ZPG PLC Regulatory News (ZPG)

ZOOPLA PROPERTY GROUP GROWS AUDIENCE TO RECORD LEVELS

ZOOPLA PROPERTY GROUP PLC

Full year results for the year ended 30 September 2014

Zoopla Property Group Plc (LSE: ZPLA), the digital media business and operator of leading UK online property portals including Zoopla and PrimeLocation, announces its full year results and KPIs for the year ended 30 September 2014.

Business highlights

· Record audience levels with traffic up 33% to 513.5m visits (2013: 386.4m)

· Continued focus on mobile which now accounts for 57% of the Group's traffic

· Ongoing investment in enhanced products for members with launch of MarketView and Comparables Reports

· Increased take up of members buying additional premium products

· SmartNewHomes acquisition fully embedded with 49% increase in developer revenue

· Expansion into new markets with launch of commercial channel and increased focus on overseas listings

· 40,000 unique home seller appraisal leads sent to local agents, equating to around £150m of potential fees for Zoopla Property Group members10

· Successful IPO in June of this year

· Final dividend proposed of 1.1p per share

Commenting on today's announcement Alex Chesterman, Founder & CEO of Zoopla Property Group said, "I am pleased to present such a strong set of full year results following our successful IPO in June. 2014 has been a landmark year for Zoopla Property Group with record audience levels and strong revenue growth across all areas of the business as consumers continue to recognise the importance of the Group's services for searching and researching the property market at work, at home and on the move.

"We continue to deliver enhanced transparency and efficiency to the market and to develop a world-class consumer proposition designed to aid our users with their property search, increase engagement and drive value for our members. We enjoyed record levels of traffic to our websites and mobile applications with 42.8m average monthly visitors generating over 29 million leads during the year providing an excellent value proposition for our members and resulting in increased take-up of our additional premium products.

"We remain committed to our mission of building our brands and business to provide the most useful property resources to consumers along with being the most effective partner for property professionals across the UK."

Outlook

We are well placed for future growth with an excellent market position as a result of strong brand awareness and high levels of consumer engagement and market penetration. We remain focused and continue to execute on our strategy of enhancing both our consumer and member propositions with the launch of new features and products to further grow engagement levels and revenues. Whilst there are some political and economic challenges within the overall housing market, the impact of these on our business is not expected to be material and early trading post the year-end is in-line with expectations. The launch of another new portal, Agents' Mutual, in January may have some short-term impact on our agency membership numbers but we have seen numerous launches into our market before and taken effective action to compete with them. Longer term we remain very confident in the value proposition we provide to both our members and consumers, which underpins our long term growth prospects.

Our next trading update is scheduled for Thursday 12 February 2015.

-ENDS-

For further information, please contact:

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

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

Dan Yea at Maitland - dyea@maitland.co.uk / 020 7379 5151

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

A slide webcast of the management team presentation to analysts and investors will be made at 09.30 today and can be accessed here. An audio dial in will also be made available:

UK Toll Number: 0203 139 4830 / UK Toll-Free Number: 0808 237 0030 / Participant pin: 21724249#

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

2. Adjusted basic EPS is calculated as profit for the year excluding exceptional items divided by the weighted average number of shares in issue for the period.

3. Adjusted basic EPS excluding £3.0 million of one-off warrant charges incurred during 2014 was 7.2 pence per share, an increase of 33% on the prior year.

4. Average Revenue Per Advertiser ("ARPA") is the revenue from member subscriptions in a given month divided by the average number of members during the month, measured as a monthly average over the period.

5. Members represent the total number of estate agency branches, new home developers and overseas agency branches paying subscription fees to advertise their listings at the end of the period.

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

7. Leads are enquiries made to the Group's members initiated either through the telephone number or email form displayed on the Group's websites and mobile applications.

8. Number of listings represents the total number of properties being advertised for sale or to rent at the end of the period.

9. The 2013 comparatives have been disclosed on the basis that Zoopla Property Group Plc was in existence from the beginning of the prior year. 2013 comparatives are based on those of the previously existing Group as presented in the consolidated financial statements of Zoopla Property Group Limited (now ZPG Limited) for the year ended 30 September 2013.

10. Based on an average agent fee of 1.5% and the average UK property value of £266,985 for October 2014

Cautionary Statement

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

As a consequence, the Group's future financial condition, results of operations and cash flows, as well as the development of the industry in which we operate, may differ from those expressed in any forward-looking statements made by us or on the Group's behalf.

Business review

Consumers are demanding more property related information and continue to recognise the importance of the Group's services for searching and researching the property market at work, at home and on the move. The Group continues to experience strong levels of traffic to its websites and mobile applications with 42.8m average monthly visits and our continued focus on mobile means this avenue is now producing 57% of the Group's traffic.

The number of leads generated during the period has increased 12% to 29.2 million in 2014 as the Group continues to increase the value provided to its members through continual improvement and development of the Group's sites and mobile apps leading to enhanced user engagement. Over the past 12 months, the Group has referred over 40,000 individual home seller leads to its members for valuations, equating to over £150 million of potential fees for its members.

Brand awareness has grown significantly in recent years, with prompted brand awareness amongst all adults nationally at 77% for the Group's Zoopla brand. The Group continues to innovate and accelerate its portfolio of products for both users and members, such as searching by commute times and customers with tools like MarketView.

Key performance indicators

The Directors consider the following metrics to be the Group's key performance indicators ("KPIs")

ARPA

Because the Group is committed to maximising the return on marketing investment for members, the Group continues to innovate with new products and solutions and periodically conducts rate reviews to ensure that its subscription pricing reflects the value offered to members. The Group's average blended ARPA has increased by 18% from £264 per month in 2013 to £312 in 2014. ARPA fluctuates across the different businesses within the Group.

The increase in agency and developer ARPA has been driven by:

· estate agents upgrading their subscription and buying additional and new innovative products, such as MarketView;

· developers upgrading their subscriptions and increasing spend on targeted email campaigns; and

· value generated for the Group's members through continued growth in both the number of site visits and leads generated.

Overseas agent ARPA has seen a small decrease in the year as the Group focused on growing overseas members and listings.

Number of members

As at 30 September 2014, the Group had active subscription contracts with 19,663 members, including 16,373 UK estate and lettings agency branches and 2,715 new home developers, which the Directors believe represents close to 90% of the total number of property professionals in the UK. The Group also had 575 overseas agents, an increase of 106% from September 2013.

The total of 19,663 members represents a 5% increase from the 18,676 members as at 30 September 2013. This increase was primarily due to increased activity in the housing market, the Group's focus on attracting the remaining UK property professionals that are not currently members and growth in the number of the Group's overseas agents.

Number of visits

The Group's number of site visits increased by 33% to 513.5 million in 2014. This increase was primarily due to:

· the Group's continued focus on brand building - the Group's core brand, Zoopla, had 77% prompted brand awareness amongst all adults nationally in October 2014, up from 26% in November 2010 (source: Harris Interactive);

· the success of the Group's mobile applications - the proportion of visits via a mobile device (smart phones or tablets) increased from of 43% in September 2013 to 57% in September 2014

Number of leads

The number of leads generated by the Group has increased 12% to 29.2 million in 2014 as the Group continues to grow its audience and increase the value provided to its members. The Group's user-centric approach to product development and track record of continually improving and developing its websites and mobile applications has led to enhanced user engagement and therefore higher lead generation. There has also been a focus on improving the quality of leads generated, which is demonstrated by the 10% increase in vendor leads during the year.

Number of listings

The number of listings featured on the Group's websites and mobile applications is influenced by fluctuations caused by seasonality. The number of listings on the Group's websites and mobile applications remained relatively stable at 1.1 million throughout 2014.

Financial review

Summary

The 2014 financial year has been one of continued growth and progression, most notably with the Group's admission to trading on the London Stock Exchange on 23 June 2014. It has also been a year of investment for the future. The Group has invested significantly in both marketing and product development in line with the long-term plans laid out to shareholders.

The Group has performed strongly in 2014 with significant revenue and Adjusted EBITDA growth of 24% and 35% respectively. The Group also continues to generate high levels of cash, with £31.0 million generated from operating activities net of tax during the year. This has led to the Group being able to return £35.5 million of cash in the form of dividends to shareholders during the year. In addition, the Directors' have proposed the payment of a final dividend for 2014 of £4.6m.

Summary Income statement

The Group's summary Income statement for the year ended 30 September 2014 is shown below:

1Adjusted profit for the year excludes exceptional items but includes £3.0 million in respect of one-off warrant charges.

Revenue

The Group's revenue increased by 24% from £64.5 million in 2013 to £80.2 million in 2014. This was principally driven by growth in agent and developer revenue, which increased by 22% and 49% respectively. The 49% growth in developer revenue reflects the success of our niche brand strategy, especially the strong performance of our SmartNewHomes brand, and our continued focus on improving the value we can offer to our developer members. The growth in agency and developer revenue is attributable to both an increase in the number of the Group's subscribing members as well as an overall increase in ARPA.

The Group also continues to develop its other areas of income with other revenues increasing by 21%. Other income includes third party advertising, developing and growing our overseas property offering and helping customers from the broader property spectrum by leveraging the largest proprietary property database to offer tailored data services. Going forward the Group will also look to develop and grow its commercial property offering.

Staff costs and other operating expenses

The Group has continued to invest in both its people and brands. Employee costs increased by £3.1 million to £12.8 million compared to £9.7 million in the prior year as a result of increased headcount to support the continued growth of the business and the transition to a plc. The Group also continued its investment in marketing and product development as it seeks to further build brand awareness, improve the experience for both website and mobile users and provide value for its members. Other operating costs were up 10% on the prior year driven principally by the Group's continued marketing campaign. Total administrative expenses disclosed within the Income Statement include certain items that are excluded for the purposes of calculating the Group's adjusted EBITDA. These items are discussed in more detail below.

Adjusted EBITDA

The Group's Adjusted EBITDA grew by 35% from £29.4 million in 2013 to £39.6 million in 2014. This increase was primarily driven by the growth in revenue during the year as set out above. The Group's high operational gearing has led to the increase in Adjusted EBITDA exceeding the Group's revenue growth and an improvement of c. 370bps in the Group's overall margins. The increase has been offset slightly by the Group's continued investment in both its people and brands as discussed above.

Depreciation and amortisation

Depreciation and amortisation increased by 21% compared with 2013. The increase has arisen primarily on depreciation of leasehold improvements recognised on the Group's relocation to a new head office during the year and a full year's amortisation of intangible assets arising on the acquisition of Trinity Digital Property Limited in August 2013.

Share-based payments

During 2014 the Group continued to operate its Employee Share Option Scheme for employees and offer warrants for long term agreements with certain members. New options and warrants were granted under the schemes in January 2014. In addition, certain member warrants became exercisable in full as a result of the IPO on 23 June 2014 which led to the recognition of £3.0 million in accelerated share-based payments charges during the year.

Exceptional items

Exceptional items of £5.6 million for 2014 represent one-off costs incurred as part of the IPO.

Income tax expense

The Group's effective Income tax rate for 2014 was 26.5% (2013: 21.1%) which is higher than the average statutory tax rate of 22% for the period due to non-deductible expenses incurred in relation to the IPO and the one-off warrant acceleration discussed above.

Profit for the year

Adjusted profit for the year, which includes £3.0 million of one-off, accelerated warrant charges, has increased by 19% from £22.3 million in 2013 to £26.7 million in 2014. The increase was driven by the growth in both revenue and EBITDA. Statutory profit for the year decreased by 6%, to £21.1 million, due to £5.6 million of IPO expenses incurred in 2014.

Earnings per share (EPS)

The Group has presented its first EPS figures as a listed company. Comparatives for the 2013 financial year have been stated to reflect the impact of the group restructuring prior to Admission. Adjusted basic EPS, which includes the £3.0 million one-off warrant charge but strips out the impact of exceptional items, has increased by 20% to 6.5 pence per share in line with the Group's increase in revenue and adjusted profit for the year. Excluding the impact of the £3.0 million one-off warrant charge, adjusted EPS was 7.2 pence per share, an increase of 33% on the prior year. The slight decrease in basic earnings per share from 5.4 pence per share to 5.1 pence per share was due to exceptional expenses incurred on the IPO.

Summary Statement of financial position

1Current trade and other receivables less trade and other payables

The Group's Statement of financial position remains strong at 30 September 2014 as the business continues to generate high levels of cash. Net assets at 30 September 2014 were £98.2 million. The overall fall in equity compared to the prior year can be attributed to the £35.5 million of cash returned to shareholders in the form of dividends paid during the year. The Group ended the year with £31.0 million of cash and cash equivalents and net current assets of £21.7 million.

Summary Statement of cash flows

Net cash inflows from operating activities

The Group continues to see high cash generation with net cash inflows from operating activities of £31.6 million in 2013 and £31.0 million in 2014. The high level of cash generated was primarily driven by the continued growth in both revenue and Adjusted EBITDA.

Cash used in investing activities

The £1.5 million of cash flows used in acquisitions of subsidiaries during 2014 represents the settlement of deferred consideration payable from acquisitions made in prior periods. The Group also saw a cash outflow in respect of leasehold improvements during the year which related to the relocation of the Group to a new head office.

Dividends

During the year the Group paid pre-IPO dividends of £35.5 million. The Directors have proposed a final dividend for 2014 of 1.1 pence per share, resulting in a final proposed dividend of £4.6 million. The final dividend represents 43.5% of the Group's profits excluding share-based payments and exceptional items for the period from 1 June 2014 to 30 September 2014. The 2014 final dividend will be paid on 23 February 2015 to those shareholders on the share register as at 5 December 2014. The final dividend is subject to approval at the Group's AGM on 12 February 2015.

Principal risks and uncertainties

Full year results

The Group presents its financial statements for the year ended 30 September 2014. The Group's full Annual Report will be made available to shareholders, and displayed on the Group's website in January 2015.

Statement of Directors' responsibilities

The responsibility statement below has been prepared in connection with the Company's full Annual Report for the year ended 30 September 2014. Certain parts thereof are not included within this Announcement.

The Directors confirm to the best of their knowledge that: 

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

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

The Directors of Zoopla Property Group Plc and their respective responsibilities are listed in the Annual Report for 2014. This responsibility statement was approved by the Board of Directors and is signed on its behalf by:

Alex Chesterman

Chief Executive Officer

24 November 2014

Independent auditor's report to the members of Zoopla Property Group Plc

Opinion on financial statements of Zoopla Property Group plc

In our opinion:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 30 September 2014 and of the group's profit for the year then ended;

· the group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union;

· the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.

The financial statements comprise of the consolidated statement of comprehensive income, the consolidated and parent company statement of financial position, the consolidated and parent company statement of cash flows, the consolidated and parent company statement of changes in equity and the related notes 1 to 26. The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

Going concern

As required by the Listing Rules we have reviewed the Directors' statement that the group is a going concern. We confirm that:

• we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate; and

• we have not identified any material uncertainties that may cast significant doubt on the group's ability to continue as a going concern.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group's ability to continue as a going concern.

Our assessment of risks of material misstatement

The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team:

The Audit Committee's consideration of these risks is set out in the 2014 Annual Report.

Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect to any of the risks described above, and we do not express an opinion on these individual matters.

Our application of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

We determined materiality for the group to be £1.5 million, which is 5% of pre-tax profit, and below 2% of equity.

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £30,000, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

An overview of the scope of our audit

Our group audit was scoped by obtaining an understanding of the group and its environment, including group-wide controls, and assessing the risks of material misstatement at the group level. Our audit scope covers 100% of the group's net assets, revenue and profit before tax.

At the parent entity level we also tested the consolidation process.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

· the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

· the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

· we have not received all the information and explanations we require for our audit; or

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

Directors' remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made or the part of the Directors' Remuneration Report to be audited is not in agreement with the accounting records and returns. We have nothing to report arising from these matters.

Corporate Governance Statement

Under the Listing Rules we are also required to review the part of the Corporate Governance Statement relating to the company's compliance with nine provisions of the UK Corporate Governance Code. We have nothing to report arising from our review.

Our duty to read other information in the Annual Report

Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:

· materially inconsistent with the information in the audited financial statements; or

· apparently materially incorrect based on, or materially inconsistent with, our knowledge of the group acquired in the course of performing our audit; or

· otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed. We confirm that we have not identified any such inconsistencies or misleading statements.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. We also comply with International Standard on Quality Control (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and applied. Our quality controls and systems include our dedicated professional standards review team and independent partner reviews.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Mark Lee-Amies (Senior statutory auditor)

for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditor

London

24 November 2014

Consolidated statement of comprehensive income

For the year ended 30 September 2014

Consolidated statement of financial position

As at 30 September 2014

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

A Chesterman S Morana

Director Director

24 November 2014 24 November 2014

Consolidated statement of cash flows

For the year ended 30 September 2014

Consolidated statement of changes in equity

For the year ended 30 September 2014

1During the year 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. Note 1.3 provides further details on the basis of consolidation. 2013 balances are stated as though the transactions occurred within Zoopla Property Group Plc. In addition, the 2014 issue of share capital balance of £1,788,000 represents £1,738,000 of shares issued by the previous parent company, ZPG Limited. It is presented as though the shares were issued by Zoopla Property Group Plc.

2The transfer from merger reserve to retained earnings in 2014 and 2013 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.

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.

The Company was incorporated on 22 April 2014 as Project ZigZag Limited, to act as the holding company for ZPG Limited (formerly known as Zoopla Property Group Limited) and its subsidiaries. On 16 May 2014 the Company registered as a public limited company and changed its name to Zoopla Property Group Plc.

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 2014 and 30 September 2013. 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 "IFRSs") issued by the International Accounting Standards Board ("IASB") as adopted by the European Union ("adopted IFRSs"). 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 2014:

· 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

These standards are not expected to have a material impact on the financial statements.

1.2 Adoption of new and revised standards

These financial statements have been prepared in accordance with the policies set out in the statutory financial statements of Zoopla Property Group Limited for the year ended 30 September 2013, with the exception of the application of certain new and revised accounting standards in the period. The new and revised standards and interpretations that have been adopted and a description of their impact on the amounts reported in the financial statements is provided below.

IFRS 10 - Consolidated financial statements

IFRS 10 replaces the parts of IAS 27 - Consolidated and Separate financial statements that deal with consolidated financial statements and SIC-12 Consolidation - Special Purpose Entities. IFRS 10 changes the definition of control such that an investor has control over an investee when (i) it has power over the investee; (ii) it is exposed, or has rights, to variable returns from its involvement with the investee; and (iii) has the ability to use its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The adoption of IFRS 10 has had no material impact on the financial statements.

IFRS 12 - Disclosure of Interests in Other Entities

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities.

In general, the application of IFRS 12 has resulted in slightly more disclosures in the financial statements.

IFRS 13 - Fair Value Measurement

IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of IFRS 2 - Share-based Payment, leasing transactions that are within the scope of IAS 17 - Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).

IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique.

The adoption of IFRS 13 has had no material impact on the financial statements.

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 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 wholly owned direct subsidiary of Zoopla Property Group Plc through a share-for-share exchange. Such Group reorganisations are outside the scope of IFRS 3. Therefore, in accordance with IAS 8, Management has used its judgement to develop a relevant and reliable accounting treatment, applying the principles of merger accounting under the Companies Act 2006. Under this method the share capital and share premium reflect that of Zoopla Property Group Plc. The 2013 comparatives have been disclosed on the basis that Zoopla Property Group Plc was in existence from the beginning of the prior year. 2013 comparatives are based on those of the previously existing Group as presented in the consolidated financial statements of Zoopla Property Group Limited (now ZPG Limited) for the year ended 30 September 2013. The difference between the net assets of ZPG Limited recognised as an investment by Zoopla Property Group Plc at the date of restructuring and the value of the shares issued within share capital has been recognised within equity as a merger reserve. The brought forward merger reserve and retained earnings represent those of the previously existing Group.

1.4 Going concern

The financial position of the Group shows a positive net and current asset position with significant cash resources and high cash generation. Furthermore, 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 main sources of revenue are subscriptions from estate agents ("agency revenue") and developers ("developer revenue"), in respect of properties advertised on Group websites. They are recognised over the period of the subscription.

Revenue from other services ("other 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 charged on bank loans and overdraft balances. 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 in accordance with IAS 37.

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:

The Directors review the residual values and useful economic lives of assets on an annual basis. In 2014 the Group purchased fixtures and fittings and computer equipment as part of the business' relocation to a new head office. The Directors believe that the economic life of these assets is five years. This has been reflected in the policy above.

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. Acquisition related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair value on the acquisition date except deferred tax assets and liabilities which are measured in accordance with IAS 12 - Income Taxes.

1.10 Goodwill

Goodwill represents the difference between consideration paid and fair value of assets and liabilities acquired in a business combination. 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.

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

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

A growth rate of 3% has been applied to extrapolate the cash flows into perpetuity. The growth rate has been determined using long-term historical growth rates of the goodwill and intangible assets and Management's expectation of future growth.

The pre-tax discount rate used is 12%.

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:

1.12 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.

1.13 Impairment of tangible and intangible assets excluding goodwill

At each statement of financial position date, the Directors review the carrying amounts of tangible and intangible assets to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of any impairment loss (if any). 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.

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 immediately in profit or loss.

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 profit or loss.

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 not interest bearing and 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.

An impairment allowance is made for trade receivables. This provision is reviewed regularly in conjunction with a detailed analysis of historic payment profiles and past default experience. When a trade receivable is deemed uncollectible, it is written off against the allowance account.

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.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The Group'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 period end 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 estimation 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. The pension charge represents the amounts payable by the Group to the fund in respect of the period.

1.19 Share-based payments

The Group provides equity-settled share-based incentive plans whereby Zoopla Property Group Plc allows certain employees of its subsidiary ZPG Limited to acquire its shares via an employee benefit trust. The Group also issues warrants over shares in Zoopla Property Group Plc to a number of the Company's estate agent members, allowing them to acquire shares in exchange for the estate agent members making their property listings available for inclusion on the Company's websites.

Equity-settled share-based payments to employees and members are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions and includes the impact of non-vesting conditions. Details regarding the determination of the fair value of equity-settled share-based payment transactions are set out in Note 21.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of the number of equity instruments that will eventually vest.

At each statement of financial position date, the Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate.

The fair value is measured using a suitable valuation model, including the Black-Scholes valuation model where appropriate. The measurement inputs for each scheme include the share price on the measurement date, exercise price of the instrument, expected volatility (based on a statistical analysis of daily share prices), weighted average expected life of the instruments (based on historical experience and general option behaviour), expected dividend yield, and risk-free interest rates based on government-backed securities. Details of the inputs used under each scheme are set out in Note 21.

Prior to the Group's Admission to the London Stock Exchange the Group granted rights over shares of ZPG Limited. Following Admission on 23 June 2014 Zoopla Property Group Plc grants rights over its equity instruments to employees and estate agent members of ZPG Limited. These are accounted for as equity-settled transactions by the Group, recognising the expense within profit and loss for the year and a corresponding credit to equity. Within the Company accounts of Zoopla Property Group Plc equity-settled share options granted directly to a subsidiary are treated as a capital contribution to the subsidiary. The capital contribution is measured by reference to the 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 21. 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 2014 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.

Impairment of goodwill and intangibles

The Group holds goodwill and intangibles on the Statement of financial position in respect of business acquisitions made. Acquired intangibles include acquired domain names 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.

Share-based payments

The Group operates a number of different share-based payment schemes. These are measured at their estimated fair value at the date of grant, calculated using an appropriate option pricing model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of the number of shares that will eventually vest. The key estimates used in calculating the fair value of the options are the fair value of Company's shares at the grant date, the discount rate, expected share price volatility, risk free interest rate, expected dividends, and expected option lives.

In respect of share options granted to employees the number of options that are expected to vest is based upon estimates of the number of employees that will forfeit their awards through leaving the Group and the likelihood of any non-market-based performance conditions being satisfied. Management regularly performs a true-up of the estimate of the number of shares that are expected to vest; this is dependent on the anticipated number of leavers. Management is also required to make a judgement on the number of warrants expected to vest based on whether or not the estate agent member is expected to meet their contractual obligations over the vesting period.

1.21 Non-GAAP performance measures

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

· Adjusted EBITDA - which is defined as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items (Note 3).

· Adjusted basic EPS - which is defined as profit for the year excluding exceptional items 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 stream level; administrative expenses, finance income and costs, and income tax are all monitored on a centralised basis. Accordingly, there is no profitability information below the Group level and thus there is a single operating segment.

The Group focuses its internal management reporting on the following activities:

· agency revenue, which represents property advertising services to estate agents and lettings agents on the Group's websites;

· developer revenue, which represents property advertising services to new home developers on the Group's websites; and

· other revenue, which predominantly represents overseas property advertising services, display advertising on the Group's websites and data services.

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

All material revenues are generated from within the UK.

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

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 income statement to assist in the understanding of the Group's underlying financial performance.

The Group defines EBITDA as profit or loss for the period before income tax expense or income, finance income, finance costs, and depreciation and amortisation. Adjusted EBITDA is arrived at by making adjustments for costs and profits which Management believe 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. 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 members in order to establish a critical mass of property listings on the Group's platform; 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 these non-cash charges in arriving at adjusted EBITDA gives a more appropriate measure of the Group's underlying financial performance.

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

4. Operating profit

Amortisation charges on the Group's intangible assets are recognised within the administrative expenses line item in the consolidated statement of comprehensive income.

5. Auditor's remuneration

1The prior year audit fee of £44,000 includes fees associated with the audit of the consolidated financial statements of the previously existing Group.

6. Employee costs

7. Executive Directors' remuneration

In respect of the highest paid director:

Both Executive Directors are members of the Group's defined contribution pension plan (2013: both).

8. Director and employee numbers

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

9. Income tax expense

Corporation tax is calculated at 22.0% (2013: 23.5%) of the taxable profit for the year.

A reduction in the standard rate of corporation tax from 24% to 23% was effective from 1 April 2013. The Finance Act 2013 provides for a further reduction in the standard rate of tax from 23% to 21% effective from 1 April 2014 and to 20% effective from 1 April 2015. This change was substantively enacted on 2 July 2013, which was before the statement of financial position date. These reduced rates have been reflected in the calculation of deferred tax as they were substantively enacted at the statement of financial position date.

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

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

10. Dividends

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 Note 20 occurred at the beginning of the comparative period.

During the year the Group paid £35.5 million in dividends to shareholders. Additionally, the Directors propose a final dividend for 2014 of 1.1 pence per share (2013: 2.5 pence per share) resulting in a final proposed dividend of £4,599,000 (2013: £10,158,000). The dividend is subject to approval at the Group's AGM on 12 February 2015. The final dividend proposed has not been included as a liability at the statement of financial position date.

There are no tax consequences of future dividend payments.

11. Earnings per share

Adjusted earnings per share

The nil-cost options granted under the Group's Long Term Incentive Plan, as disclosed in Note 21, are not considered dilutive for 2014. The 2013 weighted average number of shares has been stated as if the Group reorganisation set out in Note 20 had occurred at the beginning of the comparative period.

12. Property, plant and equipment