increase of 200 basis points to 51%. The Comparison Services division generated 7.8m in the four months since acquisition, with a margin of 28%. Group margins were lower at 45% due to the mix effect from incorporating four months of the Comparison Services division. As the business continues to evolve and the earn-out period ends the Directors will assess the relevance of splitting out Adjusted EBITDA for the Property Services and Comparison Services division.

m

2015


2014

YoY%

Property Services Adjusted EBITDA

40.9


39.6

3%

Property Services Adjusted EBITDA margin

51%


49%


Comparison Services Adjusted EBITDA

7.8


-

-

Comparison Services Adjusted EBITDA margin

28%


-

-

Adjusted EBITDA

48.7


39.6

23%

Share-based payments

(1.9)


(3.9)

(51%)

Depreciation of property, plant and equipment

(0.4)


(0.2)

100%

Amortisation of intangible assets arising on the acquisition of uSwitch

(2.0)


-

-

Amortisation of other intangible assets

(1.6)


(1.5)

1%

Exceptional items:

(8.2)


(5.6)

46%

Transaction costs incurred on the acquisition of uSwitch


(5.1)


-


-

Management deferred consideration


(1.0)


-


-

Management earn-out


(1.2)


-


-

Management deal-related performance bonus


(0.9)


-


-

IPO related costs


-


(5.6)


-

Operating profit

34.6


28.5

21%

Share-based payments

The Group continued to operate its Employee Share Option Scheme for employees and has outstanding warrants for long-term agreements with certain property partners. 2015 saw the first full year of the Group's LTIP and deferred bonus schemes, which were enacted at IPO. The charge of 1.9m in 2015 was lower than the previous year as there was a one-off warrant charge of 3.0m relating to the IPO in 2014.

Depreciation

The depreciation charge increased to 0.4m in 2015. The increase was due to the full year impact of depreciation of leasehold improvements recognised on the Group's relocation to a new head office during 2014.

Amortisation

The Group splits out amortisation of intangibles arising on the acquisition of uSwitch and amortisation of other intangibles for the purposes of calculating adjusted basic EPS. The charge for amortisation of intangibles arising on the acquisition of uSwitch for the four months of ownership in 2015 was 2.0m. The amortisation of other intangibles charge was broadly flat at 1.6m.

Exceptional items

Exceptional items include costs which Management believe to be exceptional in nature by virtue of their size or incidence. Total exceptional items of 8.2m in 2015 represent costs incurred as a result of the Group's acquisition of uSwitch, comprising 5.1m of transaction costs and 3.1m of consideration and deal-related performance payments payable to uSwitch Management. Under International Financial Reporting Standards (IFRS), consideration contingent on continued employment is considered remuneration. Therefore the Management related payments are recognised within the Group's income statement over the period until the payment becomes unconditional.

Net finance costs

Net finance costs of 1.0m comprise finance costs of 1.2m, which were partly offset by finance income of 0.2m. The increase in finance costs compared to the prior year was due to the interest paid for the use of the Group's new five-year, 150m revolving credit facility secured as part of the uSwitch acquisition.

Income tax expense

The Group's income tax charge in 2015 was 8.2m representing an effective income tax rate of 24.4% (2014: 26.2%). This is higher than the average statutory tax rate of 20.5% due to certain transaction costs incurred on the acquisition of uSwitch which are not tax deductible.

Profit for the year

Adjusted profit for the year, which is calculated as profit for the year after adding back amortisation of intangibles arising on the acquisition of uSwitch and exceptional items adjusted for tax, increased by 30% to 34.8m. Statutory profit increased by 20% to 25.4m.

Earnings per share (EPS)

Adjusted basic EPS, which strips out the impact of exceptional items and amortisation of intangibles arising from the acquisition of uSwitch, increased by 29% to 8.4 pence per share in line with the Group's increase in adjusted profit for the year. Statutory basic EPS also grew by 22% to 6.2p.

Pence per share

2015

2014

YoY%

Adjusted basic EPS

8.4

6.5

+29%

Basic EPS

6.2

5.1

+ 22%

Summary statement of financial position

m

2015

2014

Goodwill and intangibles

253.7

75.2

Property, plant and equipment (PPE)

1.9

1.5

Cash and cash equivalents

19.2

31.0

Working capital1

7.9

(5.6)

Loans and borrowings

(112.4)

-

Deferred and contingent consideration2

(38.1)

-

Provisions2

(0.8)

(0.6)

Tax assets and liabilities2

(14.2)

(3.3)

Net assets

117.2

98.2

The Group's statement of financial position remained strong at 30 September 2015 as the business generates high levels of cash. Net assets as at 30 September 2015 were 117.2m. Intangible assets increased to 253.7m as a result of the uSwitch acquisition. The Group ended the year with 19.2m of cash and cash equivalents, and 112.4m of loans and borrowings. Trade and other receivables increased due to accrued income in the Comparison Services division, which operates on a longer working capital cycle as a result of its transactional nature. The Group recognises a liability of 38.1m for deferred and contingent consideration payable as a result of the uSwitch acquisition. Tax liabilities increased as a result of the recognition of a deferred tax liability in respect of intangible assets arising on the acquisition of uSwitch.

Net debt position

m

2015

2014

Total loans and borrowings

(112.4)

-

Cash and cash equivalents

19.2

31.0

Net (debt)/cash

(93.2)

31.0

The Group had borrowings of 114.0m before the deduction of capitalised costs. The overall increase in net debt can be attributed to the acquisition of uSwitch.

Summary statement of cash flows

m

2015

2014

Net cash inflows from operating activities

39.1

31.0

Cash flows (used in)/from investing activities:



Acquisitions

(153.5)

(1.5)

Interest income received

0.2

0.2

Capital expenditure

(0.8)

(1.1)

Net cash used in investing activities

(154.1)

(2.4)

Proceeds on issue of debt, net of issue costs

123.3

-

Repayment of debt

(11.0)

-

Interest paid

(0.8)

-

Shares released from trust

0.4

0.2

Unpaid share capital paid-up

-

9.6

Dividends paid

(8.7)

(35.5)

Net cash flows from financing activities

103.2

(25.7)

Net (decrease)/increase in cash and cash equivalents

(11.8)

2.9

Cash and cash equivalents at end of the year

19.2

31.0

The Group saw strong operating cash generation with net cash inflows from operating activities of 39.1m. The increase of 26% compared to last year was driven by four months of trading from the Comparison Services business. The Group had a net outflow of 153.5m relating to the cash costs of the acquisition of uSwitch which includes transaction costs and excludes deferred consideration amounts payable. During the Period the Group repaid 11.0m of debt, reducing the Group's outstanding gross debt from 125.0m to 114.0m and incurred 0.8m of interest costs.

1 Working capital is defined as both current and non-current, trade and other receivables less trade and other payables

2 Includes both current and non-current balances

Dividends

The Group maintains a dividend pay-out ratioof 35-45% of profits excluding share-based payments and exceptional items based on the strong cash generation and long-term earnings potential of the Group. The Directors have proposed a final dividend for 2015 of 2.5 pence per share, resulting in a final proposed dividend of 10.3m. Subject to shareholder approval at the 2016 Annual General Meeting, this will be paid on 3 March 2016 to all shareholders on the share register on 18 December 2015. This together with the interim dividend of 1.0 pence per share brings the total dividend in respect of year ended 30 September 2015 to 3.5 pence per share or 14.4m.



Appendix 1:Group Key Performance Indicators ("KPIs")

The Group's key performance indicators ('KPIs') have been updated to incorporate the acquisition of uSwitch. The figures below are for the 24 month period from 1 October 2013 to 30 September 2015. Each period includes twelve months of uSwitch trading in order to give a meaningful comparator.

m

2015

20141

YoY%

Property Services:




UK Agency

58.3

63.0

(7%)

New Homes

11.0

8.5

29%

Other2

10.6

8.7

22%

Total Property Services revenue

79.9

80.2

-

Comparison Services




Energy3

36.0

35.6

1%

Communications4

34.9

27.2

28%

Other5

9.3

5.5

69%

Total Comparison Services revenue

80.2

68.3

17%





Total Revenue

160.1

148.5

8%

15.8

12.8

23%

Other costs6

23.2

27.8

(17%)

Total Property Services operating costs

39.0

40.6

(4%)





Total Property Services Adjusted EBITDA

40.9

39.6

3%





Comparison Services

Staff costs

11.6

9.4

23%

Other costs6

46.2

37.9

22%

Total Comparison Services operating costs

57.8

47.3

22%





Comparison Services Adjusted EBITDA

22.4

21.0

7%





Adjusted EBITDA

63.3

60.6

4%





KPIs

2015

2014

YoY%

Group visits7 (million per month)

49.1

47.5

3%

Property Services:




ARPA (average revenue per advertiser)




UK Agency

357

323

11%

New Homes

335

270

24%

Overseas

149

139

7%

Commercial

107

-

-

Blended

342

312

10%

Partners:




UK Agency

12,702

16,373

(22%)

New Homes

2,706

2,715

-

Overseas

737

575

28%

Commercial

266

-

-

Total number of partners

16,411

19,663

(17%)

Number of visits (million per month)

44.7

42.8

4%

Number of Property Services leads (million)

25.2

29.2

(14%)

Number of listings ('000)

845

1,110

(24%)

Comparison Services:




Number of Comparison Services leads8 (million)

24.8

18.3

36%

ARPL9 (average revenue per lead)

3.23

3.72

(13%)

1The Comparison Services business benefited from the impact of energy supplier price rises in September 2013. This equated to a c.9m increase in Energy Revenue and a c.5m increase in Adjusted EBITDA in 2014

2Other includes revenue from advertising, marketing services, data sales, overseas and commercial property

3Energy includes revenue from gas & electricity switching

4Communications includes revenue from mobile, broadband, pay TV & home phone switching

5Other includes revenue from financial services switching, boiler cover, business energy and data insight

6Other Costs includes marketing, technology, property and administrative costs

7Visits comprise individual sessions on the Group's websites or mobile applications by users for the Period indicated as measured by Google Analytics

8Number of Comparison Services leads - The Group measures Comparison Services leads at the point when a consumer completes an application form hosted on the Group's website or at the point in time when the customer leaves the Group's website having clicked through to a third party website

9ARPL (average revenue per lead) - ARPL is the revenue from energy switching, communications switching, financial services switching, boiler cover, business energy and data insight divided by the total number of Comparison Services leads during the month, measured as a monthly average over the period


Principal risks and uncertainties

Description

Impact

Management and mitigation

Assessment of risk year-on-year

Macroeconomic conditions

The Group derives most of its revenues from the UK residential property, energy, broadband and mobile markets. The Group is therefore dependent on the macroeconomic conditions in the UK and macro factors within each of the Group's key markets.

If the UK economy contracts or if interest rates increase, average property prices, the number of mortgage approvals, the volume of transactions in the UK housing market and the marketing budgets of the Group's advertising partners could decrease, which could reduce demand for the Group's services.

The Group is also exposed to changes in consumer and partner behaviour driven by fluctuations within the energy, broadband and mobile markets, which could impact demand for the Group's services.

.

Regularly reviewing market conditions and indicators

.

Maintaining a flexible cost base that can respond to changing conditions

.

Diversifying risk by maintaining a balance between different revenue streams, including diversification through the uSwitch acquisition, in order to provide protection against volatility within certain markets

.

Developing revenue streams in other related/adjacent markets

.

Communicating the effectiveness of digital media versus alternative mediums such as print

.

Promoting the benefit and potential savings for consumers of home services switching

No change

Competitive environment

The Group operates in marketplaces which are highly competitive. The actions of the Group's competitors can have a direct impact on the Group.

If competitors are able to provide, or are perceived to provide, an enhanced partner or consumer service then there is a risk that the Group's visits, number of partners and revenue may decline as a result.

A significant portion of traffic to the Group's websites is driven by search engines. Increased search engine optimisation or digital marketing expenditure by competitors may cause the Group to increase its own marketing budget to ensure that it can continue to compete effectively.

Whilst Agents' Mutual continues to operate its restrictive advertising provision there is a risk that certain estate agent partners cannot, or choose not, to list on the Group's Property Services websites.

There is a risk that the Group may not be able to achieve significant traction in its other revenue channels due to the size, scale or market share of existing players in the market.

.

Communicating to partners the value proposition of advertising on the Group's websites

.

Offering attractive and competitive pricing packages to partners.

.

Continually monitoring and undertaking reviews of competitor strategies that are built into the regular business planning cycle

.

Increasing consumer brand awareness through marketing

.

Communicating the benefits to both partners and consumers of the uSwitch acquisition and the Group's strategy to become the "consumer champion at the heart of the home"

.

Continuing to develop and extend the Group's product offering and improve the value provided for partners

.

Optimising the consumer experience to drive traffic and leads for partners

.

Diversification of risk through the acquisition of uSwitch

.

Regularly reviewing search engine optimisation and pay per click cost and effectiveness



No change

Changing online landscape and consumer trends

The Group participates in a fast-moving marketplace which is subject to rapid technological development and changes in consumer trends which may impact the Group's ability to offer the best products and services to its partners and consumers.

The way in which consumers interact with businesses is evolving rapidly. There is a risk that consumer engagement and traffic may decline if the Group does not keep up with evolving consumer trends. Furthermore, the Group's partners are constantly developing their business models and the way in which they interact with consumers directly. Failure of the Group to adapt to meet the advertising needs of its partners could lead to a fall in the number of advertising partners and revenues.

The Group is also subject to changes in policies set by search engine providers. Failure to keep pace with these changes may lead to the Group's websites receiving less exposure to consumers and result in a fall in visitor numbers.

.

Increasing user engagement levels by continuing a consumer-centric approach to product development, improving value for the Group's advertising partners

.

Ensuring mobile optimisation in all new products and features

.

Maintaining organisational flexibility, allowing fast responses to new business opportunities or threats

.

Monitoring and regular review of search engine optimisation



No change

Retention and recruitment

Success depends on the continued service and performance of the Group's Senior Leadership Team and other key employees. Skilled development, technical, operating, sales and marketing personnel are also essential for the business to meet its strategic goals.

Competition for qualified employees is intense and the loss of a number of qualified employees, or an inability to attract, retain and motivate highly skilled employees could adversely impact the Group's operations, financial condition or prospects.

There is also a risk of an increase in staff churn as a result of the uSwitch acquisition due to a failure to integrate the uSwitch business at a cultural and operational level.

.

Investing in succession planning and improving learning and development, giving opportunities for employees to upgrade skills

.

Implementation of a new HR system in 2015 which assists in supporting employees

.

Providing competitive compensation packages to all staff, including a blend of short and long-term incentives for managers, including the introduction of the "Value Creation Plan" for the CEO

.

Maintaining the culture of the Group to generate significant staff loyalty

.

Operating a structured approach to recruitment using specialist teams to ensure the recruitment of high-quality employees quickly

No change

IT systems and cyber-security

A number of the Group's IT systems are interdependent and a failure in one system or a security breach may disrupt the efficiency and functioning of the Group's operations. The Group may also be subjected to cyber-attacks.

Any failure of the Group's IT infrastructure through error or attack could impair the operation of the Group's websites, the processing and storage of data and the day-to-day management of the Group's business. In addition, any theft or misuse of data held within the Group's databases could have both reputational and financial implications for the Group.

.

Operating extensive disaster recovery and business continuity contingency plans

.

Regularly testing the security of the IT systems and platforms including penetration testing and testing of DDOS attack procedures


Maintaining separate platforms for the Property Services and Comparison Services businesses

.

Restricting access to data, systems and code and ensuring all systems are secure and up to date

.

Providing training for staff on data protection and compliance and the development of a Group-wide data policy

Up

Reputational and Brand damage

The Group operates a number of identifiable and respected brands which could be damaged by factors such as unethical or unlawful activity, poor customer service or negative press.

Damage to any of the Group's brands could lead to a fall in consumer confidence in the Group, reducing traffic and leads for the Group's partners and in turn impacting the Group's revenue. In particular, the uSwitch brand has developed a creditable reputation as a consumer champion which increases the potential impact of any reputational damage.

There is also a risk that the Group's partners may choose to terminate their existing relationship with the Group as a result of any reputational damage which would directly impact the Group's revenues.

.

Continually investing in the Group's brands

.

Embedding a culture of transparency, social awareness and ethical behaviour throughout the Group

.

Regularly reviewing the Group's risks and reviewing and developing internal controls to mitigate the risk of error or fraud

.

Executing the Group's strategy which has both consumers and the Group's partners at its core

.

Employment of a dedicated public relations team



Up

Regulatory environment

The Group operates in a number of regulated environments. Certain revenue streams within the Comparison Services businesses are regulated by the FCA. The Comparison Services business also complies with the OFGEM confidence code and is continuing to work with OFGEM in relation to its inquiries.

The Group is also involved in regular communication with OFCOM, the CMA and other regulatory bodies which impact the Group and its partners.

There is a risk that changes to the regulatory environment force the Group to revise its strategy, operations or business model. Changes in regulation may also impact the Group's profitability via increased compliance costs or a fall in revenues as a result of changes in consumer behaviour.

Non-compliance with regulations set by a regulatory body may also have both reputational and financial implications.

.

Maintaining regular contact with all significant regulatory bodies

.

Operating a culture of co-operation and transparency with regulators

.

Implementing processes to ensure compliance with all mandatory reporting obligations

.

Employment of a dedicated Regulation and Compliance manager within the Group

.

Regular monitoring of regulatory risks by the Board, Audit Committee, legal function and throughout the business

New

Debt covenants and funding

The Group holds external debt and therefore must ensure compliance with its debt covenant ratios. The Group also needs to ensure that it has the funding required to deliver on its strategy and future growth plans and that it manages its debt and cash balances effectively.

Failure of the Group to comply with its existing debt covenants may lead to a default on the Group's borrowings and require the Group to repay any amounts outstanding.

The level of debt within the business and the covenants in place may also restrict the amount of funds available for future growth including future M&A activity.

.

Negotiating sufficient headroom within the Group's existing facility

.

Consideration of current debt covenants embedded into budgeting and forecasting processes

.

Regularly monitoring compliance with current debt covenants and available headroom

.

Pro-active cash management

.

Consideration of additional or alternative funding should significant opportunities for growth be identified

New

uSwitch integration

The acquisition of uSwitch was a significant transaction and the Group needs to ensure that the business integrates successfully in terms of strategy, operations and culture.

Failure to realise the Group's strategy to become the "consumer champion at the heart of the home" and build an integrated and optimised consumer product offering may impact the Group's future revenues and have an adverse effect on both the consumer experience and the value generated for the Group's advertising partners.

Failure to integrate the business at a cultural and operational level may also increase staff churn within the business.

.

Executing the integration strategy and plan developed on acquisition

.

Oversight of the enlarged Group by the Executive and Senior Leadership teams to ensure harmonisation of strategy and objectives across the Group

.

Designing and developing integrated product and service offerings

.

Communicating the benefits to both partners and consumers of the uSwitch acquisition and the Group's strategy to become the "consumer champion at the heart of the home"

.

Harmonisation of benefits, working environments and practices and culture across the Group

New


Full year results

Thefinancialinformation set out below has been taken from the consolidatedfinancial statements of Zoopla Property Group Plc for the year ended 30 September 2015 which were approved by the Board of Directors on 1December 2015. The financialinformation does not constitute statutory accounts within the meaning of sections 435(1) and (2) of the Companies Act 2006. An unqualified report on the consolidated financial statements for the year ended 30 September 2015 has been given by the auditors Deloitte LLP. It did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain any statement under section 498 (2) or (3) of the Companies Act 2006. The consolidated financial statements will be filed with the Registrar of Companies, subject to their approval by the Company's shareholders at the Company's Annual General Meeting on 25 February 2015.The Company's Annual Report for the year ended 30 September 2015 will be posted to shareholders, and will be madeavailableon the Company's website, in December 2015.

Statement of Directors' responsibilities

The responsibility statement below has been prepared in connection with the Company's full Annual Report for the year ended 30 September 2015. Certain parts thereof are not included within this Announcement.

The Directors confirm to the best of their knowledge that:

a)the Group consolidated financial statements from which the financial information within these preliminary consolidated financial results have been extracted, are prepared in accordance with IFRSs as adopted by the European Union and give a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole; and

b)the Annual Report and the Operating and Financial Review include a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties faced by the Group.

The Directors of Zoopla Property Group Plc and their respective responsibilities are listed in the Annual Report for 2015. This responsibility statement was approved by the Board of Directors and is signed on its behalf by:

Alex Chesterman

Director

1 December 2015

Consolidated statement of comprehensive income

For the year ended 30 September 2015 from continuing operations

Notes

2015

000

2014

000

Revenue

107,556

80,230

Administrative expenses

(72,994)

(51,763)

Adjusted EBITDA

3

48,694

39,614

Share-based payments

23

(1,873)

(3,910)

Depreciation and amortisation

(4,072)

(1,658)

Exceptional items

3

(8,187)

(5,579)

Operating profit

4

34,562

28,467

Finance income

184

202

Finance costs

(1,163)

-

Profit before tax

33,583

28,669

Income tax expense

9

(8,200)

(7,592)

Profit for the year being total comprehensive income

25,383

21,077

Attributable to:

Owners of the parent

25,383

21,077

Earnings per share

Basic (pence per share)

11

6.2

5.1

Diluted (pence per share)

11

6.0

5.1

Consolidated statement of financial position

As at 30 September 2015

Notes

2015

000

2014

000

Assets

Non-current assets

Property, plant and equipment

12

1,930

1,457

Intangible assets

15

253,674

75,194

Trade and other receivables

16

7,446

-

Deferred tax assets

21

-

437

263,050

77,088

Current assets

Trade and other receivables

16

22,780

5,887

Cash and cash equivalents

19,199

31,025

41,979

36,912

Total assets

305,029

114,000

Liabilities

Current liabilities

Trade and other payables

17

22,251

11,418

Current tax liabilities

4,990

3,777

Deferred and contingent consideration

18

35,393

-

Provisions

19

190

-

Non-current liabilities

Loans and borrowings

20

112,432

-

Deferred and contingent consideration

18

2,739

-

Provisions

19

609

634

Deferred tax liabilities

21

9,185

-

Total liabilities

187,789

15,829

Net assets

117,240

98,171

Equity attributable to owners of the parent

Share capital

22

418

418

Share premium reserve

50

50

Other reserves

22

87,101

87,537

Retained earnings

29,671

10,166

Total equity

117,240

98,171

The consolidated financial statements of Zoopla Property Group Plc were approved by the Board of Directors and were signed on its behalf by:

A Chesterman

S Morana

Director

Director

1 December 2015

1 December 2015

Consolidated statement of cash flows

For the year ended 30 September 2015

2015

000

2014

000

Cash flows from operating activities

Profit before tax

33,583

28,669

Adjustments for:

Depreciation of property, plant and equipment

415

153

Amortisation of intangible assets

3,657

1,505

Finance income

(184)

(202)

Finance costs

1,163

-

Share-based payments

1,873

3,910

Transaction costs on acquisition of uSwitch

5,130

-

Movement in contingent and deferred consideration

2,142

-

Operating cash flow before changes in working capital

47,779

34,035

Increase in trade and other receivables

(428)

(984)

(Decrease)/Increase in trade and other payables

(46)

2,747

Increase/(Decrease) in provisions

30

(492)

Cash generated from operating activities

47,335

35,306

Income tax paid

(8,224)

(4,325)

Net cash flows from operating activities

39,111

30,981

Cash flows (used in)/from investing activities

Acquisition of subsidiaries, net of cash acquired

(146,012)

(1,497)

Amounts paid into escrow in relation to deferred and contingent consideration

(7,436)

-

Interest received

184

202

Acquisition of property, plant and equipment

(111)

(929)

Acquisition of intangible assets

(709)

(162)

Net cash flows used in investing activities

(154,084)

(2,386)

Cash flows from/(used in) financing activities

Proceeds on issue of debt, net of issue costs

123,291

-

Repayment of debt

(11,000)

-

Interest paid

(780)

-

Proceeds on issue of shares

-

72

Unpaid share capital paid up

-

9,563

Shares released from trust

303

150

Equity contributions received

-

50

Dividends paid

(8,667)

(35,528)

Net cash flows from/(used in) financing activities

103,147

(25,693)

Net (decrease)/increase in cash and cash equivalents

(11,826)

2,902

Cash and cash equivalents at beginning of period

31,025

28,123

Cash and cash equivalents at end of period

19,199

31,025

Consolidated statement of changes in equity

For the year ended 30 September 2015

Share

capital

000

Share

premium

reserve

000

Other reserves

Retained

earnings

000

Total

equity

000

EBT share

reserve

000

Merger

reserve

000

At 1 October 2014

418

50

(1,566)

89,103

10,166

98,171

Profit and total comprehensive income for the period

-

-

-

-

25,383

25,383

Transactions with owners recorded directly in equity:

Share-based payments

-

-

-

-

1,723

1,723

Current tax on share-based payments

-

-

-

-

565

565

Deferred tax on share-based payments

-

-

-

-

(238)

(238)

Shares released from EBT

-

-

549

-

(246)

303

Transfer between reserves1

-

-

-

(985)

985

-

Dividends paid

-

-

-

-

(8,667)

(8,667)

At 30 September 2015

418

50

(1,017)

88,118

29,671

117,240

Share

capital

000

Share

premium

reserve

000

Other reserves

Retained

earnings

000

Total

equity

000

EBT share

reserve

000

Merger

reserve

000

At 1 October 20132

4

18,577

-

70,187

18,519

107,287

Profit and total comprehensive income for the period

-

-

-

-

21,077

21,077

Transactions with owners recorded directly in equity:

Share-based payments

-

-

-

-

3,882

3,882

Current tax on share-based payments

-

-

-

-

459

459

Deferred tax on share-based payments

-

-

-

-

722

722

Issue of share capital

-

1,788

-

-

-

1,788

Group restructuring2

414

(20,315)

-

19,901

-

-

Equity contributions

-

-

-

-

50

50

Shares purchased by EBT

-

-

(1,716)

-

-

(1,716)

Shares released from EBT

-

-

150

-

-

150

Transfer between reserves1

-

-

-

(985)

985

-

Dividends paid

-

-

-

-

(35,528)

(35,528)

At 30 September 20142

418

50

(1,566)

89,103

10,166

98,171

1 The transfer from merger reserve to retained earnings in 2015 and 2014 represents an equalisation adjustment in respect of the amortisation charge on intangibles which arose on acquisition of The Digital Property Group Limited on 31 May 2012.

2 During 2014 the Group was subject to restructuring prior to Admission on the London Stock Exchange. Zoopla Property Group Plc was inserted at the top of the Group as the new parent company, with the former parent, ZPG Limited (formerly Zoopla Property Group Limited), becoming a direct subsidiary of Zoopla Property Group Plc through a share-for-share exchange. The Group's Annual Report 2014 provides further details on the basis of consolidation. 2014 balances are stated as though the transactions occurred within Zoopla Property Group Plc.

Notes to the financial statements

1. Accounting policies

Zoopla Property Group Plc is a company domiciled and incorporated in the United Kingdom. The address of the registered office is the Harlequin Building, 65 Southwark Street, London SE1 0HR.

1.1 Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below for the years ended 30 September 2015 and 30 September 2014. The policies have been consistently applied to all the periods presented, unless otherwise stated.

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and IFRIC Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRS"). They are prepared on the historical cost basis.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Management to exercise judgement in applying the Group's accounting policies. Note 1.20 gives further details relating to the Group's critical accounting estimates.

At the date of approval, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective for financial years beginning on or after 1 January 2015:

IFRS 9 - Financial Instruments - classification of financial assets and financial liabilities

Amendments to IFRS 11 - accounting for acquisition of Interests in Joint Operations

Amendments to IAS 16 and IAS 38 - clarification of acceptable methods of depreciation and amortisation

IFRS 15 - revenue from contracts with customers

Amendments to IAS 27 - equity method in separate financial statements

Amendments to IFRS 10/IAS 28 - sale or contribution of assets between an investor and its associate or joint venture

Improvements 2014 - annual improvements to IFRSs: 2012-2014

Amendments to IFRS 10, IFRS 12 and IFRS 28 - Investment Entities: Applying the consolidation exception

Amendments to IAS 1 - Disclosure initiative

The Group is currently in the process of assessing the impact of IFRS 15 - revenue from contracts with customers. All other standards identified above are not expected to have a material impact on the financial statements. There have been no new or revised standards adopted in the period.

1.2 Adoption of new and revised standards

These financial statements have been prepared in accordance with the policies set out in the Group's Annual Report for the year ended 30 September 2014. No new or revised accounting standards were adopted in the period.

1.3 Basis of consolidation

The Consolidated financial statements incorporate the accounts of Zoopla Property Group Plc ("the Company") and entities controlled by the Company (its "subsidiaries") (together, "the Group"). Control is achieved where the Company:

has the power over the investee;

is exposed, or has rights, to variable return from its involvement with the investee; and

has the ability to use its power to affect its returns.

The results of subsidiaries acquired are included from the effective date of acquisition. The results of subsidiaries sold are included up to the effective date of disposal.

During the year the Group acquired Ulysses Enterprises and its subsidiaries (together, "uSwitch"). The results of uSwitch have been consolidated from the date of acquisition, being 1 June 2015. Details of the acquisition are set out in Note 14.

In June 2014 the Group was subject to restructuring prior to Admission on the London Stock Exchange. Zoopla Property Group Plc was inserted at the top of the Group as the new parent company, with the former parent, ZPG Limited (formerly Zoopla Property Group Limited), becoming a direct subsidiary of Zoopla Property Group Plc through a share-for-share exchange. The Group's Annual Report 2014 provides further details on the basis of consolidation. 2014 balances are stated as though the transactions occurred within Zoopla Property Group Plc.

1.4 Going concern

The financial position of the Group shows a positive net asset position and the Group continues to generate both positive Adjusted EBITDA and profit after tax. As a consequence, the Directors believe that the Group is well placed to manage its business and financial risks successfully.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the historical financial information.

1.5 Revenue

Revenue represents amounts due for services provided during the period, net of value added tax (VAT), with the VAT liability being recognised at the date of invoice.

The Group categorises revenue into two broad categories - Property Services and Comparison Services.

The main sources of Property Services revenue are subscriptions from estate agents ("UK Agency revenue") and developers ("New Homes revenue"), in respect of properties advertised on the Group's websites. Revenue is recognised over the period of the subscription. Revenue from other property services ("Other Property Services revenue") is recognised in the month in which the service is provided.

The main sources of Comparison Services revenue are fees received for gas and electricity comparison services ("Energy revenue") and mobile, broadband, pay TV and home phone comparison services ("Communications revenue"). Revenue is recognised at the point at which a transaction on the Group's website completes based on the historical conversion of such transactions into completed switches. Revenue from other comparison services ("Other Comparison Services revenue") is recognised in the month in which the service is provided.

1.6 Operating leases

Leases are classified as operating leases as substantially all of the risks and rewards incidental to ownership are not transferred to the Group. The total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term.

1.7 Finance income and costs

Finance income represents interest receivable on cash and deposit balances. Interest income is recognised on an accruals basis using the effective interest method.

Finance costs represent interest and certain fees charged on bank loans, the Group's revolving credit facility, overdraft balances and other borrowings. Finance costs are recognised on an accruals basis using the effective interest method.

1.8 Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.

Subsequent costs to repair or service a previously recognised item of property, plant and equipment are expensed when incurred as they do not provide future economic benefit to the organisation.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful economic lives, using the straight-line method, on the following bases:

Fixtures and fittings

-

over 2-5 years

Computer equipment

-

over 2-5 years

Leasehold improvements

-

over the lease term

The Directors review the residual values and useful economic lives of assets on an annual basis.

1.9 Business combinations

The acquisition of subsidiaries and businesses is accounted for using the acquisition method in accordance with IFRS 3. The consideration for each acquisition is measured at the aggregate of fair values of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, net of cash acquired. Acquisition related costs, other than those associated with the issue of debt or equity securities, are recognised in the consolidated statement of comprehensive income as incurred.

At the acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair value on the acquisition date with the exception of deferred tax assets and liabilities, which are measured in accordance with IAS 12 - Income Taxes. Identifiable net assets include the recognition of any separately identifiable intangible assets. Further detail of the identifiable assets and liabilities recognised on the acquisition of uSwitch can be found in Note 14.

Deferred and contingent consideration are measured at fair value at the date of acquisition. Where the amounts payable are classified as a financial liability any subsequent change in the fair value is charged/credited to the Group's consolidated statement of comprehensive income. Amounts classified as equity are not subsequently remeasured. Where consideration is contingent on the continued employment of Management the amount is recognised as a remuneration expense over the deferral period.

1.10 Goodwill

Goodwill arising on a business combination represents the difference between the fair value of the consideration paid and the fair value of assets and liabilities acquired. Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income.

Goodwill is not subject to amortisation but is tested for impairment annually and whenever the Directors have an indication that it might be impaired. For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the combination.

1.11 Intangible assets

Intangible assets with finite lives are stated at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged to the consolidated statement of comprehensive income on a straight-line basis over the estimated useful lives of the intangible assets as follows:

Brand

-

10 years

Domain names

-

5 years

Databases

-

3-10 years

Customer relationships

-

5 years

Website development and computer software

-

3 years

1.12 Impairment of tangible and intangible assets

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Where the asset does not generate cash flows that are independent from other assets, the recoverable amount of the cash-generating unit to which the asset belongs is estimated. Any impairment loss is recognised immediately in the consolidated statement of comprehensive income.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that this increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in the consolidated statement of comprehensive income.

1.13 Research and development

The Group incurs expenditure on research and development in order to develop and improve new and existing property websites and products. Expenditure includes the staff costs of the technical team.

Research expenditure on planning new websites or products and obtaining new technical knowledge is expensed in the period in which it is incurred. Development costs are expensed when incurred unless they meet certain criteria for capitalisation. Development costs whereby research findings are applied to creating a substantially enhanced website or new product are only capitalised once the technical feasibility and the commercial viability of the project has been demonstrated and they can be reliably measured. Capitalised development costs are amortised on a straight-line basis over their expected useful economic life.

Once the new website or product is available for use, subsequent expenditure to maintain the website or product, or on small enhancements to the website or product, is recognised as an expense when it is incurred.

1.14 Financial instruments

Financial assets and financial liabilities are recognised on the statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Trade and other receivables are designated as loans and receivables. They are recognised at amortised cost, which is net of any allowance for impairment in relation to irrecoverable amounts. This is deemed to be a reasonable approximation of their fair value. The provision is reviewed regularly in conjunction with a detailed analysis of historical payment profiles and past default experience. When a trade receivable is deemed uncollectable, it is written off against the allowance account. The Group receives interest income on certain amounts held in escrow.

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Trade and other payables are not interest bearing and are designated as other financial liabilities. They are recognised at their carrying amount which is deemed to be a reasonable approximation of their fair value.

Borrowings are measured at amortised cost, net of arrangement fees. Arrangement fees are released through the consolidated statement of comprehensive income under the effective interest method, along with interest charged, over the life of the instrument.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The Company's Ordinary Shares are classified as equity instruments and are recognised at the proceeds received, net of any direct issue costs. Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.

Financial instruments are not used for speculative purposes.

1.15 Current tax

Current income tax, including UK income tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

1.16 Deferred tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

the initial recognition of goodwill;

the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax assets are recovered.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

the same taxable Group company; or

different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

1.17 Provisions

Provisions are recognised when the Group has a present obligation, legal or constructive, as a result of a past event, it is probable that the Group will be required to settle that obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the statement of financial position date, and are discounted to present value where the impact is material. The unwinding of any discount is recognised in finance costs.

Dilapidation provisions are recognised based on Management's best estimate of costs to make good the Group's leasehold properties at the end of the lease term.

The Group recognises a restructuring provision when there is a detailed formal plan in place and when it has raised a valid expectation in those affected that it will carry out the restructuring, either by starting to implement the plan or by announcing its main features to those affected. The provision includes only the direct expenditures arising from the restructuring and not those associated with the ongoing activities of the Group.

1.18 Employee benefits: defined contribution benefit scheme

The Group operates a defined contribution pension scheme which is a post-employment benefit plan under which the Group pays fixed contributions into a fund. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Contributions payable to the fund are charged to the statement of comprehensive income in the period to which they relate.

1.19 Share-based payments

The Group provides equity-settled share-based incentive plans whereby Zoopla Property Group Plc grants shares or nil-cost options over its shares to employees of its subsidiaries for their employment services. The Group also issues warrants over shares in Zoopla Property Group Plc to a number of the Group's estate agent partners, allowing them to acquire shares in exchange for making their property listings available for inclusion on the Group's property websites.

Equity-settled share-based payments to employees and partners are measured at the fair value of the equity instruments at the grant date. The fair value is measured using a suitable valuation model, including the Black-Scholes and Monte-Carlo valuation models where appropriate, and is charged to the consolidated statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to meet a market vesting condition. Details regarding the determination of the fair value of equity-settled share-based payment transactions are set out in Note 23.

Where the terms and conditions of options are modified before they vest, the increase in fair value of the options, measured immediately before and after the modification, is charged to the income statement over the remaining vesting period.

Within the Company accounts of Zoopla Property Group Plc equity-settled share options granted directly to employees or estate agent partners of a subsidiary are treated as a capital contribution to the subsidiary. The capital contribution is measured by reference to the fair value of the share-based payments charge for the period and is recognised as an increase in the cost of investment with a corresponding credit to equity.

A number of shares are held in trust in order to settle future exercises of the Group's share incentive schemes. Details of the trusts are included in Note 23. Shares held in trust are treated as a deduction from equity.

Employer's National Insurance contributions are accrued, where applicable, at a rate of 13.8%. The amount accrued is based on the market value of the shares at 30 September 2015 after deducting the exercise price of the share option.

1.20 Critical accounting judgements and key sources of estimation uncertainty

The Group's Management makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the current circumstances. Actual results may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within future periods are discussed below.

Acquisition of uSwitch

On 1 June 2015 the Group completed its acquisition of Ulysses Enterprises Limited and its subsidiaries (together, "uSwitch"). The process of determining the fair value of assets and liabilities acquired is inherently judgemental and there is a risk that inappropriate methodologies or assumptions could lead to the valuation of acquired intangibles, goodwill or the fair value of other net assets acquired being misstated.

The acquisition also included an element of contingent consideration in the form of a 0.0-30.0 million earn-out payable to both institutional and management shareholders. The process of determining the fair value of contingent consideration payable to institutional investors was subject to Management's best estimate of the final pay-out at the date of acquisition. The earn-out payable to management shareholders continuing in employment is recognised in the Group's consolidated statement of comprehensive income over the period of deferral and this accrual is updated each period to reflect Management's best estimate of the final pay-out. At the date of acquisition Management expected to settle the earn-out in full. This assumption is unchanged as at the date of this report. Management is therefore comfortable that the liability on the consolidated statement of financial position as at 30 September 2015 remains appropriate.

Impairment of goodwill and intangibles

The Group holds goodwill and intangibles on the statement of financial position in respect of business acquisitions made. During the period the Group has recognised intangible assets and goodwill of 181 million in respect of the acquisition of uSwitch. Acquired intangibles include acquired brands, domain names, websites and supporting technology platforms and customer relationships. The Group is required to review these assets for impairment. Determining whether goodwill and intangible assets are impaired or whether a reversal of impairment of intangible assets should be recorded requires an estimation of the recoverable value, which represents the higher of fair value and value in use, of the relevant cash-generating unit. The value in use calculation requires Management to estimate the future cash flows expected to arise from the cash-generating unit, discounted using a suitable discount rate to determine if any impairment has occurred. A key area of judgement is deciding the long-term growth rate of the applicable businesses and the discount rate applied to those cash flows. Details of the assumptions used are included in Note 15 to the financial statements.

Revenue and accrued income

Revenue generated by the Group's Comparison Services division is recognised predominantly from online switching services. Revenue accruals are made based on an estimation of the likely number of successful switches. Revenue recognition, including the existence of revenue, is considered to be a significant judgement area due to the estimates required to determine accrued revenue at the period end.

Revenue is recognised at the point at which a transaction on the Group's website is completed. An element of Management judgement is required in calculating a revenue accrual which estimates the number of successful switches for each provider in the period between the last date of billing and the latest provider data being made available. The accrued income is estimated by considering the volume of transactions that have passed from the Group's websites, the historical conversion of such transaction into completed switches and contracted revenue per switch.

Revenue from Property Services is predominantly subscription based and therefore there is a lower amount of estimation uncertainty and Management judgement involved in its recognition and measurement.

1.21 Non-GAAP performance measures

In the analysis of the Group's financial performance certain information disclosed in the financial statements may be prepared on a non-GAAP basis or has been derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. These measures are reported in line with how financial information is analysed by Management. The Directors believe that these non-GAAP measures provide a more appropriate measure of the Group's underlying business performance. The non-GAAP measures are designed to increase comparability of the Group's financial performance year-on-year. However, these measures may not be comparable with non-GAAP measures adopted by other companies. The key non-GAAP measures presented by the Group are:

Adjusted EBITDA - which is defined as operating profit after adding back depreciation and amortisation

share-based payments and exceptional items (Note 3).

Adjusted basic EPS - which is defined as profit for the year, excluding exceptional items and amortisation of intangible assets arising on the acquisition of uSwitch, adjusted for tax and divided by the weighted average number of shares in issue for the period (Note 11).

2. Business and geographical segments

The Board of Directors has been identified as the Group's chief operating decision maker. The monthly reporting pack provided to the Board to enable assessment of the performance of the business has been used as the basis for determining the Group's operating segments.

Whilst the chief operating decision maker monitors the performance of the business at a revenue and Adjusted EBITDA level (Note 3); depreciation and amortisation, share-based payments, exceptional items, finance income and costs and income tax are all monitored on a centralised basis. As the Group continues to evolve and the earn-out period ends we will assess the relevance of splitting out Adjusted EBITDA for the Property Services and Comparison Services divisions.

Assets and liabilities are also managed on a centralised basis and are not reported to the chief operating decision maker in a disaggregated format.

The chief operating decision maker monitors six individual revenue streams as set out below. The six revenue streams are grouped under two headings: Property Services and Comparison Services. Adjusted EBITDA is monitored on an aggregated basis under these two headings. The Comparison services business arose on completion of the acquisition of uSwitch on 1June 2015. Revenue and costs shown under this heading therefore represent trading for the four months from 1 June 2015 to 30 September 2015, being the period of consolidation.

Property Services

UK Agency revenue which represents property advertising services provided to estate agents and lettings agents;

New Homes revenue which represents property advertising services provided to new home developers; and

Other Property Services revenue which predominantly represents overseas property advertising services display advertising and data services.

Comparison Services

Energy revenue which represents gas and electricity switching services;

Communications revenue which represents mobile broadband pay TV and home phone switching services; and

Other Comparison Services revenue which predominantly represents financial services switching boiler cover business energy and data insight services. All material revenues are generated from within the UK.

The following table analyses the Group's revenue streams as described above:

2015

Property

Services

000

Comparison

Services

000

Total

Group

000

UK Agency

58,269

-

58,269

New Homes

10,965

-

10,965

Other Property Services

10,663

-

10,663

Energy

-

11,576

11,576

Communications

-

13,322

13,322

Other Comparison Services

-

2,761

2,761

Total revenue

79,897

27,659

107,556

Underlying costs

(39,031)

(19,831)

(58,862)

Adjusted EBITDA

40,866

7,828

48,694

Share-based payments

(1,873)

Depreciation and amortisation

(4,072)

Exceptional items

(8,187)

Operating profit

34,562

Finance income

184

Finance costs

(1,163)

Profit before tax

33,583

Income tax expense

(8,200)

Profit for the year being total comprehensive income

25,383

2014

Property

Services

000

Comparison

Services

000

Total

Group

000

Revenue

UK Agency

62,986

-

62,986

New Homes

8,547

-

8,547

Other Property Services

8,697

-

8,697

Total revenue

80,230

-

80,230

Underlying costs

(40,616)

-

(40,616)

Adjusted EBITDA

39,614

-

39,614

Share-based payments

(3,910)

Depreciation and amortisation

(1,658)

Exceptional items

(5,579)

Operating profit

28,467

Finance income

202

Profit before tax

28,669

Income tax expense

(7,592)

Profit for the year being total comprehensive income

21,077

3. Adjusted EBITDA

Adjusted EBITDA is used by Management as a key measure to monitor the Group's business and the Directors believe it should be disclosed on the face of the statement of comprehensive income to assist in the understanding of the Group's underlying financial performance. Furthermore, the terms of the Group's revolving credit facility require Management to report on the Group's Net Debt to Adjusted EBITDA ratio. Adjusted EBITDA is therefore considered a key performance metric for Management, the providers of the Group's external debt and other stakeholders.

The Group defines Adjusted EBITDA as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items. Exceptional items include costs and profits which Management believes to be exceptional in nature by virtue of their size or incidence. Such items would include costs associated with business combinations, one-off gains and losses on disposal, and similar items of a non-recurring nature together with reorganisation costs and similar charges. In 2015 exceptional items relate to the acquisition of uSwitch as set out below. Exceptional items in 2014 were incurred in relation to the Group's IPO.

This is further adjusted for share-based payment expenses which are comprised of charges relating to: (i) warrants issued to certain of the Group's partners; and (ii) employee incentive plans which are aimed at retaining staff and aligning employee objectives with those of the Group. The Directors consider that excluding share-based payments and other non-cash charges such as depreciation and amortisation in arriving at Adjusted EBITDA gives a more appropriate measure of the Group's underlying financial performance and a closer approximation to the Group's operating cash flows.

The table below presents a reconciliation of profit for the period to Adjusted EBITDA for the periods shown:

2015

000

2014

000

Operating profit

34,562

28,467

Depreciation of property, plant and equipment

415

153

Amortisation of intangible assets arising on the acquisition of uSwitch

2,047

-

Amortisation of other intangible assets

1,610

1,505

Share-based payments (Note 23)

1,873

3,910

Exceptional items

8,187

5,579

Adjusted EBITDA

48,694

39,614

Exceptional items comprise:

2015

000

2014

000

Transaction costs incurred on the acquisition of uSwitch

5,130

-

Management deferred consideration conditional on continued employment

936

-

Management earn-out conditional on continued employment

1,206

-

Management deal related performance bonus

915

-

IPO related costs

-

5,579

Exceptional items

8,187

5,579

4. Operating profit

2015

000

2014

000

Operating profit is stated after charging:

Depreciation of property, plant and equipment

415

153

Amortisation of intangible assets arising on the acquisition of uSwitch

2,047

-

Amortisation of other intangible assets

1,610

1,505

Operating lease rentals:

- Land and buildings

597

428

- Other

341

304

Share-based payments (Note 23)

1,873

3,910

5. Auditor's remuneration

2015

000

2014

000

- for the audit of Zoopla Property Group Plc and the consolidated financial statements

55

30

- for the audit of subsidiaries of Zoopla Property Group Plc

135

85

Total audit fees

190

115

- Audit related assurance services

20

-

- Services related to acquisitions

182

-

- Services related to corporate finance transactions

-

678

Total non-audit fees

202

678

6. Employee costs

2015

000

2014

000

Staff costs (including Directors) comprise:

Wages and salaries

17,121

11,210

Social security costs

1,966

1,371

Defined contribution pension costs

391

178

Share-based payments (Note 23)

1,757

806

21,235

13,565

7. Remuneration of Key Management Personnel

2015

000

2014

000

Salary, benefits and bonus

1,949

1,139

Defined contribution pension cost

129

55

Share-based payments

448

56

2,526

1,250

Key Management Personnel comprises the Chairman, the Directors, the Group Chief Commercial Officer and, from 1 June 2015, the Chief Executive Officer of uSwitch.

Further information about the remuneration of Executive Directors is provided in the audited part of the Directors' remuneration report.

All of the Key Management Personnel excluding the Chairman and the Non-Executive Directors are members of the Group's defined contribution pension plans (2014: all).

8. Director and employee numbers

The average monthly number of Directors and employees in administration and Management during the period was:

2015

Number

2014

Number

Administration

285

205

Management

18

12

303

217

9. Income tax expense

2015

000

2014

000

Current tax

Current period

9,095

8,076

Adjustment in respect of prior periods

(145)

(235)

Total current tax

8,950

7,841

Deferred tax

Origination and reversal of temporary differences

(765)

(280)

Adjustment in respect of prior periods

-

4

Effect of change in UK corporation tax rate

15

27

Total deferred tax

(750)

(249)

Total income tax expense

8,200

7,592

Corporation tax is calculated at 20.5% (2014: 22.0%) of the taxable profit for the year.

A reduction in the standard rate of corporation tax from 23% to 21% was effective from 1 April 2014. A further reduction in the rate of corporation tax from 21% to 20% was effective from 1 April 2015. The reduced rate of 20% has also been reflected in the calculation of deferred tax as it was substantively enacted at the statement of financial position date.

On 8 July the Chancellor of the Exchequer announced a reduction in the rate of corporation tax to 19% from 1 April 2017 and 18% from 1 April 2020. The Finance Bill was not substantively enacted at the year-end date and therefore the one off impact of re-measuring the UK deferred tax assets and liabilities for the rate change is not recognised at 30 September 2015.

The charge for the period can be reconciled to the profit in the statement of comprehensive income as follows:

2015

000

2014

000

Profit before tax

33,583

28,669

Current corporation tax rate of 20.5% (2014: 22.0%)

6,885

6,307

Non-deductible expenses

1,390

1,584

Adjustments in respect of prior periods

(145)

(231)

Adjustment for the exercise of share options and warrants

104

(32)

Enhanced relief for R&D expenditure

(14)

-

Effect of change in UK corporation tax rate

(20)

27

Utilisation of tax losses not previously recognised

-

(63)

Total income tax expense

8,200

7,592

In addition to the amount charged to profit and loss, the following amounts relating to tax have been recognised directly in equity:

2015

000

2014

000

Credit for current tax on share-based payments

(565)

(459)

Deferred tax

Charge/(credit) for deferred tax on share-based payments

238

(722)

Total income tax recognised directly in equity

(327)

(1,181)

10. Dividends

2015

000

20141

000

Interim dividend for 2015 of 1.0 pence per Ordinary Share paid on 24 June 2015

4,131

-

Final dividend for 2014 of 1.1 pence per Ordinary Share paid on 23 February 2015

4,536

-

Special dividend of 2.2 pence per Ordinary Share paid on 13 June 2014

-

8,986

Interim dividend for 2014 of 3.5 pence per Ordinary Share paid on 10 April 2014

-

14,294

Final dividend for 2013 of 3.0 pence per Ordinary Share paid on 24 October 2013

-

12,248

Total dividends paid in the year

8,667

35,528

1 Dividends paid were declared on shares over the Group's previous parent, ZPG Limited. The dividend per share amounts disclosed above have been stated as if the 10 for one share exchange set out in the Annual Report 2014 occurred at the beginning of the comparative period.

During the year the Group paid 8.7 million in dividends to shareholders. Additionally, the Directors propose a final dividend for 2015 of 2.5 pence per share (2014: 1.1 pence per share) resulting in a final proposed dividend of 10.3 million (2014: 4.6 million). The dividend is subject to approval at the Group's AGM on 25 February 2016. The final dividend proposed has not been included as a liability at the statement of financial position date.

11. Earnings per share

2015

000

2014

000

Earnings for the purposes of basic and diluted earnings per share, being profit for the year

25,383

21,077

Exceptional items (Note 3)

8,187

5,579

Amortisation of intangible assets arising on the acquisition of uSwitch

2,047

-

Adjustment for tax

(784)

-

Adjusted earnings for the year

34,833

26,656

Number of shares

Weighted average number of Ordinary Shares

412,509,761

410,953,217

Dilutive effect of share options and warrants

3,761,746

5,011,672

Dilutive effect of potentially issuable shares

4,063,633

-

Dilutive earnings per share denominator

420,335,140

415,964,889

Basic and diluted earnings per share

Basic earnings per share (pence per share)

6.2

5.1

Diluted earnings per share (pence per share)

6.0

5.1

Adjusted earnings per share

Adjusted basic earnings per share (pence per share)

8.4

6.5

Adjusted diluted earnings per share (pence per share)

8.3

6.4

Adjusted EPS figures for 2015 exclude the amortisation of intangible assets arising on the acquisition of uSwitch, which arise only on consolidation. Management believes that excluding the amortisation of these intangibles better reflects the underlying performance of the Group and increases comparability of performance year-on-year.

The weighted average number of dilutive shares includes 4,063,633 shares in relation to deferred consideration arising on the Group's acquisition of uSwitch, which is payable in shares or cash at the option of the Group.

Nil-cost options issuable under the Group's Long-Term Incentive Plan and contingently issuable shares in respect of the earn-out arising on the Group's acquisition of uSwitch are not considered dilutive as the performance conditions have not been met at the statement of financial position date.

The 2014 weighted average number of shares has been stated as if the Group reorganisation set out in the Annual Report 2014 had occurred at the beginning of the comparative period.

12. Property, plant and equipment

Fixtures

and fittings

000

Computer

equipment

000

Leasehold

improvements

000

Total

000

Cost

At 1 October 2014

209

359

1,107

1,675

Acquired on acquisition of uSwitch

123

521

133

777

Additions

8

103

-

111

At 30 September 2015

340

983

1,240

2,563

At 1 October 2013

109

184

33

326

Additions

185

212

1,107

1,504

Disposals

(85)

(37)

(33)

(155)

At 30 September 2014

209

359

1,107

1,675

Accumulated depreciation

At 1 October 2014

35

126

57

218

Charge for the year

85

184

146

415

At 30 September 2015

120

310

203

633

At 1 October 2013

91

96

33

220

Charge for the year

29

67

57

153

Disposals

(85)

(37)

(33)

(155)

At 30 September 2014

35

126

57

218

Net book value

At 30 September 2015

220

673

1,037

1,930

At 30 September 2014

174

233

1,050

1,457

13. Investment in subsidiaries

Details of the Company's direct and indirect subsidiaries at 30 September 2015 are shown below. All of the subsidiaries listed are included in the consolidated accounts of Zoopla Property Group Plc - the ultimate parent company of the Group. The Ordinary Share capital of each subsidiary is owned entirely by the direct parent indicated. ZPG Limited and Ulysses Enterprises Limited are the only direct subsidiaries of Zoopla Property Group Plc. All subsidiaries are incorporated in the UK.

Name

Direct parent

Country of incorporation

Ownership of
Ordinary Shares
and voting interest
at 30 September 2015

Active

ZPG Limited

Zoopla Property Group Plc

United Kingdom

100%

Ulysses Enterprises Limited

Zoopla Property Group Plc

United Kingdom

100%

uSwitch Digital Limited

Ulysses Enterprises Limited

United Kingdom

100%

uSwitch Limited

uSwitch Digital Limited

United Kingdom

100%

uSwitch Communications Limited

uSwitch Digital Limited

United Kingdom

100%

Dormant

Propertyfinder Group Limited

ZPG Limited

United Kingdom

100%

Propertyfinder Publications Limited

Propertyfinder Group Limited

United Kingdom

100%

Propertyfinder Holdings Limited

Propertyfinder Group Limited

United Kingdom

100%

Sherlock Publications Limited

Propertyfinder Holdings Limited

United Kingdom

100%

Propertyfinder.co.uk Limited

Propertyfinder Holdings Limited

United Kingdom

100%

Internet Property Finder Limited

Propertyfinder.co.uk Limited

United Kingdom

100%

Omio Limited

uSwitch Limited

United Kingdom

100%

14. Acquisitions

On 1 June 2014 Zoopla Property Group Plc completed its acquisition of uSwitch through the purchase of 100% of the issued share capital of Ulysses Enterprises Limited for total consideration of 177.6 million as measured in accordance with IFRS 3.

Expenses incurred on the acquisition of 5.1 million are included within administration expenses in the statement of comprehensive income. These costs have been considered exceptional in arriving at Adjusted EBITDA for 2015 (Note 3).

The purchase has been accounted for as a business combination under the acquisition method in accordance with IFRS 3. In calculating the goodwill arising on acquisition the fair value of net assets acquired of 6.7 million was assessed and no material adjustments from book value were made. The Group has recognised a number of separately identifiable intangibles as part of the acquisition, details of which are set out in Note 14a.

The fair value of the assets and liabilities acquired were as follows:

Fair value

000

Property, plant and equipment

777

Intangible assets - computer software

86

Trade receivables

5,466

Accrued income

10,056

Prepayments and other receivables

953

Deferred tax assets

379

Trade payables

(3,079)

Accruals and other payables

(6,708)

Provisions

(135)

Corporation tax payable

(1,053)

Total net assets acquired

6,742

Intangible assets recognised (Note 14a):

- Brand

48,770

- Website and technology platform

2,890

- Database

900

Deferred tax liability arising on intangibles

(10,512)

Goodwill on acquisition (Note 14b)

128,782

177,572

Satisfied by:

Cash consideration, net of cash acquired

61,907

Debt assumed and discharged (Note 14c)

79,675

Deferred and contingent consideration (Note 14d)

35,990

Total consideration

177,572

The fair value of the financial assets acquired includes trade and other receivables with a fair value of 16.5 million and a gross contractual value of 16.5 million. The best estimate at the acquisition date of the contractual cash flows not to be collected is nil.

14a. Intangible assets recognised on consolidation

Brand

48.8 million has been recognised in respect of the uSwitch brand name, domain name, image and reputation. The brand has been valued using an excess earnings valuation model using profit generated from organic sources over a useful economic life of 10 years. Organic sources include direct visits to the website and traffic achieved through unpaid search results. Management believes profit generated from organic sources represents the best estimate of the value brought to the Group by the uSwitch brand. A post-tax discount rate of 12% and an average long-term growth rate of 6% have been used to determine the net present value of future profits in excess of a reasonable return on other contributory assets.

Website and technology platform

2.9 million has been recognised with respect to the uSwitch website and supporting technology platforms. The fair value has been obtained by estimating the cost of independently building a similar website and supporting platforms. The asset will be depreciated over a useful economic life of three years.

Database

uSwitch's consumer database helps the business to drive traffic and revenue through targeted email campaigns. The value of the database has been determined at 0.9 million based on a discounted cash flow of profit from email campaigns over the twelve months to 31 May 2015 extrapolated over a useful economic life of three years. A 20% churn rate has been applied to the forecast to account for natural churn in the information held.

14b. Goodwill

The acquisition of uSwitch provides a number of benefits to the Group. The goodwill recognised on acquisition represents value arising from intangible assets that are not separately identifiable under IAS 38 including the skills and knowledge of uSwitch's workforce and expected revenue and cost synergies as outlined below.

The Board believes that the integration of the Comparison Services division into the Group will help create a fully integrated consumer property journey with an enhanced product and service offering which will increase consumer engagement on the Group's platform and drive an increase in the quantity and quality of leads provided to existing property professional partners and advertisers.

The Board also believes that comparison services are highly relevant to the Group's consumer audience and that this will provide substantial cross-selling opportunities. By offering additional products and services along the consumer property journey the Board expects to drive increased demand for comparison services, generating additional revenues as well as reducing the direct costs associated with generating additional leads.

Furthermore, the Board believes that there are further revenue opportunities within uSwitch as the home services comparison market continues to grow and there is additional scope for uSwitch to increase and expand its product offering in the financial services comparison market.

14c. Debt assumed and discharged

Immediately prior to acquisition uSwitch had outstanding debt of 87.0 million. This amount was fully settled on acquisition. 79.7 million of the outstanding debt was assumed and discharged by Zoopla Property Group Plc.

The following table provides a reconciliation of the amounts included in the consolidated statement of cash flows:

2015

000

2014

000

Cash consideration, net of cash acquired on acquisition

(61,907)

-

Debt assumed and discharged

(79,675)

-

Cash expenses incurred on acquisition

(4,430)

-

Deferred consideration paid

-

(1,497)

Cash outflow on acquisition of subsidiaries

(146,012)

(1,497)

14d. Deferred and contingent consideration

On acquisition the following deferred and contingent amounts were recognised as consideration:

000

Deferred consideration (i)

11,040

Contingent consideration - Earn-out (ii)

24,950

35,990

i) Deferred consideration

Deferred consideration of 11.0 million has been recognised at acquisition. Deferred consideration is payable in cash and/or up to 10.0 million in shares of Zoopla Property Group Plc at the discretion of the Group. The amount has been classified as a financial liability on the Group's consolidated statement of financial position at the acquisition date in accordance with IAS 39.

ii) Contingent consideration - Earn-out

Earn-out consideration of between 0.0 and 30.0 million is payable in cash or up to 50% in shares of Zoopla Property Group Plc at the discretion of the Group. The amount to be paid is contingent on the performance of uSwitch against certain revenue and Adjusted EBITDA targets over a 16 month period to 30 April 2016. Up to 5.0 million of the earn-out is payable to Management shareholders - the treatment for which is set out below. The remaining 0.0 to 25.0 million has been recognised at fair value on the Group's consolidated statement of financial position at the acquisition date. Management expects to settle the earn-out in full and therefore a liability for the full 25.0 million has been recognised. Any subsequent movements in the fair value will be recognised within the Group's consolidated statement of comprehensive income as a fair value gain or loss.

Consideration payable to Management shareholders

A maximum of 11.4 million is payable to Management shareholders and is conditional on the continued employment of Management up to and including the date of payment. In accordance with IFRS 3, this consideration will be recognised as a remuneration expense in the Group's consolidated statement of comprehensive income over the deferral period. The Group is accruing the full 11.4 million over the deferral period.

The movement in the value of deferred and contingent consideration between the date of acquisition and 30 September 2015 is set out in Note 18.

15. Intangible assets

Goodwill

000

Brand

000

Customer

relationships

000

Domain

names

000

Websites

and computer

software

000

Database

000

Total

000

Cost

At 1 October 2014

70,793

-

6,091

1,451

162

229

78,726

On acquisition (Note 14)

128,782

48,770

-

-

2,976

900

181,428

Additions

-

-

-

-

709

-

709

At 30 September 2015

199,575

48,770

6,091

1,451

3,847

1,129

260,863

Amortisation

At 1 October 2014

-

-

2,478

847

-

207

3,532

Charge for the year

-

1,626

1,218

262

440

111

3,657

At 30 September 2015

-

1,626

3,696

1,109

440

318

7,189

Net book value

At 30 September 2015

199,575

47,144

2,395

342

3,407

811

253,674

At 30 September 2014

70,793

-

3,613

604

162

22

75,194

Goodwill and intangibles are tested for impairment by comparing the carrying amount of the cash-generating unit with its recoverable amount, which represents the higher of its estimated fair value and value in use. An impairment loss is recognised when the carrying value of the asset exceeds its recoverable amount.

The recoverable amounts of intangible assets and goodwill are based on the value in use, which is determined using cash flow projections derived from financial plans approved by Management covering a three year period. They reflect Management's expectations of revenue, EBITDA growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance. Cash flows beyond the three year period have been extrapolated using perpetuity growth rates.

A growth rate of 3% has been applied to extrapolate the cash flows into perpetuity. Growth has been capped at 3% across both business units so as not to exceed the long-term expected growth rate of the country and industry the Group operates in, in accordance with IAS 36.

The pre-tax discount rate used for both businesses is 12%.

The Directors are comfortable that a reasonable change in the underlying assumptions would not indicate an impairment.

16. Trade and other receivables

2015

000

2014

000

Trade receivables

8,850

2,839

Accrued income

10,740

525

Prepayments

2,348

2,077

Amounts held in escrow

7,446

-

Other receivables

842

446

30,226

5,887

Current

22,780

5,887

Non-current

7,446

-

30,226

5,887

The Directors consider that the carrying value of trade and other receivables is approximate to their fair value. The carrying value also represents the maximum credit exposure.

7.4 million is held in escrow for the settlement of deferred consideration payable in relation to the acquisition of uSwitch.

Details of the Group's exposure to credit risk are given in Note 25.

17. Trade and other payables

2015

000

2014

000

Trade payables

5,507

4,676

Accruals

10,599

3,406

Other taxation and social security payments

5,512

2,900

Deferred income

380

155

Other payables

253

281

22,251

11,418

The Directors consider that the carrying value of trade and other payables is approximate to their fair value.

Details of the Group's exposure to liquidity risk are given in Note 25.

18. Deferred and contingent consideration

The Group's liabilities in respect of deferred and contingent consideration arising on the acquisition of uSwitch on 1 June 2015 are set out below:

Deferred

consideration

000

Contingent

consideration -

earn-out

000

Total

000

At 1 October 2014

-

-

-

Recognised on acquisition

11,040

24,950

35,990

Charge in the period for amounts conditional on the continued employment of Management

936

1,206

2,142

At 30 September 2015

11,976

26,156

38,132

Current

10,000

25,393

35,393

Non-current

1,976

763

2,739

19. Provisions

The movement in provisions can be analysed as follows:

Dilapidation

provisions

000

Redundancy

provisions

000

Total

000

At 1 October 2014

634

-

634

Acquired on acquisition of uSwitch

135

-

135

Charged in the period

30

-

30

Utilised in the period

-

-

-

At 30 September 2015

799

-

799

Current

190

-

190

Non-current

609

-

609

At 1 October 2013

201

350

551

Charged in the period

575

-

575

Utilised in the period

(142)

(350)

(492)

At 30 September 2014

634

-

634

Current

-

-

-

Non-current

634

-

634

The dilapidation provisions relate to Management's best estimation of costs to make good the Group's leasehold properties at the end of the lease term. The charge in the period represents expected exit costs on completion of the Group's property leases.

20. Loans and borrowings

On 30 April 2015 the Group entered into an agreement for the provision of a five year, 150.0 million revolving credit facility. 125.0 million was drawn down on 1 June 2015 as part of the uSwitch acquisition. At 30 September 2015 11.0 million of the debt has been repaid leaving outstanding gross borrowings of 114.0 million.

The drawn portion of the facility incurs interest at UK Libor plus a margin. The margin is variable based on the Group's Net Debt to Adjusted EBITDA ratio. The effective interest rate for the period is set out in Note 25.

2015

000

Initial draw down on acquisition of uSwitch

125,000

Repayment of borrowings

(11,000)

Gross borrowings

114,000

Capitalised costs at 30 September 2015

(1,568)

Total loans and borrowings

112,432

The Group has no other loans or borrowings.

21. Deferred tax

Property, plant

and equipment

and computer

software

000

Intangible

assets

000

Share-based

payments

000

Other

000

Total

000

Deferred tax asset/(liability) at 1 October 2014

326

(784)

895

-

437

On acquisition of uSwitch

-

(10,512)

-

379

(10,133)

(Charge)/credit to profit or loss

(190)

673

209

57

749

Charge to equity

-

-

(238)

-

(238)

Deferred tax asset/(liability) at 30 September 2015

136

(10,623)

866

436

(9,185)

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so.

The following is an analysis of the deferred tax balances (after offset) for financial reporting purposes:

2015

000

2014

000

Deferred tax liabilities

(10,623)

(784)

Deferred tax assets

1,438

1,221

(9,185)

437

22. Equity

Share capital

2015

000

2014

000

Shares classified as capital

Authorised

418,116,472 (2014: 418,092,702) shares of 0.001 (2014: 0.001) each

418

418

Called-up share capital - allotted and fully paid

418,116,472 (2014: 418,092,702) Ordinary Shares of 0.001 (2014: 0.001) each

418

418

Rights and restrictions attaching to shares

Ordinary Shares

The Ordinary Shares carry one vote per share and rights to dividends.

Share transactions

On 20 February 2015 the Group issued 23,770 Ordinary Shares with a nominal value of 0.001 to settle the exercise of warrant instruments exercised. There were no other share transactions during the year. The total number of shares at 30 September 2015 was 418,116,472.

Other reserves - Merger reserve

The merger reserve was created in May 2012 from the premium on shares issued for the acquisition of The Digital Property Group Limited. In 2014 the merger reserve increased as a result of the Group's reorganisation prior to the IPO.

Other reserves - EBT share reserve

The EBT share reserve represents shares in issue that are held by the Employee Benefit Trust for the purpose of settling the Group's obligations under the Employee Share Option Scheme.

23. Share-based payments

The Group operates a number of share-based incentive schemes for both its employees and certain estate agent partners. The Group recognised a total share-based payments charge of 1.9 million for 2015 (2014: 3.9 million) as set out below:

2015

000

2014

000

Employee Share Option Scheme (i)

600

587

Long-Term Incentive Plan (ii)

600

86

Share Incentive Plan (iii)

231

105

Deferred Bonus Plan (iv)

175

-

One-off warrant charge on IPO (v)

-

2,985

Other warrant charges (v)

117

119

National Insurance Contributions payable in respect of eligible share-based payment schemes (vi)

150

28

Total share-based payments charge

1,873

3,910

i) Employee Share Option Scheme

The Group operates an equity-settled share-based incentive scheme for all employees under an approved plan until 31 May 2012 and an unapproved plan thereafter. The options vest in instalments over four years. Options are forfeited if the employee leaves the Group before the options vest. The Group recognised a charge of 0.6 million (2014: 0.6 million) in respect of options under this scheme.

Details of options under the scheme outstanding at 30 September 2015 are set out below:

2015

2014

Number

'000

Weighted average

exercise price

Number

'000

Weighted average

exercise price

Outstanding options at the beginning of the year

5,693

0.26

5,198

0.19

Granted during the year

-

-

2,550

0.35

Exercised during the year

(1,416)

0.21

(1,338)

0.13

Forfeited during the year

(538)

0.32

(717)

0.32

Outstanding options at the end of the year

3,739

0.27

5,693

0.26

The options outstanding at 30 September 2015 had a weighted average exercise price of 0.27 (2014: 0.26) and a weighted average remaining contractual life of 8.6 years (2014: 8.1 years). The range of exercise prices for outstanding options was 0.06 to 0.35 (2014: 0.06 to 0.35).

The number of options exercisable as at 30 September 2015 was 2,023,000 (2014: 1,458,000).

The Employee Share Option Scheme will continue to operate until all shares vest or lapse, or the scheme is otherwise cancelled. There will be no future grants under this scheme.

ii) Long-Term Incentive Plan

The Group operates an equity-settled Long-Term Incentive Plan which grants nil-cost options to eligible employees which vest at the end of a three year vesting period. The vesting of the options is subject to both adjusted Earnings per share ("EPS") and Total Shareholder Return ("TSR") performance criteria. The Group recognised a charge of 0.6 million (2014: 0.1 million) in respect of this scheme.

A total of 1,400,935 options have been granted in respect of the 2015 financial year, the majority of which were granted on 1 August 2014 following the Group's IPO. None of the options granted are exercisable as at 30 September 2015. The following information is relevant in the determination of the fair value of the LTIP options granted on 1 August 2014. There were no material grants in 2015:

1 August 2014

grant

Valuation method - TSR

Monte-Carlo

Valuation method - EPS

Black-Scholes

Share price at grant date

2.48

Exercise price

nil

Expected volatility

28.3%

Expected life

3 years

Expected dividend yield

n/a

Risk-free interest rate

1.5%

Fair value per share - TSR

1.44

Fair value per share - EPS

2.48

The volatility assumption, measured at the standard deviation of expected share price returns, has been calculated using historical daily data of six comparator companies over a term commensurate with the expected life of each option. Dividend equivalent payments will be made in respect of vested options in the form of additional shares.

iii) Share Incentive Plan (SIP)

The SIP is an all-employee share ownership plan which has been designed to meet the requirements of Schedule 2 of the Income Tax (Earnings and Pensions) Act 2003 so that shares can be provided to UK employees under the SIP in a tax-efficient manner. Under the scheme employees may be awarded Free Shares and/or offered the opportunity to purchase Partnership Shares with one Free Matching Share for each Partnership Share purchased. During the period the Group granted a total of 134,735 Matching Shares. 32,980 of these shares are still subject to forfeiture should the employee leave the Group within 12 months of the grant date. The Group recognised a charge of 0.2 million (2014: 0.1 million) in respect of shares under this scheme.

iv) Deferred Bonus Plan

From 1 October 2014 the Group has operated a Deferred Bonus Plan (DBP) which defers a proportion of eligible employees' annual bonuses into nil-cost options. The options vest over a period of between one and three years from the end of the performance period. The performance period for the 2015 DBP runs from 1 October 2014 until 30 September 2015. 0.2 million (2014: nil) has been accrued in respect of the 2015 DBP. No options have been granted under this scheme.

v) Warrants

The Group has entered into agreements with a number of estate agent partners whereby the partners agree to pay annual fees for advertising on the Group's property websites over a five year period in exchange for a fixed number of warrants over Ordinary Shares. The warrants are issued annually over the five year term of the agreements at an exercise price equal to the nominal value of each share (0.001). Some or all of the warrants are forfeited if service agreements are terminated before the end of the term.

The total charge recognised for the year ended 30 September 2015 in respect of warrants was 0.1 million (2014: 3.1 million). The 2014 warrant charge included a one-off, accelerated charge of 3.0 million for warrants exercised on the Group's Admission to the London Stock Exchange.

2015

2014

Number

'000

Weighted

average

exercise price

Number

'000

Weighted

average

exercise price

Outstanding warrants at the beginning of the year

-

-

343

0.001

Issued during the year

137,779

0.001

1,859

0.001

Exercised during the year

(23,770)

0.001

(2,202)

0.001

Outstanding warrants at the end of the year

114,009

0.001

-

-

The number of warrants outstanding at 30 September 2015 was 114,009 (2014: nil). The warrants had a weighted average exercise price of 0.001 and a weighted average remaining contractual life of 4.4 years.

The number of warrants issuable over shares in Zoopla Property Group Plc under existing partner contracts is 1,198,300. The warrants will be issued with an exercise price of 0.001 over the lives of the contracts.

vi) National Insurance Contributions (NIC)

National Insurance Contributions are payable in respect of certain share-based payment schemes. These contributions are treated as cash-settled transactions and are accrued at a rate of 13.8%. The total NIC charge relating to share-based payment schemes was 150,000 (2014: 28,000).

vii) The Employee Benefit Trust (EBT) and Share Incentive Plan Trust (SIP Trust)

Employee Benefit Trust (EBT)

The Group has established an Employee Benefit Trust which is constituted by a trust deed entered into between the Company and Appleby Trust (Jersey) Limited. The Trust held 4,491,861 Ordinary Shares in Zoopla Property Group Plc at 30 September 2015 (2014: 5,908,116). These shares are held to satisfy future exercises under the Group's share-based payment schemes. Shares are allocated by the Trust when the awards are exercised. The Trust waives its right to any dividends. The market value of the shares held in the Trust at 30 September 2015 was 9.4 million (2014: 14.0 million). The cost of the shares has been deducted from equity.

Share Incentive Plan Trust (SIP Trust)

The Group has established a Share Incentive Plan Trust which is constituted by a trust deed which was entered into between Zoopla Property Group Plc and Yorkshire Building Society. The Trust held 427,515 Ordinary Shares in Zoopla Property Group Plc at 30 September 2015 (2014: 427,515). These shares are held to satisfy future Free Share and Partnership Share exercises. Shares are allocated by the Trust when the awards are exercised. Dividends paid on shares held in the Trust are passed to the employees when the shares are allocated. The market value of the shares held in the Trust at 30 September 2015 was 0.9 million (2014: 1.0 million). The cost of the shares has been deducted from equity.

24. Related party transactions

a) Key Management Personnel

The Chairman and the Directors are considered to be the Key Management Personnel of the Group along with the Group's Chief Commercial Officer and the CEO of uSwitch. Details of remuneration for Key Management Personnel are shown in Note 7.

No share options were exercised by Key Management Personnel in the period.

Further information on the remuneration of the Chairman and the Directors can be found in the Directors' remuneration report.

b) Other Group companies

Details of transactions with subsidiaries are outlined in the Company's financial statements. Transactions with other Group companies have been eliminated on consolidation.

c) Other related parties

Other related party transactions are as follows:

At 30 September 2015 Daily Mail and General Trust plc (DMGT) owned 31.3% of the share capital of Zoopla Property Group Plc (2014: 31.8%).

A&N Media Finance Services Limited (ANMFS), a subsidiary of DMGT, supplied various shared services to ZPG Limited for which the fee was 43,000 for the year (2014: 89,000). The balance outstanding at 30 September 2015 was nil (2014: nil).

25. Financial instruments

Carrying amount and fair value of financial assets and liabilities

All financial assets, including cash and cash equivalents, are designated as 'Loans and receivables' and are held at amortised cost. All financial liabilities are classified as 'Other liabilities measured at amortised cost'. The Directors consider that the carrying amounts of financial assets and liabilities recorded at amortised cost in the financial statements are approximate to their fair values.

Financial risk management

The Group is exposed to the following risks from financial instruments:

credit risk;

market risk; and

liquidity risk.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or bank ("counterparty") fails to meet its contractual obligations resulting in financial loss to the Group. The Group's maximum exposure to credit risk at the end of each period was equal to the carrying amount of financial assets recorded in the financial statements. The exposure to credit risk is influenced by the individual characteristics of each counterparty.

The potential for customer default varies between the Group's two revenue divisions. The customer base of the Group's Property Services division is large, so there is no significant concentration of credit risk. The Comparison Services division operates in a market with a small number of customers which creates a concentration of debtor balances and from time to time the amounts due from one or a number of suppliers may be material. However, customers within this market are often large energy and telecommunications organisations with high credit ratings and access to significant funds. The Group's largest customer contributed to 19% of the Group's trade receivables balance.

The Group manages counterparty risk on its trade receivables through strict credit control quality measures and regular aged debt monitoring procedures. The Group reserves the right to charge interest on overdue receivables, although it does not hold collateral over any trade receivable balances. Overdue amounts are regularly reviewed and impairment provisions are created where necessary. This provision is reviewed regularly in conjunction with a detailed analysis of ageing profile, historical payment profiles and past default experience. The Group has long-standing relationships with its key customers and extremely low historical levels of customer credit defaults.

The ageing of trade receivables at the period end is as follows:

2015

2014

Gross

000

Provision

000

Gross

000

Provision

000

0-30 days

7,205

-

2,033

-

31-60 days

1,234

-

927

(191)

61-90 days

400

(38)

125

(104)

91+ days

680

(631)

299

(250)

Total

9,519

(669)

3,384

(545)

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was granted up to the period end date.

The credit risk associated with bank and deposit balances is mitigated by the use of banks with good credit ratings.

Market risk

Market risk, is the risk that changes in foreign exchange and interest rates will affect the income and financial management of the Group. The Group is not exposed to any significant currency risk and there is a minimal interest rate risk on cash and bank balances. However, the Group has borrowings subject to an interest rate calculated with reference to Libor. Changes in interest rates therefore impact the financial results of the Group. The Directors actively monitor interest rate risk and note that interest rates remain at a historical low. The Directors believe that any reasonable increase in the Libor rate would not significantly impact the Group. Therefore, the Group does not hedge its interest rate risk at this time. At 30 September 2015 borrowings of 114.0 million were subject to floating interest rates (2014: nil).

At 30 September 2015 if Libor were to have increased by 1% throughout the year with all other variables held constant profit before tax would decrease by 0.4 million (2014: nil) as a result of additional interest incurred. Therefore, the Directors are comfortable that any sensitivity to fluctuations in interest or exchange rates would not have a material impact on the results of the Group.

Liquidity risk

Liquidity risk refers to the ability of the Group to meet the obligations associated with its financial liabilities that are settled in cash as they fall due. Management regularly review performance against budgets and forecasts to ensure sufficient cash funds are available to meet its contractual obligations.

The Group's activities are highly cash generative allowing it to effectively service working capital requirements. At 30 September 2015 the Group held total cash and cash equivalents of 19.2 million (2014: 30.1 million) and Net debt of 93.2 million.

The Group has access to a 150.0 million revolving credit facility ("RCF"), of which 114.0 million was drawn-down at 30 September 2015. The remaining 36.0 million undrawn facility allows the Group to secure additional external financing should it be required. The total facility requires the Group to meet certain covenants based on the Group's interest cover and Net Debt to Adjusted EBITDA ratio. Exceeding the covenants would result in the Group being in breach of the facility which may lead to the facility being withdrawn. Management regularly monitors and models covenant compliance and prepares detailed forecasts to ensure that sufficient headroom is available. The Directors are satisfied that there is reasonable headroom on each of the Group's debt covenant ratios.

The following tables detail the Group's remaining contractual maturities for undiscounted financial liabilities, including interest. The contractual maturity is based on the earliest date on which the Group may be required to settle. Where interest rates are variable the undiscounted amount is derived from interest rate curves at 30 September 2015. The contractual maturity is based on the earliest date on which the Group may be required to settle.

Effective

interest rate

Within 1 year

000

1 to 2 years

000

2 to 5 years

000

More than

5 years

000

Total

contractual

amount

000

2015

Trade payables

5,256

-

-

-

5,256

Borrowings1

3.0%

2,920

3,222

123,513

-

129,655

Total

8,176

3,222

123,513

-

134,911

2014

Trade payables

4,676

-

-

-

4,676

Borrowings

-

-

-

-

-

Total

4,676

-

-

-

4,676

1 - Interest on the Group's borrowings assumes that the Group makes no further capital repayments until maturity of the RCF in 2020.

Treasury and capital risk management

The Group's policy is to actively manage its cash and capital structure to ensure that it complies with its current debt covenant ratios, maintains its current dividend policy and minimises the Group's interest payments by paying down its debt where possible.

Management will consider the use of excess cash, including the payment of special dividends to shareholders and M&A activity, based on the risks and opportunities of the Group at that time.

The Directors can manage the Group's capital structure through the issue or redemption of either debt or equity instruments and by adjustment to the Group's dividend paid to equity holders. The Directors believe that the current debt to equity ratio remains appropriate but continue to monitor the efficiency of the capital structure on an on-going basis.

26. Operating lease commitments

At the statement of financial position date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2015

000

2014

000

Within one year

1,139

258

In the second to fifth year inclusive

3,565

2,757

After five years

2,306

3,059

7,010

6,074

27. Subsequent events

There have been no reportable subsequent events between 30 September 2015 and the date of signing of this report.

28. Ultimate controlling party

The Directors are of the opinion that there was no ultimate controlling party in either period presented.

Company statement of financial position

As at 30 September 2015

Notes

2015

000

2014

000

Assets

Non-current assets

Investment in subsidiaries

4

200,478

91,332

Trade and other receivables

5

77,446

-

Deferred tax assets

183

-

Current assets

Prepayments

63

12

Other receivables

101

55

Cash and cash equivalents

4,668

100

4,832

167

Total assets

282,939

91,499

Liabilities

Current liabilities

Trade and other payables

6

21,905

385

Deferred and contingent consideration

7

35,393

-

Non-current liabilities

Loans and borrowings

8

112,432

-

Deferred and contingent consideration

7

2,739

-

Total liabilities

172,469

385

Net assets

110,470

91,114

Equity

Share capital

9

418

418

Share premium reserve

50

50

Merger reserve

9

90,495

90,495

Retained earnings

19,507

151

Total equity

110,470

91,114

The financial statements of Zoopla Property Group Plc (company number 09005884) were approved and authorised for issue by the Board of Directors and were signed on its behalf by:

A Chesterman

S Morana

Director

Director

1 December 2015

1December 2015

Company statement of cash flows

For the year ended 30 September 2015

2015

000

2014

000

Cash flows from operating activities

Profit before tax

26,119

(318)

Adjustments for:

Finance income

(618)

-

Finance costs

1,162

-

Dividend income received

(35,000)

-

Transaction costs on acquisition of uSwitch

5,130

-

Movement in contingent and deferred consideration

2,142

-

Operating cash flow before changes in working capital

(1,065)

(318)

Decrease/(Increase) in trade and other receivables

9,669

(67)

Increase in trade and other payables

20,477

385

Net cash inflows from operating activities

29,081

-

Cash flows (used in)/from investing activities

Acquisition of subsidiaries

(155,540)

-

Amounts paid into escrow in relation to deferred and contingent consideration

(7,436)

-

Interest income received

618

-

Dividend income received

35,000

-

Net cash flows used in investing activities

(127,358)

-

Cash flows from/(used in) financing activities

Proceeds on issue of debt, net of issue costs

123,291

-

Repayment of debt

(11,000)

-

Interest paid

(779)

-

Proceeds on issue of shares

-

50

Equity contributions received

-

50

Dividends paid

(8,667)

-

Net cash flows from financing activities

102,845

100

Net increase in cash and cash equivalents

4,568

100

Cash and cash equivalents at beginning of period

100

-

Cash and cash equivalents at end of period

4,668

100

Company statement of changes in equity

For the year ended 30 September 2015

Share

capital

000

Share

premium

reserve

000

Merger

reserve

000

Retained

earnings

000

Total

equity

000

At 1 October 2014

418

50

90,495

151

91,114

Profit and total comprehensive income for the period

-

-

-

26,302

26,302

Transactions with owners recorded directly in equity:

Dividends paid

-

-

-

(8,667)

(8,667)

Share-based payments

-

-

-

1,721

1,721

At 30 September 2015

418

50

90,495

19,507

110,470

Share

capital

000

Share

premium

reserve

000

Merger

reserve

000

Retained

earnings

000

Total

equity

000

At 22 April 2014

-

-

-

-

-

Loss and total comprehensive income for the period

-

-

-

(318)

(318)

Transactions with owners recorded directly in equity:

Issue of Ordinary Shares

418

50

90,495

-

90,963

Issue of Preference Shares

50

-

-

-

50

Equity contributions received

-

-

-

50

50

Redemption of preference shares

(50)

-

-

-

(50)

Share-based payments

-

-

-

419

419

At 30 September 2014

418

50

90,495

151

91,114

Notes to the Company financial statements

1. Accounting policies and basis of accounting

The Directors have applied International Financial Reporting Standards (IFRS) as adopted by the European Union.

The accounting policies and the financial risk management policies, where relevant to the Company, are consistent with those of the consolidated Group as set out in Notes 1 and 25 to the consolidated financial statements respectively.

Statement of comprehensive income

The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 and has not presented a statement of comprehensive income. The profit for the period ended 30 September 2015 was 26.3 million (2014: loss of 0.3 million).

2. Auditor's remuneration

The Company incurred a cost of 55,000 (2014: 30,000) for statutory audit services for the period ended 30 September 2015.

3. Employee costs and Directors' remuneration

The Company has no employees other than the Directors of the Company. Remuneration paid to the Directors was accounted for and paid by the Group's trading entity, ZPG Limited. Details of Directors' remuneration are set out in the Directors' remuneration report.

4. Investments in subsidiaries

Investments in subsidiaries are valued at cost less any provision for impairment.

The investment in subsidiaries balance of 200.5 million represents the Company's 100% shareholding in ZPG Limited and Ulysses Enterprises Limited. Ulysses Enterprises Limited was acquired on 1 June 2015 as set out in Note 14 to the consolidated financial statements.

During the year the Company recognised an increase in the investment in ZPG Limited in respect of the Group's share schemes. Consistent with the Group accounting policies outlined in Note 1.19 to the consolidated financial statements, equity-settled share options granted directly to a subsidiary are treated as a capital contribution to the subsidiary. The capital contribution is measured by reference to the consolidated share-based payments charge and is recognised as an increase in the cost of investment with a corresponding credit to retained earnings. The credit to retained earnings does not make up part of distributable reserves.

2015

000

Investment in ZPG Limited at 1 October 2014

91,332

Acquisition of Ulysses Enterprises Limited

107,425

Share-based payments - capital contribution

1,721

200,478

5. Trade and other receivables

2015

000

2014

000

Amounts held in escrow

7,446

-

Amounts receivable from Group companies

70,000

-

77,446

-

The Directors consider that the carrying value of trade and other receivables are approximate to their fair value. All trade and other receivables are classified as non-current receivables.

Amounts held in escrow are held for the settlement of deferred consideration due on the acquisition of uSwitch.

The Company has a receivable of 70.0 million due from Ulysses Enterprises Limited. This amount is designated as an unsecured, intercompany loan. The loan accrues interest at Libor + 2% and has no fixed repayment date. The Company is comfortable that the amount is recoverable in full.

6. Trade and other payables

2015

000

2014

000

Trade payables

11

-

Accruals

1,894

37

Amounts payable to Group companies

20,000

348

21,905

385

The Directors consider that the carrying value of trade and other payables are approximate to their fair value. All trade and other payables are classified as current liabilities.

Details of the Group's exposure to liquidity risk are given in Note 25 to the consolidated financial statements.

7. Deferred and contingent consideration

Details of deferred and contingent consideration are given in Note 18 to the consolidated financial statements

8. Loans and borrowings

Details of loans and borrowings are given in Note 20 to the consolidated financial statements

9. Equity

Share capital

Details of the Company's share capital are included in Note 22 to the consolidated financial statements.

Merger reserve

The merger reserve represents the difference between the investment recognised in ZPG Limited on restructuring in 2014 of 90.9m and the value of the shares issued of 0.4 million.

10. Financial instruments

The IFRS 7 - Financial Instruments' disclosures, where relevant to the Company, are consistent with those of the Group as set out in Note 25 to the consolidated financial statements.

11. Related parties

a) Key management personnel

There are no employees of the Company. The Directors are employed and/or remunerated by the Company's subsidiary - ZPG Limited. There were no transactions during the year between the Directors and the Company other than the issue of shares and share options as outlined in the Directors' remuneration report.

b) Subsidiaries

Transactions with subsidiaries

On 1 June 2015 the Company acquired Ulysses Enterprises Limited and its subsidiaries as set out in Note 14 to the consolidated financial statements. The transaction included Zoopla Property Group Plc assuming and discharging external debt of 79.7 million through an intercompany loan with Ulysses Enterprises Limited. During the period to 30 September 2015 Ulysses Enterprises Limited repaid 9.7 million of this balance to the Company.

During the year ZPG Limited paid dividends of 35.0 million to the Company and settled bills to the value of 20.0 million (2014: 348,000) on behalf of the Company.

The Company issues shares to employees and estate agent partners of ZPG Limited as part of the Group's share-based payment schemes as set out in Note 23 to the consolidated financial statements.

There have been no other transactions with the Company's subsidiaries during the year.

Year end balances with subsidiaries

At 30 September 2015 70.0 million of the intercompany loan due from Ulysses Enterprises Limited was outstanding. Interest at Libor + 2% is due on the outstanding balance.

A trading balance of 20.0 million is due to ZPG Limited. This amount will be settled on receipt of any dividend from ZPG Limited. No interest is payable on the balance.

There were no other related party transactions in the period.

c) Other related parties

There were no transactions between the Company and any other related parties.

12. Subsequent events

There have been no reportable subsequent events between 30 September 2015 and the date of signing of this report.

13. Ultimate controlling party

The Directors are of the opinion that there was no ultimate controlling party in either period presented.


This information is provided by RNS
The company news service from the London Stock Exchange
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