OTMP.L Regulatory News (OTMP)

14 June 2022

ONTHEMARKET PLC

("OnTheMarket", the "Group" or the "Company")

FULL-YEAR RESULTS TO 31 JANUARY 2022

Significant strategic progress in creating a differentiated, tech-enabled property business

OnTheMarket plc (AIM: OTMP), the majority agent-owned company which operates the OnTheMarket.com property portal, today announces its audited results for the year ended 31 January 2022.

Highlights of the year

· Revenue and ARPA up 32%, reflecting growth in paying customers, the migration of customers on discounted rates towards full-tariff contracts, continued growth in new homes revenues and COVID-19 customer support discounts that totalled £2.6m in 2021.

· Adjusted operating profit up 13% to £2.7m (2021: £2.4m), in part reflecting a 80% increase in marketing expenditure to £10.6m (2021: £5.9m).

· Cash generated from operating activities of £3.7m (2021: £5.1m), reflecting cash generated by Agents' Mutual Limited ("Agents' Mutual"), partially offset by investment in Glanty Limited ("Glanty") since acquisition.

· Strong balance sheet, with year-end cash of £8.4m (31 January 2021: £10.7m) after the acquisition of Glanty, strategic investments and full furlough scheme repayment in the period, which together represented £2.6m of cash payments.

· Focus on valuation leads5, up 58% from FY21, and serious property-seekers, with site visits up 6% to a record 283m (2021: 267m).

Strategic and corporate developments

OnTheMarket has continued to make significant progress with its strategy of building a differentiated, technology-enabled property business based on the following pillars:

· Portal

o  A complete refresh of the user experience at OnTheMarket.com, launching our new website, logo and branding.

o  To emphasise that OnTheMarket features thousands of newly listed properties 24 hours or more before Rightmove or Zoopla every month, 'New & exclusive' properties, together with properties featured on OnTheMarket.com and not on either Rightmove or Zoopla ("totally exclusive"), are now labelled as 'Only With Us'.

· Software solutions

o  Completed the acquisition of Glanty. Product development is ongoing, in particular the development of a CRM system and an associated product targeted at the sales market, complimenting the teclet lettings product already available.

o  Commercial partnership with Canopy to give all our agency customers the opportunity for free and unlimited comprehensive tenant referencing check, potentially saving them thousands of pounds a year.

· Data and market intelligence

o  Commercial partnership with Sprift Technologies to provide our customers with 'best-in-class' data and market intelligence tools and, more recently, a full-service canvassing and prospecting system.

o  Release of our monthly OnTheMarket Property Sentiment Index, with a unique focus on buyer and seller confidence, determined from consumer responses to questions with an average response rate of over 120,000 per month.

· Communications and marketing

o  A new marketing and communications strategy, with new TV creative to drive increased levels of consumer awareness amongst serious property seekers and generate valuation leads for customers.

§ "Get Real About Moving. Get OnTheMarket."

o  Commercial media partnership signed with Reach plc, the UK's largest commercial news publisher, to further boost consumer engagement.

Outlook

· Positive start to FY23 with current trading in line with the Board's expectations.

· UK residential property markets remain very active, with demand for properties significantly outweighing supply, notwithstanding a slight recent rebalancing as the level of new instructions increased.

· The Board believes that the Group's recent operational and financial progress, together with a substantial, loyal advertiser base, provides a strong platform for the implementation of its strategy.

Jason Tebb, Chief Executive Officer, commented:

"I am delighted to be reporting a strong set of results which show that our strategy is working. Having listened and engaged with thousands of agents we are more convinced than ever in our strategy of building a differentiated, tech-enabled property business.

With our strong performance and momentum in the business the future remains very exciting for OnTheMarket. We are continuing to deliver increased value to our customers and serious property seekers, with innovative new products and a refreshed brand.

I would like to thank the OnTheMarket team for their hard work and commitment to delivering for all of our stakeholders."

Analyst and investor presentations

A presentation will be held at 9.00am today. Please contact OTM@tulchangroup.com for further information.

The Group will also provide a live presentation relating to the preliminary results via the Investor Meet Company platform on 21 June 2022 at 5:00pm BST. Investors can sign up to Investor Meet Company for free and add to meet ONTHEMARKET PLC via: https://www.investormeetcompany.com/onthemarket-plc/register-investor

1) Adjusted operating profit is defined as operating profit before share-based payments (including charges relating to shares issued for agent recruitment), specific professional fees and non-recurring items. This is an alternative performance measure and should not be considered an alternative to IFRS measures, such as revenue or operating profit or loss. Please see the Financial Review and Key Performance Indicators section below for a reconciliation of operating profit to adjusted operating loss / profit.

2) Average revenue per property advertiser, being revenues due from property advertisers before the deduction of non-cash share-based agent recruitment charges for a period divided by the average number of property advertisers for that period. ARPA presented herein is the average of the monthly ARPAs for the year. A property advertiser is a listed agency branch or a new home development advertising on OnTheMarket.com.

3) Advertisers are either estate and lettings agent branches or new homes developments listed at OnTheMarket.com.

4) Visits comprise individual sessions on OnTheMarket.com's web-based portal or mobile applications by users for the period indicated as measured by Google Analytics.

5) Valuation leads are email requests for a sales or lettings valuation to an agent.

For further information, please contact:

Background on OnTheMarket:

OnTheMarket plc, the majority agent-owned company which operates the OnTheMarket.com property portal, is a leading UK residential property portal provider.

Its objective is to create value for shareholders and property advertiser customers by delivering an agent-backed, technology enabled portal - offering a first-class service to agents and new homes developers at sustainably fair prices and becoming the go-to portal for serious property-seekers.

OnTheMarket provides a unique opportunity for agents to participate in the equity value of their own portal. Agent backing and support enable OnTheMarket to display 'Only With Us' properties which are either exclusive properties advertised at OnTheMarket.com by customers who do not list their properties with either Rightmove or Zoopla, or properties listed 24 hours or more before agents release these properties to Rightmove or Zoopla.

Chairman's Statement

I am pleased to report OnTheMarket's full year results to 31 January 2022.

The year saw positive momentum in the Group's strategy of creating a differentiated, tech-enabled property business across the broader property ecosystem. Our vision is to build the business around four key strategic pillars, namely:

Property portal

Software solutions

Data and market intelligence

Communications and marketing

We have seen significant progress in each of these areas during the year, which Jason Tebb, Chief Executive Officer, will detail further in his report below.

The team's achievements are even more impressive as they were delivered in a year which saw continued macroeconomic uncertainty from the COVID-19 pandemic. The interests of stakeholders and communities remain the driving factor in our decision making. The executive team continued its impressive management of the business in the face of these challenges, and as a measure of their success we were proud to have been able to repay in full the furlough scheme monies we had received in 2020.

The Group delivered a strong performance in FY22. Agency revenues benefitted from the growth in paying customers during the latter part of FY21, which saw us start FY22 with a higher monthly revenue run rate versus FY21, combined with the continued migration of customers on discounted rates towards full-tariff contracts. Our new homes business also showed strong growth in both developments listed and revenues generated. 

In May 2021 we completed the acquisition of Glanty, which operates under our Software Solutions pillar, offering subscription-based software solutions to help agents operate more efficiently and effectively, as well as a providing us with a pipeline of products under development.

Outlook

UK residential property markets remain very active, with demand for properties significantly outweighing supply. We are committed to supporting our agent and housebuilder customers with improved and more extensive products and services that reflect these market conditions, whilst providing consumers with tools and content that we believe make OnTheMarket.com a must visit site for serious property seekers. Our aim is to deliver increasing value to all our stakeholders.

Our people remain our most valuable asset. Once again, I am extremely grateful to them for their dedication during the year. I would also like to extend my thanks to our shareholders, customers and suppliers for their ongoing support.

Christopher Bell - Independent Non-Executive Chairman

Chief Executive Officer's Report

I am delighted to be making this statement after my first full year as Chief Executive Officer of OnTheMarket, and I am pleased to outline the strong results delivered by the Group and the significant steps we are taking in creating a differentiated, tech-enabled property business across our four strategic pillars.

FY22 saw extremely high activity levels in the UK residential property market. The change in working patterns saw property seekers re-evaluating their housing wants and needs. This, alongside a highly competitive mortgage market and low interest rates, created exceptional demand for UK residential properties during the year.

I have been particularly pleased by the value we are able to provide to our agent and housebuilder customers as market activity continued apace. FY22 was a record year for site visits, and we have established our position as a leading property search site for the most serious property seekers in the UK. In particular, during the year we sought to provide increasing numbers of valuation leads to our agent customers to combat the challenging market conditions they faced, which saw low levels of new property instructions coming to market. I am pleased to report our valuation leads increased 58% from FY21.

We have remained committed to our sustainably low listing fees, alongside first-class service for all stakeholders and we continue to offer a unique proposition to the industry due to our agent ownership of c60%.

We continue to engage with our agent customers, including my 'listening tour' of Town Hall events and 1-1 clinics. As a direct result of the conversations we have had, the most significant changes to our offering since launch in January 2015 have been implemented. In the last year, we launched a new brand, a new OnTheMarket website with a completely re-designed user experience, and a new TV creative. Feedback from our clients demonstrates that these initiatives have been well received.

Advertiser customers

Agency branches listing at OnTheMarket.com were up 8% to 11,451 as at 31 January 2022 (2021: 10,645). The percentage of agency advertisers on paying contracts at the year-end was 90% (2021: 93%).

New homes advertiser numbers continued to grow strongly throughout the period, with 2,281 developments listed at 31 January 2022, up 12% from 2,042 at 31 January 2021. Our objective is to deliver housebuilders increasing value through access to highly motivated and active property seekers and the delivery of increasing numbers of high-quality leads. We are pleased with the progress we have made in this area over the last 12 months.

Total property advertisers were therefore 13,732 on 31 January 2022 (2021: 12,687), an increase of 8%.

Financial performance

Group revenue and ARPA were up 32% to £30.4m and £188, reflecting growth in paying customers, the migration of customers on discounted rates towards full-tariff contracts, continued growth in new homes revenues and COVID-19 customer support discounts that totalled £2.6m in 2021.

Average monthly agency ARPA in the year to 31 January 2022 was up 36% to £204 (2021: £150), whilst new homes average monthly ARPA increased to £100, up 20% from £83 in the year to 31 January 2021.

Further details on the Group's financial performance are set out in the Financial Review and Key Performance Indicators section.

OnTheMarket's vision

In September 2021, after extensive consultation with our customers and staff, we unveiled our company's mission statement:

Listening. Innovating. Delivering.

This is our commitment to all our customers and stakeholders and serves to provide purpose and goals to our team in realising our shared vision.

We are building a differentiated, technology-enabled property business, providing a suite of tools and services for agents, housebuilders, advertisers and consumers alike. We aim to offer 'best-in-class' products and platforms across the broader property ecosystem.

Our vision is structured around four core strategic 'pillars' through which to drive our future growth. These pillars are being built through a mix of in-house developments, partnerships with specialist providers and, where appropriate, strategic acquisitions.

The four pillars are:

1. an engaging and relevant property portal that attracts the most serious property seekers;

2. software solutions to meet evolving customer needs;

3. the provision of leading data and market intelligence; and

4. a leading communications and marketing capability, both on behalf of, and in conjunction with, our customers.

1. Property portal

In December 2021 we embarked upon a complete refresh of the user experience ("UX") at OnTheMarket.com, launching our new website, logo and branding. Following an extensive period of consumer research, customer engagement, testing and product development, this refresh constitutes the largest ever upgrade to our features and functionality.

The new user interface and features have been re-designed from the ground up, with a suite of upgrades, features and improvements. Many of our decisions were based on suggestions from our agent community or consumers. Improvements include functionality utilising intuitive search such as Wish List, Help Me Choose, Travel Time Search and Street Search, as well as UX updates to Ask The Agent, Reserve Buyers List and Viewing Time Requests. The new functionality represents one of our core priorities: combining traditional 'tried and tested' agency principles with modern technological solutions, allowing us to help our customers operate in the most time-efficient, commercially minded manner.

To emphasise that OnTheMarket features thousands of newly listed properties 24 hours or more before Rightmove or Zoopla every month, what were called 'New & exclusive' properties, together with properties featured at OnTheMarket.com and not on either Rightmove or Zoopla ("totally exclusive"), are now labelled as 'Only With Us'. A new countdown timer feature has been added to show consumers how long remains until the Only With Us listing will be made available on Rightmove or Zoopla. Properties totally exclusive to OnTheMarket are still labelled as Only With Us, but do not feature the countdown timer.

The new logo and branding demonstrate an evolution of the original 'map marker' imagery, representing a more consumer-centric, contemporary approach, illustrating the continued evolution of OnTheMarket into a property-technology company. The branding and execution were featured in the new TV advert and supported the multi-platform campaign that launched in late December 2021. More on this is outlined under "Communications and Marketing" below.

2. Software solutions

As a technology-enabled property business, OnTheMarket is committed to continuing to evolve and innovate to meet the needs of our customers and consumers.

Our strategy is to become an indispensable resource for consumers by providing exclusive property listings, detailed property data, intuitive tools and expert content to help make their property journey easier to navigate. We have adopted a rapid and agile development strategy, driven by consumer behaviours, and providing intuitive solutions to problems faced by customers or consumers.

In addition to this, we seek to empower agents by developing information-led solutions that enable them to operate more efficiently and support their businesses whilst simultaneously generating more high-quality leads and adding greater value to them.

In May 2021 we completed the acquisition of Glanty. Investment in product development is ongoing, in particular the development of a CRM system and an associated product targeted at the sales market, complementing the teclet lettings product already available. In January 2022 we began a series of beta-test sessions with agents, and we have recruited a new head of sales with experience in the CRM space to lead our activities as we launch Glanty's new products and services.

In May 2021 we also signed a commercial partnership with Canopy, a residential lettings platform, enabled by open banking and providing tenants with the ability to report rental payments to the two main UK credit agencies (Experian and Equifax) to improve their credit history and score. This commercial partnership gives all of our estate agency customers free, unlimited tenant referencing, potentially saving them thousands of pounds a year. With the private rental sector currently estimated to include 4.4 million households in the UK, this gives us the chance to create higher-quality, pre-qualified leads and more value for our advertisers. The Canopy partnership was well received, being praised regularly at our "Town Hall" events, which led us to extend this arrangement beyond the initial twelve-month period.

With a market in which agents have been experiencing historically low levels of new property sales and lettings instructions at the forefront of our minds, we put particular focus on generating high-quality valuation leads for our customers. As a result, we launched an automated call service partnership with Callwell to provide agents with real-time connections to potential clients who use our automated valuation model ("AVM"). These potential vendors represent very high-quality leads and the ability to connect immediately by phone is a competitive advantage to agents when securing instructions, with 60% of calls connected leading to a valuation appointment being booked on the call. We also released our AgentVal tool, allowing agents to use our AVM within their own website, free of charge to our customers, and demonstrating that we are providing increased levels of value to our agents' own websites as well as at portal level.

Our engagement with our customers through our beta-testing, working groups and "Town Hall'' events has led to a series of "by popular-demand" improvements on site, including improved functionality within our back office OnTheMarket Expert, the addition of lead history information, new labels on site to improve the user experience (chain free, EV charger, auction), the support of what3words in a listing description and enrichments to properties with additional information (EPC, broadband, mobile data). We also introduced a development display label for our new homes customers, allowing them to promote listings across a whole development.

In January 2022 we released the functionality for our exclusive agreement with Autoenhance.ai Limited, providing our customers with its photo enhancement software services. The image enhancements are designed to display properties to generate greater customer engagement and therefore more high-quality leads to our customers. Initially available to those who upload properties manually, we are currently looking at extending this to those who upload via CRM software.

Also in January 2022, we announced an exclusive commercial partnership with Brickflow, the UK's new comparison site for development finance, which will provide our customer agents with the ability to instantly connect their property developer clients with lenders and earn significant additional revenue on land deals. This new partnership with us is a sector-first in the portal space, offering a valuable service to housebuilders and developers, whilst also enabling estate agents to offer an additional service to their land and new homes departments.

3. Data and market intelligence

We have continued to innovate and develop the data-led services that our clients need to win instructions, convert leads and operate efficiently. Key feedback raised consistently during our customer engagement has been the requirement for more data for conducting valuations and the provision of enhanced market intelligence.

In May 2021 we signed an exclusive commercial partnership with Sprift Technologies, an award-winning property data specialist. This relationship benefits our customers with free market appraisal guides which are powered by the Sprift platform via our own back-office system, OnTheMarket Expert.

The guides provide enhanced data and market intelligence on residential properties for both sales and lettings, supporting our agent customers in providing expert valuations and winning new instructions, increasing the value they receive from listing at OnTheMarket.com.

In January 2022 we extended our partnership with Sprift and announced exclusive access for our agent and housebuilder customers to Sprift's prospecting tool, SmartMail. SmartMail is a full-service canvassing and prospecting system that enables multi-trigger mailings to be sent directly to specifically targeted properties, including those listed with another agent or currently not on the market at all.

Agents can use SmartMail to specify which events trigger alerts for specific homes, for example a newly listed property or one which has been on the market for a set period of time. Agents can also prospect or canvass for instructions in specific streets or areas, as well as by type or value.

In July 2021 we released our OnTheMarket Property Sentiment Index. This monthly report has a unique focus on buyer and seller confidence and mover attitudes towards mortgage borrowing. The insights contained with the Property Sentiment Index are determined from consumer responses to questions asked on the OnTheMarket website, with an average response rate of over 120,000 per month. OnTheMarket believes this to be the largest monthly consumer sentiment index to date in terms of attitudes to buying and selling residential property in the UK. It provides advertisers and consumers with additional market intelligence to inform their decision making, whilst reinforcing the OnTheMarket brand as a thought leader in the UK residential property industry.

For our housebuilder customers, we also released lead mapping, supply and demand intelligence tools and performance comparison reports. These provide them with enhanced data to better understand the source location of leads, as well as perform buyer demand analysis by area and track their performance versus competitors.

4. Communications and marketing

It was important that, in a competitive industry, we are clear with consumers as to the value of our proposition and the advantages that we offer to the most serious property seekers, giving them an advantage in their property search.

As such, we have completely re-engineered our internal and external communications strategies to both customers and consumers. Using the framework of a 'professionally informal' approach, we have refreshed our brands' tone of voice, our use of imagery and our explainer tools, with a focus on simplifying our messaging.

At the core of this strategy was our new TV creative, which was broadcast for the first time on 26 December 2021. The aim of the new creative is to make our brand recognisable whilst driving increased levels of consumer awareness. It is designed to encourage serious property seekers to visit the site, request a valuation, set up a property alert and enquire about properties for sale or rent with the campaign directing consumers' attention to getting serious about their property search.

"Get Real About Moving. Get OnTheMarket."

In addition to this, the new creative has also been applied to all our digital display and paid social campaigns. We also refreshed the co-branding marketing materials, delivering new marketing packs to our agent customers across the country throughout January 2022. Marketing of our portal by our agent customers is an effective and low-cost strategy to increase our consumer exposure further.

In March 2021 the Group announced a commercial media partnership with Reach plc, the UK's largest commercial news publisher. Reach plc's brands 'reach' 80% of all UK consumers every day, through a suite of mainstream titles. In working with Reach plc on digital campaigns, we can leverage their coverage of the consumer market to drive incremental traffic to the OnTheMarket.com website.

A consistent request from our agent customers was the desire for training and development programmes for their business. As a direct result of this, in October 2021 we agreed an exclusive commercial partnership with business coaching specialists, Property Academy. The relationship provides our full fee-paying customers with free access to bespoke leadership coaching sessions, run by industry stalwart and speaker Peter Knight.

In line with OnTheMarket's strategy of building a differentiated, technology-enabled property business, we announced a partnership with Kremer Signs in January 2022. Kremer Signs supplies signage to all sectors within the property industry, including residential, commercial and land and new homes. They have also developed the Smartboard product and our partnership supplies our agent customers with Smartboards which are added to for-sale signs and use QR codes to generate a new type of lead.

We will continue to evolve our brand and the ways we promote it in the current year.

ESG

OnTheMarket continues to be mindful of the impact its operations and decisions have on the environment, its staff, communities and all stakeholders.

During FY22 OnTheMarket started working with external climate consultants to calculate and benchmark our carbon footprint. This will support the development of OnTheMarket's sustainability strategy aimed at reducing our business emissions. OnTheMarket has also established a Green Working Group to generate ideas and engage our people on sustainability.

As part of our ongoing commitment to staff development, we have created a learning and development platform to improve performance and employee satisfaction, as well as the introduction of a significant benefits package available to all.

The welfare and safety of our staff is one of our top priorities and we have maintained a hybrid working model post-restrictions easing. In December 2021, an employee engagement group was established to further engage with our staff, with a view to ensuring their voice is heard at senior management level.

Post year-end developments

On 26 May 2022 at a general meeting of the Company shareholders approved a resolution for a proposed cancellation of the share premium account that would provide the Company with greater flexibility to make distributions to shareholders, should the Board consider it appropriate in the future. Subject to the approval of the Court, the cancellation is expected to become effective on 7 July 2022. Further details are set out in note 22.

UK residential property market

There is currently a level of macroeconomic uncertainty in the UK, arising from the increasing cost of living (particularly energy and food costs) and rising bank interest rates, which have been put in place to try to curb inflation. In addition, the ongoing geo-political issues and conflicts are clearly contributing to this uncertainty.

Our data suggests that, despite these challenges, UK property seekers have to date not been deterred from moving. The results of our latest Property Sentiment Index shows that in April 2022, 82% of sellers were confident that they could complete a sale within three months (the same percentage as in March and February 2022).

Strong demand from serious buyers remains, with our data showing that in April 2022, 63% of properties in the UK were sold subject to contract within 30 days of first being advertised for sale.

Buyers are also confident about obtaining the mortgages they need. While there have been four interest rate rises, taking rates up to 1% from the low of 0.1% seen during the height of the pandemic, mortgage availability doesn't seem to be a concern. More than a third of buyers already had a mortgage agreement in principle in place in April 2022, with only 1% of movers surveyed reported to be 'very worried' about mortgage availability.

The number of properties newly listed for sale is slowly increasing and supply/demand economics suggest that, if this continues, housing price growth will moderate. If there's more choice of properties for sale and buyer numbers remain consistent, or even start to drop off, there could be a levelling off in activity and prices.

However, the fundamental lack of housing stock means that values should hold. While there may be further challenges to come, for now our data shows strong confidence from both buyers and sellers, which is continuing to fuel the UK housing market. There are many reasons why people need to move and there are plenty looking to do so. The challenges of the past two years have ingrained a sense of positivity in the housing market which shows no signs of slowing. The 'new normal' is a housing market which shows resilience as long as stock levels continue to improve, and confidence is maintained.

Outlook

I am pleased to report on such strong results as we continue our strategic transition, building on the solid foundations which were already in place. Our vision for our future is clear; to become a differentiated, tech-enabled property business across the four pillars of portal, software, data and market intelligence and the provision of communications and marketing tools.

I am proud of this evolution of the business and thanks to the extraordinary efforts of the team we have been able to achieve this transition in just over 12 months. We have a fresh, new and contemporary website, which we believe is the simplest and most easy-to-use property search site in the UK.

We have delivered a suite of new products, services and functionality to help our customers operate more effectively and efficiently, whilst focusing on serious property seekers and valuation opportunities. There is so much more to come; our roadmap for internal development already extends past the next three years and we are now used to a pace of change and innovation that was unimagined a year ago.

Going forwards, our focus will remain on delivering increasing levels of value to our estate agents, letting agents and housebuilder customers, whilst also offering innovative solutions to consumers, giving them an advantage in their property search. In the future, we want all serious property seekers to consider OnTheMarket an essential tool in their property journey, before during and after they have moved home. This is an ambitious objective but one which we are determined to deliver.

The operational and financial progress to 31 January 2022 is a testament to the strength of the team and of the business. I am also pleased to report that trading in the first few months of the current financial year is in line with our expectations. Our rebranded and improved portal, the opportunities arising from our acquisition of Glanty, our commercial partnerships, our product development pipeline and our increasing engagement with our supportive customer base, together provide a strong platform from which to take the next step in delivering our strategy.

I would like to thank my colleagues for their hard work and commend them for sharing so enthusiastically in our common vision, to deliver value to all stakeholders. Together we will work tirelessly to continue to listen, innovate and deliver.

OnTheMarket's momentum is building, and we are looking to the future with confidence. But we're only just getting started, there is much more to come.

Jason Tebb - Chief Executive Officer

Financial Review and Key Performance Indicators

The year ended 31 January 2022 saw revenue and ARPA up 32%, reflecting growth in paying customers, the migration of customers on discounted rates towards full-tariff contracts, continued growth in new homes revenues and 2021 COVID-19 customer support discounts that totalled £2.6m. The Group delivered revenue of £30.4m in the year ended 31 January 2022 (2021: £23.0m) and an adjusted operating profit of £2.7m (2021: £2.4m), up 13%.

At 31 January 2022, the Group had cash of £8.4m and no borrowings (2021: £10.7m before deferred creditors of £0.4m). Adjusting for cash payments of £0.4m to repay in full furlough loans, £1.8m incurred in acquiring Glanty and £0.4m of strategic investments in commercial partners, net cash increased by £0.3m. This reflects cash generation by Agents' Mutual, offset by investment in Glanty since acquisition.

The reported operating loss of the Group was £0.6m (2021: reported operating profit of £1.2m) and is further analysed as follows:

The basic and diluted profit per share in the year were 0.15p and 0.13p respectively (2021: basic and diluted profit per share were 3.76p and 3.42p respectively).

Analysis of revenue and ARPA by source

Following the acquisition of Glanty in May 2021 the Group reports revenues attributable to products and services offered to:

· estate and letting agents;

· new home developers;

· Glanty customers; and

· other, non-property advertiser customers.

Costs, assets and liabilities are not attributed to the different revenue sources and so segmental reporting under IFRS 8 is not appropriate.

Operational KPIs

Group operational KPIs were as follows:

· Group ARPA was £188, an increase of 32%, reflecting the growing number of agents under paying contracts in the year and the migration of customers on discounted rates towards full-tariff contracts (FY21: £142).

· Site visits were up 6% to an annual record of 283 million (FY21: 267 million).

· Average monthly leads per advertiser were constant at 117 (FY21: 117). Valuation leads increased by 58% in the year, reflecting strong engagement with property-active consumers.

Income statement

The Group's financial performance is presented in the Consolidated Income Statement below. The profit for the year attributable to the owners of the Group was £0.1m (2021: £2.7m).

Administrative expenses in 2022 increased by £7.5m to £28.1m (2021: £20.6m). This movement is primarily due to decisions taken in 2020 to reduce costs and conserve cash in light of the COVID-19 pandemic. In particular, marketing expenditure increased 80% to £10.6m (2021: £5.9m) and staff costs (including temporary workers and consultants) increased to £11.4m (2021: £10.0m) as headcount, bonuses and commissions were lower in FY21.

During the year there arose a non-cash charge of £0.5m in relation to share option awards made to employees (2021: £0.7m). Further details on options awarded, exercised and forfeited are set out in note 18.

Professional fees of £0.2m were incurred in the year (2021: compensation received net of professional fees £0.9m), predominantly in relation to the acquisition of Glanty (see note 11). Additional charges of £0.4m were recognised arising from the Group's associate holding in Glanty and the amortisation of acquisition related costs (2021: share of loss of associate £0.1m).

An agent recruitment charge of £1.6m (2021: £1.4m) was incurred in relation to non-cash share-based charges arising on the issue of shares to certain new and existing agents following them having earlier signed new long-term listing agreements to advertise all of their UK residential sales and letting properties at OnTheMarket.com.

In FY22, the Group fully repaid the grant income received in FY21 under the Coronavirus Job Retention Scheme of £0.4m (2021: grant income received £0.4m).

Statement of financial position

Intangible assets increased to £7.5m (2021: £4.7m), which includes the acquisition of Glanty's intangible assets at fair value in FY22 of £1.9m. There was also additional capitalisation of staff and consultant costs incurred in the ongoing development of OnTheMarket.com and Glanty products, partially offset by the amortisation charge arising on those costs and on costs previously capitalised.

Goodwill of £1.5m was recognised within the Group as a result of the acquisition of Glanty in the year. Goodwill represents the excess of the fair value of Glanty's purchase consideration over Glanty's net fair value of identifiable assets and liabilities acquired.

Right of Use Assets increased by £0.5m to £0.7m (2021: £0.2m). This was because of new motor vehicle leases, a renewal of the leasehold premise in Agents' Mutual and a new lease from the acquisition of Glanty.

Investments of £0.4m arose in the year, from investment into Insurestreet Limited, trading as Canopy, and into Property Funding Hub Limited, trading as Brickflow.

A deferred tax asset of £2.6m (2021: £1.6m) was recognised in the year. Further details are set out in note 9.

Receivables increased to £5.1m as at 31 January 2022 (2021: £4.8m), mainly as a result of an increase in prepayments in respect of advertising expenditure and an increase in trade receivables, partially offset by a fall in the share-based agent recruitment prepayment. Details on the accounting treatment for agent shares issued are set out in note 2.9.

Trade and other payables as at the year end rose to £5.6m (2021: £4.9m), mainly as a result of higher year end payables in relation to staff bonus accruals and an accrual in respect of future issues of agent recruitment shares under listing agreements signed with customers, partially offset by a reduction in VAT payable. Details on the accounting treatment for agent shares issued are set out in note 2.9.

At the end of the year, the Statement of Financial Position showed total assets of £26.3m (2021: £22.9m), with the increase primarily due to the acquisition of Glanty.

Total equity was £18.7m at 31 January 2022 (2021: £16.9m), which reflects the issue of shares on the acquisition of Glanty. This has been accounted for under s.612 of the Companies Act 2006 and a merger reserve has been created. A general meeting was held on the 26 May 2022 at which shareholder approval for a proposed cancellation of capital was received. As part of the cancellation of capital, legal advice was received over the classification of reserves that led to the Group adjusting its reserves in FY22. Reserves of £3.7m, previously classified as share premium, have now been categorised as other reserves. See note 21 for further details.

Consolidated Income Statement: year ended 31 January 2022

The operating profit arises from the Group's continuing operations.

There is no recognised income or expense for the year other than the profit shown above and therefore no separate statement of other comprehensive income has been presented.

Consolidated Statement of Financial Position: at 31 January 2022

Consolidated Statement of Changes in Equity: year ended 31 January 2022

Share capital

Share capital represents the par value of ordinary shares issued by the Company.

Share premium

Share premium represents the difference between the issue price and the par value of ordinary shares issued by the Company.

Share-based payment reserve

Share-based payment reserve represents the cumulative share-based payment expense for the Group's share option schemes.

Other reserves

Other reserves represent movements in share prices from contract date to share issue date in relation to the issue of agent recruitment shares (see note 2.20).

Merger reserve

Merger reserve represents the difference between the cost of the investment in a subsidiary undertaking and the equity of that subsidiary acquired, on consolidation.

Retained earnings

Retained earnings represent the cumulative profit and loss net of distributions to owners.

Consolidated Statement of Cash Flows: year ended 31 January 2022

Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash at bank and in hand. This is consistent with the presentation in the Statement of Financial Position.

Selected notes to the Consolidated Financial Statements: year ended 31 January 2022

1. General information

The principal activity of the Company is that of a holding company. The principal activities of the Group in the year under review were the provision of online property portal services to businesses in the estate and lettings agency industry under the trading name of OnTheMarket.com, and the provision of software services to UK estate and lettings agents by Glanty under the trading name teclet.

The Company is a public company limited by shares and it is incorporated and domiciled in the UK. The address of its registered office is PO Box 450, 155-157 High Street, Aldershot, GU11 9FZ. Its shares are listed on AIM.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. They have been applied consistently to all periods presented with the addition of IFRS 3: Business Combinations, further information on which is set out below in notes 2.3, 2.4 and in note 11.

2.1. Basis of preparation

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 January 2022 but is derived from those accounts. Statutory accounts for 31 January 2021 have been delivered to the Registrar of Companies and those for 31 January 2022 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) of the Companies Act 2006.

While the financial information included in this results announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS"s), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in June 2021.

Measurement bases

The consolidated financial statements have been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The preparation of the consolidated financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates and management judgements in applying the accounting policies. The significant estimates and judgements that have been made and their effects are disclosed in note 3.

2.2. Going concern

The Group made a profit after tax for the year of £0.1m (2021: £2.7m) and as at 31 January 2022 the Group had a net cash balance of £8.4m (2021: £10.7m). At 31 May 2022, the Group had cash of £8.2m.

The Directors have prepared and reviewed cash forecasts and projections for the Group for the next 12 months. They have also conducted sensitivity analyses and considered scenarios where there is an adverse impact on future revenues, together with the mitigating actions they may take in such circumstances, such as a reduction in budgeted discretionary expenditure.

Based upon these projections and analyses, the Directors have a reasonable expectation that the Group has adequate financial resources to continue its operations for the foreseeable future and to be able to meet its debts as and when they fall due.

In the light of this, the Directors consider the going concern basis to be appropriate to the preparation of these financial statements.

2.3. Business Combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The consideration transferred is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Costs directly attributable to the business combination are recognised in the income statement in the period they are incurred. The cost of a business combination is allocated at the acquisition date by recognising the acquiree's identifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria at their fair values at that date.

The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. Intangible assets are recognised if they meet the definition of an intangible asset contained in IAS 38 and their fair value can be measured reliably. The excess of the cost of acquisition over the fair value of the Group's share of identifiable net assets acquired is recognised as goodwill.

For business combinations achieved in stages, the Group remeasures its previously held equity interest in the acquiree at its acquisition date fair value and recognises the resulting gain or loss, if any, in the Income Statement as appropriate.

2.4. Goodwill

Goodwill represents the excess of the fair value of purchase consideration over the net fair value of identifiable assets and liabilities acquired. Goodwill is recognised as an asset at cost and subsequently measured at cost less accumulated impairment.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit and loss on disposal.

2.5. Intangible assets

In accordance with IAS 38, "Intangible Assets", expenditure incurred on research and development is distinguished as relating to a research phase or to a development phase.

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally generated intangible asset arising from the development and enhancement of the online platform, OnTheMarket.com, and associated applications, or the development and enhancement of Glanty software assets, is recognised when the development has been deemed technically feasible, the Group has the intention to complete the development, probable future economic benefits will occur, the Group has the required funds to complete the development and when the Group has the ability to measure the expenditure on the development reliably.

The amount initially recognised for internally generated intangible assets is the sum of the directly attributable expenditure incurred from the date when the intangible asset first meets the recognition criteria defined above.

Capitalisation ceases when the asset is brought into use. Where no internally generated asset can be recognised, development expenditure is recognised in the income statement in the period in which it is incurred.

Subsequent to initial recognition, internally generated assets are reported at cost less accumulated amortisation and impairment losses. The amortisation methods applied are as follows:

Development costs - Straight-line 4 years

Technology related intangibles - Straight-line 8 years

Customer related intangibles - Straight-line 8 years

Those separately identifiable intangible assets acquired at fair value under the purchase of Glanty are amortised over 8 years, being the period which the Directors believe best matches the basis of calculation of the fair values at which they were acquired.

2.6. Impairment of property, plant & equipment, right-of-use assets, intangible assets and goodwill

The carrying value of property, plant, and equipment, right of use assets and intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Goodwill is tested for impairment annually and whenever there is an indication that they might be impaired. An impairment loss is recognised for the amount by which the carrying value of the asset exceeds its recoverable amount.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

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 the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately as profit, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

2.7 Investments in associates in the consolidated financial statements

Associates are entities over which the consolidated entity has significant influence but not control or joint control.

Investments in associates are accounted for using the equity method.

Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post acquisition changes in the consolidated entity's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

Dividends received or receivable from associates reduce the carrying amount of the investment.

When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the Company or consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

2.8. Impairment of financial assets

An impairment loss is recognised for the expected credit losses on financial assets when there is an increased probability that the counterparty will be unable to settle an instrument's contractual cash flows on the contractual due dates, a reduction in the amounts expected to be recovered, or both. The probability of default and expected amounts recoverable are assessed using reasonable and supportable past and forward-looking information that is available without undue cost or effort. The expected credit loss is a probability-weighted amount determined from a range of outcomes and takes into account the time value of money.

For trade receivables, material expected credit losses are measured by applying an expected loss rate to the gross carrying amount. The expected loss rate comprises the risk of a default occurring and the expected cash flows on default based on the aging of the receivable.

For intercompany loans that are repayable on demand, expected credit losses are based on the assumption that repayment of the loan is demanded at the reporting date. If the subsidiary does not have sufficient accessible highly liquid assets in order to repay the loan if demanded at the reporting date, an expected credit loss is calculated. This is calculated based on the expected cash flows arising from the subsidiary, weighted for probability likelihood variations in cash flows. 

2.9. Share-based payments

Employee share schemes

The Group operates equity-settled share-based remuneration plans for its employees. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values.

Where employees are rewarded using share-based payments, the fair value of employees' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions).

All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding increase to equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.

Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current period.

The number of vested options ultimately exercised by holders does not impact the expense recorded in any prior period. Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.

The social security contributions payable in connection with the grant of the share options are considered an integral part of the grant itself and the charge will be treated as a cash-settled transaction.

Agent recruitment shares

The Group issues shares to key agents who commit to long-term listing agreements, in line with its strategy to grow the agent shareholder base. Shares are issued in return for payment of the nominal share value in cash and, in some cases historically, in return for share premium in non-cash consideration relating to the long-term listing agreements signed. Shares are either issued as soon as practicable after contract commencement or following the completion of contractual commitments, depending upon the contract terms.

For shares issued as soon as practicable after contract commencement, an agent recruitment share reserve is credited upon contract commencement (shown within other reserves in the financial statements) and a prepayment created, based on the value of the shares at contract date, which is then amortised over the life of the contract.

In instances where shares are issued after the completion of contract commitments, amounts are accrued during the life of the contract and the accrual released and other reserves credited upon issue of the shares. Amounts are accrued and deducted against revenue over the period in which the fees are earnt.

Upon the issue of shares to the agents, which predominantly takes place on a quarterly basis, the nominal value of the shares issued, which is paid in cash by the agent, is transferred to share capital.

2.10. Revenue

Revenue principally represents the amounts receivable from agency and new homes customers in respect of listing fees and the sale of products that provide additional marketing opportunities for customers. Glanty revenues are predominantly in respect of licence subscriptions and paid development contracts. The Group also receives revenues from non-property advertisers who pay for exposure to consumers using the Group's platforms.

Revenue is recognised based upon the transaction price specified in a contract with a customer. It is recognised at the point when the performance obligations are satisfied, through providing a customer with access to the OnTheMarket platforms and / or products or other services.

Further information on the main revenue sources is set out below.

Agency

For listing services, customers pay monthly subscriptions to list their properties on the OnTheMarket platforms. Contract fees for these services are predominantly based upon the size (number of branches) of the agent, branch locations and customer activities (sales, sales and lettings or lettings only). They vary in length from rolling monthly notice periods to five years, with agents on discounted rates or short-term introductory free of charge offers typically on shorter contracts.

Performance obligations are satisfied, and revenue recognised, from the point at which the customer has access to the platform to allow them to list their properties. Subscription revenue is spread over the life of the contract. Agency listing services are typically billed monthly in advance, from the point the customer gains access to the platforms.

Agent customers have the option to enhance their property listings and presence through purchasing additional advertising products. For products that provide enhanced brand exposure over a period of time, revenue is recognised over the life of the product, from the point the customer gains access to the product. Invoices for such products are sent on a monthly basis, in arrears.

For products with a one-off usage basis, revenue is recognised at the point in time or over time depending on the nature in which the customer chooses to apply and use the product.

Where contracts include an issue of shares to an agent customer following payment of listing fees, and the shares issued are calculated as a percentage of the fees paid, the fair value of the shares expected to be awarded is accrued over the relevant period and treated as a discount to revenues.

New homes

For listing services, customers pay monthly subscriptions to list their developments on the OnTheMarket platforms. Revenues for these services are predominantly based upon a monthly fee per development listed. Contracts are predominantly rolling, and the contract will end when the listed development is fully sold.

Performance obligations are satisfied, and revenue recognised, from the point at which the customer has access to the platform to allow them to list their properties. Subscription revenue is spread over the life of the contract. New homes listing services are typically billed monthly in arrears, from the point the customer gains access to the platforms.

New homes customers have the option to enhance their property listings and presence through purchasing additional advertising products. For products that provide enhanced brand exposure over a period of time, revenue is recognised over the life of the product, from the point the customer gains access to the product. Invoices for such products are sent on a monthly basis, in arrears.

For products with a one-off usage basis, revenue is recognised at the point in time or over time depending on the nature in which the customer chooses to apply and use the product.

Glanty

Glanty revenue is derived from the sale of software licences or for the provision of software development services for customers.

Licence agreements with customers include a pre-defined subscription period during which the customer is entitled to the usage of the software. The length of the subscription period varies and might be one, 12, 24, or 36 months. Performance obligations are satisfied, and revenue recognised, when the customer has the contractual right to use the software. Revenue is then recognised on a monthly basis, over the life of the contract, from the point the customer has the right to access software. Invoices are issued under a range of billing agreements including monthly, quarterly, in advance and in arrears.

For paid development work, revenue is recognised on the basis of work performed over the life of the contract, with billing often based on contractual milestones within the contracts.

Other

Other revenue principally relates to advertising revenue paid by customers (not agency or new homes customers) to advertise non-property products on the OnTheMarket platforms. Performance obligations are met once a customer is actively advertising on the OnTheMarket platforms. Revenue is recognised from the point in time in which the customer advertised. Where third parties are acting as intermediaries between the Group and the advertiser customer, only net revenues receivable are recognised.

Contract assets and liabilities

Contract assets relate to the Group's rights to consideration for services that have been provided at the reporting date, predominantly under contracts invoiced in arrears. Contract assets are transferred to receivables when the rights to consideration have become unconditional.

Contract liabilities predominantly relate to advance consideration received from agency customers for listing services, for which revenue is recognised at a later date, as or when the services are provided.

2.11. Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. An operating segment's operating results, where discrete financial information is available, are reviewed regularly by the Group's Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its performance. Since its acquisition, Glanty has been accounted for as an operating segment under IFRS 8, distinct from the rest of the Group.

3. Critical accounting judgements and key sources of estimation uncertainty

The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions concerning the future which impact the application of accounting policies and reported amounts of assets, liabilities, income and expenses. The accounting estimates resulting from these judgements and assumptions seldom equal the actual results but are based on historical experiences and future expectations.

Critical accounting judgements

The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements;

Revenue recognition

Where customers default on the payment terms of their contracts, management have made judgements as to whether there is any current intention to pay by these customers and, where there is judged not to be, the contract is deemed not to meet the contract recognition criteria under IFRS 15 and hence the amounts due are not included within revenues. Amounts, if subsequently received, are recognised as revenue at the time of receipt.

Key sources of estimation uncertainty

Business combinations

Management uses valuation techniques when determining the fair values of certain assets and liabilities acquired in a business combination (see note 11). In particular, the fair value of contingent consideration is dependent on the outcome of many variables including the acquiree's future profitability.

Impairment of Goodwill, Intangible Assets and Investments in subsidiaries

Determining whether goodwill, intangible assets or investment in subsidiaries are impaired requires an estimation of the value in use of the cash-generating unit to which these have been allocated. The value in use calculation requires the company to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate to calculate present value. Projections are based on both internal and external market information and reflect past experience as set out in note 12.

Impairment of Company receivables

The Company has intercompany loans to its subsidiaries Agents' Mutual and Glanty which are repayable on demand. As the subsidiaries did not have sufficient highly liquid resources to repay the loans at 31 January 2022, an expected credit loss is calculated under IFRS 9.

The calculation is based upon a number of scenarios, ranging from a scenario which anticipates that Agents' Mutual and Glanty will trade profitably in the future and that this will allow it to repay the loans in time, to a scenario under which it is anticipated that the loan will not be fully recovered. Forecast cash flows under a range of possible outcomes are used to derive a probability-weighted value for the loans based upon the time taken to repay the outstanding amount in full. These calculations rely on management estimates as to the future cash flow forecasts and the probability weightings assigned. The estimates reflect the views of management at 31 January 2022 and the future cash flows therefore vary year to year.

Deferred tax

At 31 January 2022 Agents' Mutual had tax losses available to carry forward. Agents' Mutual was profitable in the year to 31 January 2022 and the Directors believe it will make taxable profits in the future, against which the tax losses carried forward will be available to offset future corporation tax payments. A deferred tax asset has therefore been recognised in respect of these losses. The amount recognised is based upon the Directors' judgement of possible taxable profits arising in the foreseeable future. In forming this judgement, The Directors are required to estimate possible revenues and profits that may arise and the asset is restricted to forecast profits in the foreseeable future (see note 9).

4. Revenue

The Group has determined that the Chief Executive Officer is the chief operating decision maker. Monthly management numbers are reported and issued to the Chief Executive Officer, which are used to assess the performance of the business.

Following the acquisition of Glanty in May 2021, the Group reports revenues attributable to products and services offered to:

· estate and letting agents;

· new home developers;

· other, non-property advertising income; and

· Glanty customers

Agency Sales are predominantly billed monthly in advance, and these are recognised as deferred income. The Group has contract liabilities as follows in respect of deferred income:

Contract liabilities of £1.8m at 31 January 2021 were recognised as revenue in the year ended 31 January 2022 (2021: £1.6m).

A proportion of sales in are billed monthly in arrears and are recognised as accrued income. Accrued income amounted to £0.4m for the year ended 31 January 2022 (2021: £0.2m).

All revenue is generated in the UK for the Group's services.

During the year there was a charge of £0.4m to revenue in relation to shares that are issued after the completion of contract commitments. These are amounts that are initially accrued during the life of the contract and the accrual released and other reserves credited upon issue of the shares. Amounts are accrued and deducted against revenue over the period in which the fees are earnt.

5. Operating Segments

The Group determines and presents operating segments based on internal information that is provided to the Chief Executive Officer, who is the Group's chief operating decision maker.

The Group's reportable segments are as follows:

· Glanty

· Rest of the Group

Management monitors the business segments at a revenue and operating profit level separately for the purpose of making decisions about resources to be allocated and of assessing performance. There was no inter-segment revenue during the year.

Costs, assets and liabilities are not attributed to the different revenue sources other than for Glanty and so segmental reporting under IFRS 8 is not appropriate for the remainder of the Group.

No customer made up more than 10% of Group revenues in the current or prior years.

Operating profit in relation to the Rest of the Group segment is managed together and as there are no internal measures of individual segment profitability, relevant disclosures have been shown under the heading Rest of the Group in the table below.

1 Glanty figures are for the period from acquisition on 28 May 2021 to 31 January 2022.

2 Operating loss is stated after the charge for depreciation and amortisation.

3 Assets and liabilities are not separately monitored by segment by the Chief Operating Decision Maker and therefore not identified above.

6. Administrative expenses

Expenses are comprised of:

7. Specific professional fees, share-based payments and non-recurring items

Share-based employee incentive charges include employer's national insurance charge on options exercised in the year as well as the movement in the expected future employer's national insurance charge based on the year-end share price. See note 18 for further details.

Professional fees incurred in the period relate predominantly to fees and expenses in relation to the acquisition of the remaining 80% of Glanty. In the prior period, compensation net of professional fees incurred were in relation to litigation which was settled in that period. Compensation related to the recovery of litigation costs.

Agent recruitment charges relate to share-based charges arising on the issue of shares to agents committing to long-term service agreements, in line with the Group's strategy to grow the agent shareholder base.

The government grant costs in the period reflect the repayment of amounts received in the year to 31 January 2021 under the Coronavirus Job Retention Scheme.

Payments in relation to loss of office reflect contractual compensation to Ian Springett for loss of office and associated legal costs.

Staff related costs in the period relate to costs associated with termination of employment and professional fees associated with employee share-based plans. Staff related costs in the prior period relate predominantly to professional fees paid in relation to the search for a permanent Chief Executive Officer following Ian Springett's departure from the Group.

Prepaid acquisition related costs relate to the amortisation of prepayments for employee services incurred as part of the acquisition of Glanty and amortised over the three-year period from acquisition.

All of these items have been separately analysed as the Directors believe the adjusted operating profit calculated and disclosed before accounting for these amounts provides useful additional information as an alternative performance measure. However, it should not be considered an alternative to IFRS measures, such as revenue or operating loss or profit.

8. Employees and Directors

9. Income tax

Factors affecting tax charge for the year

Deferred taxes reflected in these financial statements have been measured using the enacted tax rates at the Balance Sheet date. For UK corporation tax the enacted rate of 19% was used for periods until 5 April 2023 and the enacted rate of 25% was used thereafter to measure the net deferred tax asset.

The subsidiary, Agents' Mutual, has trading losses available for carry forward of £30.2m (2021: £32.4m). Unused tax losses for which no deferred tax asset has been recognised total £18.9m (2021: £24.2m).

Based upon estimations of profits arising in the foreseeable future, a deferred tax asset of £2.6m (2021: £1.6m) has been recognised for these losses. This deferred tax asset comprises temporary differences attributable to:

The movement in the year in the deferred tax asset arising from the Agents' Mutual losses is as follows:

£'000

Opening balance at 1 February 2021 1,558

Credited to profit and loss 1,041

_____

Closing balance at 31 January 2022 2,599

_____

The subsidiary, Glanty, has trading losses available for carry forward of £4.8m for which no deferred tax asset has been recognised. The Group has been implementing its strategic plans for the long-term development of the business. These plans envisage a period of strong growth in the future, underpinned by initial investment in product development and roll-out. As a result of the Group's strategic plans, circumstances with respect to recoverability of the deferred tax asset in relation to losses carried forward in the foreseeable future remain uncertain. Consequently, no deferred tax asset has been recognised. The Group has also not recognised a deferred tax liability arising on non-current asset timing differences of £321k due to the availability of tax losses to extinguish this liability.

A deferred tax liability of £401k has been recognised, based upon the potential tax payable should the Group dispose of the identifiable net assets acquired upon the acquisition of Glanty. The charge assumes tax at 25% of the excess of fair value over the tax base of the asset at the acquisition date. The liability reduces the goodwill arising on the acquisition of Glanty.

10. Earnings per share

11. Acquisition of subsidiary

Glanty is a property technology business which specialises in providing solutions to the UK residential estate and lettings sectors. It is the owner and developer of software products and services designed to reduce overheads, maximise efficiencies and increase revenues for estate and lettings agents. The acquisition of Glanty was in line with the Group's strategy to create a tech-enabled property business across the broader property ecosystem.

OnTheMarket made an initial strategic investment for a 20% share in Glanty, in December 2019. As part of that investment, the Company was granted a call option under which it had the right, but not the obligation, to enter into a share purchase agreement to acquire the remaining 80% of Glanty shares. The call option was exercised on 19 March 2021 and the acquisition of the remaining 80% of shares in Glanty completed on 28 May 2021. From that date Glanty has been accounted for as a subsidiary.

Consideration transferred

The initial consideration of £1,533,477 (the "Initial Consideration") required to be paid by OnTheMarket under the share purchase agreement was satisfied by way of the issue of 1,528,832 ordinary shares of 0.2 pence each in the capital of OnTheMarket in aggregate and a cash payment of £1,512k, offset by a prepayment arising in respect of bad leaver provisions of £580k.

The Initial Consideration was subject to an adjustment post-completion based on Glanty's actual net cash/net debt and actual working capital position as at completion. This has resulted in a reduction in the Initial Consideration of £147,000, which led to the return to OnTheMarket of 163,154 ordinary shares of 0.2 pence each in the capital of OnTheMarket. These shares will not be eligible to be voted and must be cancelled or disposed of within three years. The shares were cancelled on 2 November 2021.

Contingent earn-out

The purchase agreement includes additional consideration which may become payable under earn-out arrangements (capped at £12m and payable in shares or cash at the Company's discretion) and if Glanty receives R&D tax credits from HMRC which relate to periods prior to completion (capped at £150k). The Group has calculated the fair value of the contingent consideration based on probabilities assigned to forecasts based on different assumptions.

The earnout targets are based on Glanty's recurring revenues and EBITDA in the third-year post completion, the mechanism for determining which is detailed in the share purchase agreement. The earnout will be payable if third year revenues exceed £2m and third year EBITDA exceeds £0.5m. Below those levels, no earnout is paid. If payable, the earnout payable will be 1 times third year revenues plus 1.5 times third year EBITDA, capped at an aggregate payment of £12m. Payment of any earnout will be made following the third anniversary of completion of the call option and allows time for drawing up and agreeing the relevant accounts on which the earnout is calculated.

The fair value of the consideration for the 80% of Glanty shares acquired is as follows:

Previously held investment in Glanty

On the acquisition date, the Group's 20% investment in Glanty, previously accounted for as an investment in associate, has been remeasured to fair value. On that date, a cumulative loss of £0.2m arising from difference in the fair value of the investment and the carrying value in the accounts at the acquisition date is recognised in the consolidated income statement as the fair value loss on step acquisition. The previously held investment is considered part of what was given up by the Group to obtain control of Glanty. Accordingly, the fair value of the investment is included in the determination of goodwill.

Goodwill

Goodwill of £1.5m relates to earnings attributable to future new customers of the Company, new technologies that may be developed that will complement/replace the existing suite of products, the highly skilled assembled workforce (which cannot be separately recognised as an intangible asset) and an amount for general operational purposes.

Glanty's contribution to the Group results

From the acquisition date to 31 January 2022, Glanty has contributed £0.6m of revenues and a loss after tax of £0.6m.

Had the acquisition occurred on 1 February 2021, Glanty would have contributed £0.8m of revenues and a loss after tax of £1.2m. This loss includes £0.6m of one-off costs in relation to additional payments crystallising prior to the acquisition by the Company. The Group revenue would have been £30.7m and a loss after tax of £0.7m.

12. Goodwill

Impairment testing for cash generating units containing goodwill

The Group tests the carrying value of assets at the cash-generating unit Glanty for impairment annually, or more frequently if there are indicators that assets might be impaired. The review is undertaken by assessing whether the carrying value of assets is supported by their value-in-use, which is calculated as the net present value of future cash flows derived from those assets, using cash flow projections. If an impairment charge is required, this is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (£1.5m) and then to the other assets of the cash generating unit, but subject to not reducing any asset below its recoverable amount. The impairment review in respect of Glanty concluded that no impairment charge was required.

For the impairment review, cash flows were prepared using Board approved forecasts to 31 January 2025, alongside management projections for a further two years. The projections demonstrate continued growth in revenue from existing customers including forecast growth in sales to the Group's listing agent customer base. Revenue growth in years 4 and 5 are forecast to slow but, given the early stage that the business is at, revenue growth rates for these years were still forecast above steady state industry norms. For the impairment review, a long-term revenue growth rate beyond the 5-year period of 0% has been assumed.

Key assumptions are those to which the recoverable amount of an asset or cash-generating unit is most sensitive.

The following key assumptions were used in the discounted cash flow model for Glanty:

- revenue growth in the base model for the years 1-5 is assumed at a CAGR of 44%;

- EBITDA margins increase to a steady state level of 40% in perpetuity; and

- 14% pre-tax discount rate.

Revenue growth in the base model is assumed at a CAGR of 44%. Glanty achieved growth in license revenue of 54% in the prior year. Management believe continued growth in the base model is achievable in accordance with the acquisition strategy of Glanty providing additional services for agents listed on the OnTheMarket.com portal and supports the move of the Group from specific listing services to a holistic approach towards service and product delivery. In addition, management believes the projected long term growth rate beyond 5 years of 0% revenue is prudent and justified, based on the maturity of growth in the business.

During the forecast period Glanty is expected to become profitable and EBITDA margins increase to a steady state level of 40% in perpetuity. Management believes this is reflective of a steady state within the industry and reflects the costs of supporting the business in the long run.

The discount rate of 14% pre-tax reflects management's estimate of the time value of money and the consolidated entity's weighted average cost of capital adjusted for Glanty, the risk-free rate and the volatility of the share price relative to market movements.

Sensitivity

As disclosed in note 3, the directors have made judgements and estimates in respect of impairment testing of goodwill. The impairment review is highly sensitive to reasonably possible changes in key assumptions used in the value-in-use calculations. Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. The sensitivities are as follows:

- Revenue growing less than a CAGR of 25% (with unchanged costs) could lead to an impairment arising

- EBITDA margin in perpetuity at approximately 21.5% (revenue growth in line with the base case), could lead to an impairment arising.

13. Intangible assets