ZPG logo

ZPG - ZPG News Story

490.4p 0.0  0.0%

Last Trade - 10/07/18

Sector
Technology
Size
Micro Cap
Market Cap £n/a
Enterprise Value £n/a
Revenue £105.9m
Position in Universe th / 1826

Zoopla Property Grp - Full year results - Part 3

Wed 2nd December, 2015 7:01am
- Part 3: For the preceding part double click  ID:nRSB6823Hb 

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 amortisationshare-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  ComparisonServices£000  Total Group£000  
 Revenue                                               
 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  ComparisonServices£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  
 Fees payable to the Group's auditor and its associates:                                  
 - 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  
 Fees payable to the Group's auditor and its associates for other services to the Group:  
 - 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: 
 
 2015Number      2014Number  
 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  
 Current tax                                               
 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                                                                         2014 1£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 
 
 Fixturesand fittings£000            Computerequipment£000  Leaseholdimprovements£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 

- More to follow, for following part double click  ID:nRSB6823Hd
© Stockopedia 2021, Refinitiv, Share Data Services.
This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.