ZPG PLC Regulatory News (ZPG)

Zoopla Property Group

2 December 2015

TRANSFORMATIONAL YEAR WITH RECORD REVENUE AND PROFITS

Full year results for the year ended 30 September 2015

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

Business highlights

· Revenue increase of 34% to £107.6m

· Adjusted EBITDA up 23% to £48.7m

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

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

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

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

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

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

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

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

Outlook

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

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

-ENDS-

For further information, please contact:

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

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

James Isola at Maitland 020 7379 5151

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

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

An audio dial in will also be made available:

UK Toll Number: 0203 139 4830

UK Toll-Free Number: 0808 237 0030

United States Toll-Free Number: 1866 928 7517

United States Toll Number: 1 718 873 9077

Participant pin: 40978295#

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

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

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

Cautionary Statement

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

Business Review

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

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

Executing on our strategy

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

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

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

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

Property Services

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

Average revenue per advertiser (ARPA)

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

Partners

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

Number of visits

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

Number of Property Services leads

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

Number of listings

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

Comparison Services

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

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

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

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

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

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

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

Finance Review

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

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

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

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

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

Summary Income Statement

Revenue

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

Operating costs

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

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

Adjusted EBITDA

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

Share-based payments

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

Depreciation

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

Amortisation

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

Exceptional items

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

Net finance costs

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

Income tax expense

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

Profit for the year

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

Earnings per share (EPS)

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

Summary statement of financial position

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

Net debt position

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

Summary statement of cash flows

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

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

2 Includes both current and non-current balances

Dividends

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

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

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

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

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

3Energy includes revenue from gas & electricity switching

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

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

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

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

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

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

Principal risks and uncertainties

Full year results

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

Statement of Directors' responsibilities

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

The Directors confirm to the best of their knowledge that: 

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

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

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

Alex Chesterman

Director

1 December 2015

Consolidated statement of comprehensive income

For the year ended 30 September 2015 from continuing operations

Consolidated statement of financial position

As at 30 September 2015

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

Consolidated statement of cash flows

For the year ended 30 September 2015

Consolidated statement of changes in equity

For the year ended 30 September 2015

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

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

Notes to the financial statements

1. Accounting policies

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

1.1 Basis of preparation

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

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

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

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

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

1.2 Adoption of new and revised standards

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

1.3 Basis of consolidation

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

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

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

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

1.4 Going concern

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

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

1.5 Revenue

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

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

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

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

1.6 Operating leases

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

1.7 Finance income and costs

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

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

1.8 Property, plant and equipment

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

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

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

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

1.9 Business combinations

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

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

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

1.10 Goodwill

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

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

1.11 Intangible assets

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

1.12 Impairment of tangible and intangible assets

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

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

1.13 Research and development

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

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

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

1.14 Financial instruments

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

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

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

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

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

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

Financial instruments are not used for speculative purposes.

1.15 Current tax

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

1.16 Deferred tax

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

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:

1.17 Provisions

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

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

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

1.18 Employee benefits: defined contribution benefit scheme

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

1.19 Share-based payments

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

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

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

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

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

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

1.20 Critical accounting judgements and key sources of estimation uncertainty

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

Acquisition of uSwitch

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

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

Impairment of goodwill and intangibles

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

Revenue and accrued income

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

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

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

1.21 Non-GAAP performance measures

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

2. Business and geographical segments

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

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

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

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

Property Services

Comparison Services

The following table analyses the Group's revenue streams 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 statement of comprehensive income to assist in the understanding of the Group's underlying financial performance. Furthermore, the terms of the Group's revolving credit facility require Management to report on the Group's Net Debt to Adjusted EBITDA ratio. Adjusted EBITDA is therefore considered a key performance metric for Management, the providers of the Group's external debt and other stakeholders.

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

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

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

Exceptional items comprise:

4. Operating profit

5. Auditor's remuneration

6. Employee costs

7. Remuneration of Key Management Personnel

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

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

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

8. Director and employee numbers

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

9. Income tax expense

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

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

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

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

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 the Annual Report 2014 occurred at the beginning of the comparative period.

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

11. Earnings per share

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

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

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

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

12. Property, plant and equipment

13. Investment in subsidiaries

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

14. Acquisitions

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

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

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

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

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

14a. Intangible assets recognised on consolidation

Brand

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

Website and technology platform

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

Database

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

14b. Goodwill

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

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

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

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

14c. Debt assumed and discharged

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

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

14d. Deferred and contingent consideration

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

i) Deferred consideration

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

ii) Contingent consideration - Earn-out

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

Consideration payable to Management shareholders

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

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

15. Intangible assets

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

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

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

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

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

16. Trade and other receivables

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

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

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

17. Trade and other payables

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

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

18. Deferred and contingent consideration

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

19. Provisions

The movement in provisions can be analysed as follows:

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

20. Loans and borrowings

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

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

The Group has no other loans or borrowings.