ZPG PLC Regulatory News (ZPG)

23 May 2018

ZPG REPORTS RECORD PERFORMANCE AND GROWTH 

Half-year results for the six months ended 31 March 2018

ZPG Plc (LSE:ZPG) ("ZPG" or the "Company"), which owns and operates some of the UK's most trusted home-related digital platforms, today announces its half-year results for the six months ended 31 March 2018 (the "Period").

Financial highlights

Business highlights

● Revenue up by 33% to £156.9 million and Adjusted EBITDA up by 41% to £63.4 million

● Like-for-like5 revenue and Adjusted EBITDA increased by 10% and 21% respectively

● Adjusted EBITDA margin up to 40.4% driven by improvements and timing of investment

● Almost 350 million visits across the group's platforms generating >36 million partner leads

● New product portfolio, data expertise and partner relationships resulting from acquisitions

● Continued product innovation and differentiation with launch of new tools across platforms

● Profit for the Period3 was up 33% after acquisition-related costs and share-based payments

● The Board has resolved not to declare an interim dividend following the Silver Lake offer

Property

● Revenue up 34% to £74.9 million due to acquisitions and strong performance across all verticals

● Like-for-like5 Property revenue and Adjusted EBITDA increased by 9% and 11% respectively

● Total # of unique partners (including acquisitions) increased by 9% to 26,173 at end of Period

● UK Agency partners up 7% and listings up 6% to 15,264 branches and 982k listings respectively

● ARPP6 up by 18% to £484 due to acquisitions, as well as continued product up-sell and cross-sell

Comparison

● Revenue up 32% to £82.0 million due to acquisitions and strong underlying7 performance

● Like-for-like5 Comparison revenue and Adjusted EBITDA increased by 10% and 38% respectively

● 27.1 million leads generated helping consumers save over £300 million off their household bills

● Account sign-ups increased to 2.8 million with launch of new Bill Assistant product on uSwitch

● Continued progress on integration of products across brands and development of single platform

Silver Lake offer

● Silver Lake, a leading global technology investor, has offered to acquire ZPG for £4.90 per share in cash

● The ZPG Board believes that the offer reflects the value created by ZPG to date and its future prospects

● Scheme Document expected to be posted 24 May and shareholder meetings expected to be held 18 June

● Subject to shareholder approval and required regulatory clearances, completion is anticipated in Q3 2018

Commenting on today's announcement Alex Chesterman, Founder & CEO of ZPG Plc said:

 "We had a strong first half to the year across both divisions and I am pleased to report revenue of £156.9m and Adjusted EBITDA of £63.4m for the Period. We continue to grow our consumer engagement and to lead innovation with the launch of new tools across our platforms, helping our consumers to make smarter property and household-related decisions and our partners to operate more effectively. "Our Property division performed well across each vertical, helped by demand for additional products, cross-sell and new contract wins, including the continued return of agents to our portals."

"Our Comparison division also performed well with leads up across each vertical. Energy had an exceptionally strong first half as a result of ongoing optimisation of the consumer journey and extreme weather during the Period prompting increased switching levels. "Looking ahead, we are excited about the prospect of working with Silver Lake and the opportunity this offers to our employees, consumers and partners as we move to the next stage of ZPG's development and growth."

Outlook

ZPG has enjoyed a good start to the second half of its financial year across both divisions. In Property, we are encouraged by the strong cross-sell pipeline for our products as well as the rate of returning UK agents to our portals. The Comparison business continues to trade well despite seasonally lower switching volumes in the Energy vertical during the warmer months and increased investment in our brands which will be weighted more towards the second half of this financial year. Management remains comfortable with financial year 2018 market expectations8, 9.

The paragraph above, together with the Company collated Adjusted EBITDA consensus figure in Note 8 below, constitutes an ordinary course profit forecast for ZPG's financial year ending 30 September 2018 for the purposes of Rule 28 of the City Code on Takeovers and Mergers (the "Profit Forecast"). Accordingly, the ZPG Directors have given the confirmation set out in Note 10 below.

-ENDS-

For further information, please contact:

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

Rachael Malcolm, Head of Investor Relations - rachael.malcolm@zpg.co.uk / 0203 8725 648

James Isola, 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 www.zpg.co.uk at 09.00am this morning and registration can be accessed here. An audio dial-in will also be made available:

Standard International Access: +44 (0) 203 003 2666

UK Toll-Free Number: 0808 109 0700

United States Toll-Free Number: 1 866 966 5335

United States Toll Number: 1 646 843 4608

Participant password: ZPG

1. When reviewing performance, the Directors use a combination of both statutory and adjusted performance measures. The adjusted performance measures, including Adjusted EBITDA and Adjusted basic EPS, provide additional information in line with how financial performance is measured by management and reported to the Board. These measures are reconciled in the Summary Income Statement in the Finance Review below.

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

3. Profit for the Period includes £17.7 million (H1 2017: £13.0 million) of exceptional items and amortisation of intangibles arising on acquisitions (adjusted for tax) recognised during the Period.

4. Adjusted basic EPS is calculated as profit for the Period excluding exceptional items and amortisation of intangible assets arising on acquisitions, adjusted for tax and divided by the weighted average number of shares in issue for the year.

5. Like-for-like growth includes a full six months trading from all acquisitions in both periods.

6. Average revenue per partner (ARPP) represents total revenue from ZPG's Property partners in a given month divided by the number of Property partners during the month, measured as a monthly average over the Period.

7. Underlying excludes the contribution from acquisitions made during the 18 months to 31 March 2018.

8. As at 22 May 2018 Company collated consensus figures for FY18 Revenue and Adjusted EBITDA were £310 million and £122 million, respectively. These figures include only those analysts who have published updated figures since our full year results and announcement of the Calcasa acquisition and excludes any impact from the conditional sale of Hometrack Australia.

9. The conditional sale of Hometrack Australia, announced following the end of the Period is expected to complete during the second half and would therefore impact on FY results accordingly.

10. The ZPG Directors confirm that the Profit Forecast remains valid and has been properly compiled on the basis stated below and that the basis of accounting used is consistent with ZPG's accounting policies, which are in accordance with IFRS and are those that ZPG will apply in preparing its financial statements for the financial year ending 30 September 2018. In confirming the ZPG Profit Forecast, the ZPG Directors made the following assumptions in respect of the financial year ending 30 September 2018:

a. factors outside the influence or control of the ZPG Directors:

b. factors within the influence or control of the ZPG Directors:

Cautionary Statement

This document contains forward-looking statements. These forward-looking statements include 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 Company'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 Company'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 Company'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 Company'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 Company's behalf.

About ZPG Plc (www.zpg.co.uk)

ZPG Plc (LSE:ZPG) ("ZPG") owns and operates some of the UK's most trusted digital brands that help empower smarter property and household decisions including Zoopla, uSwitch, Money, PrimeLocation and SmartNewHomes. We are also one of the leading residential property data and software providers with a range of products including Hometrack, Calcasa, TechnicWeb, Ravensworth, Alto, Jupix, ExpertAgent, PropertyFile and MoveIT. Our websites and apps attract over 50 million visits per month and over 25,000 business partners use our services. ZPG was founded in 2007 and has a highly experienced management team, led by Founder & CEO, Alex Chesterman OBE.

Zoopla is the UK's most comprehensive property website, helping consumers to research the market and find their next home by combining hundreds of thousands of property listings with market data and local information.

uSwitch is the UK's leading comparison website for home services switching, helping consumers to find the best deal and save money on their gas, electricity, broadband, TV, phone and other products.

Money is one of the UK's leading financial services comparison websites, helping consumers compare products including mortgages, loans, credit cards, bank accounts and insurance from more than 600 providers.

PrimeLocation is one of the UK's leading property websites, helping house-hunters in the middle/upper tiers of the market find their dream home from the top estate agents, letting agents and property developers.

SmartNewHomes is the UK's leading website dedicated exclusively to new homes, helping buyers understand the market and search for new build homes from all the leading property developers across the country.  

Hometrack and Calcasa are leading providers of automated property valuations and statistical property market insights in the UK and Netherlands to partners including mortgage lenders, developers, investors, government agencies, housing associations and others.

TechnicWeb is the UK's leading estate agency website design and hosting business specialising in designing and operating fully-responsive websites for the property sector.

Ravensworth is the UK's leading provider of print solutions to estate agents and offers a comprehensive range of products and services for every stage of the property marketing journey from listing through to post-sale.

Alto, Jupix and ExpertAgent are some of the leading cloud-based estate agency and property management software systems used by thousands of property professionals across the UK for the day-to-day management of inventory, marketing and communications.

PropertyFile and MoveIT are innovative tools used by estate agents to improve communication and efficiency with their customers and to allow them to generate additional revenue streams via referrals. 

Business Review

ZPG has delivered a strong set of first half results with revenue up 33% to £156.9m and Adjusted EBITDA up 41% to £63.4m in the six months to 31 March 2018. The increase was driven by a strong underlying organic performance across both divisions, the early benefits of our cross-sell strategy and the integration of strategic acquisitions which have further enhanced our offering to both consumers and partners whilst also improving our revenue diversity.

Delivering on our strategy

We have made significant progress towards our mission of being the platform of choice for consumers and partners engaged in property and household decisions. During the Period, we continued to invest in our brands and platforms which attracted an audience of almost 350 million visits and generated over 36 million leads for our partners.

ZPG continued to lead innovation with the launch of new tools across both its Property and Comparison platforms. On Zoopla we launched a number of new tools, including the integration of Money's mortgage comparison products and the first iteration of our MyHome tool, designed to help consumers optimise their household bills. Consumer monetisation from our Property platform generated over £4.5 million of revenue during the Period. In Comparison, uSwitch account sign-ups increased by 47% to 2.8 million registered users and in March we launched our Bill Assistant tool which helps consumers manage all of their household bills from energy and car insurance to home insurance and mortgages in one place.

We have made significant progress towards our mission of being the most effective partner for property professionals, with increased demand for our one-stop shop product offering which now includes portal, software, websites, data and print services. During the Period, introductions and lead conversion between our portal and software sales teams improved, with the number of software partners also taking a portal subscription increasing by 5%. In addition, both software and websites recorded their best ever month of new business sign-ups in Q2 2018. The integration of our data solutions via Hometrack and digital print services via Ravensworth is progressing well with both products now available to Property partners via our market-leading software platforms.

Acquisitions & Partnerships

On 1 October 2017, ZPG acquired Money, one of the UK's leading finance comparison websites, helping consumers to compare thousands of deals in more than 60 product categories including mortgages, loans, credit cards, bank accounts and insurance. The acquisition is a core part of ZPG's strategy to offer the widest range of relevant products across its platforms and is an ideal fit, with both businesses focussed on empowering consumers to make smarter home-related decisions. Since the acquisition, we have made good progress on the integration of products across both uSwitch and Money, resulting in improved conversion.

In December 2017, we acquired Calcasa, the leading automated valuation model ("AVM") and residential property market insights provider in the Netherlands. The combination brings together two of the best European property data solutions and enhances our expertise, capabilities and partner relationships.

We also made a further strategic investment in Trussle and benefitted from the increased valuation of our investments in Landbay and PropertyFinder.

Following the end of the Period, the Company​ announced that it has agreed to sell Hometrack Australiafor AUD$130 million (£71 million) in cash, subject to approval from the Australian Competition and Consumer Commission. ZPG acquired Hometrack Australia as part of ​its acquisition of the wider Hometrack business in the UK​ in January 2017 and the sale demonstrates ZPG's focus on its core markets in the UK and Europe. 

Property

Revenues in our Property division increased by 34% to £74.9 million for the Period, driven by strong demand for additional products, further migration of our software partners to cloud-based products, new contract wins and the inclusion of acquisitions. On a like-for-like basis (including acquisitions in both periods) Property revenue increased by 9%.

We saw the total number of unique Property partners increase by 9% to 26,173 at the end of the Period as a result of underlying growth and the inclusion of acquisitions. ARPP increased by 18% to £484 as a result of demand for additional depth products, cross-sell to our existing partners and the inclusion of acquisitions. On a like-for-like basis (including acquisitions in both periods) the total number of unique Property partners increased by 3% and ARPP increased by 6%.

Traffic to our Property platform has continued to grow to over 49 million visits per month, up 7% year-on-year, delivering 9.8 million leads to our Property partners during the Period. The number of UK Agents advertising across our Property platform increased by 7% to 15,264, including approximately 1,350 win-backs to date, and our inventory grew by 6% to over 982k listings as at the end of the Period. We saw continued growth in sales of our cloud-based websites for estate agents via Technicweb during the Period and the integration of our on-demand print services solutions via Ravensworth is progressing well.

Our Software business, which includes the UK's leading cloud-based products Alto, Jupix and Expert Agent, had a strong first half. The on-going migration of partners from legacy desktop to cloud-based products remains on track, with 50% of partners using one of our cloud-based products as at 31 March 2018 (H1 2017: 42%). In addition, we reached a new milestone of over £1.5 million generated in referral fees by our partners using our MoveIT platform.

ZPG's Data business, which includes Hometrack and Calcasa, leading providers of automated property valuations and property market insights in the UK and the Netherlands, has had a strong first half. During the Period, Hometrack signed a new deal with Northview Group and extended its relationship with Santander, and now serves 19 of the top 25 mortgage lenders in the UK. 

Comparison

Comparison revenue was up 32% to £82.0 million, driven by a strong underlying performance and the inclusion of Money, one of the UK's leading financial services comparison websites. On a like-for-like basis (including acquisitions in both periods) Comparison revenue increased by 10%.

The number of leads generated to our Comparison partners increased by 70% to 27.1 million, helping consumers save over £300 million off their household bills. Average revenue per lead (ARPL), defined as total Comparison revenue divided by the total number of Comparison leads, decreased by 29% to £3.03 during the Period reflecting a shift in product mix towards the lower ARPL Finance products from the inclusion of Money. On a like-for-like basis (including acquisitions in both periods) the total number of Comparison leads increased by 17% and ARPL decreased by 5%.

The Energy vertical had an exceptionally strong first half as a result of ongoing optimisation of the consumer experience on uSwitch and extreme weather conditions in the UK prompting consumers to switch. On an underlying basis, Energy continued to benefit from the structural growth in returning switchers on fixed term deals which now account for 38% of uSwitch's Energy revenue.

uSwitch performed well in Communications switching against a tough market backdrop for broadband switching driven by the shift from suppliers towards customer retention. Mobiles continued to perform strongly driven by competitive consumer deals and continued optimisation of the consumer experience driving greater lead generation. In April 2018, Ofcom announced that it plans to consult on the introduction of end of market notifications within the communications market, with a view to increasing consumer engagement.

Our Finance proposition was significantly enhanced during the Period through the acquisition of Money on 1 October 2017. Management is pleased with the performance across all of the key financial services including mortgages, banking, credit cards and loans with traffic to Money up 35% year-on-year.

Alex Chesterman OBE, Founder & CEO

Finance Review

Revenue increased by 33% to £156.9 million and Adjusted EBITDA increased by 41% to £63.4 million compared to the same six-month period last year. The increase was predominantly driven by a strong underlying performance across both divisions, the benefits of our cross-sell strategy and the inclusion of acquisitions. On a like-for-like basis (including acquisitions in both periods) revenue increased by 10% and Adjusted EBITDA increased by 21%. Full details of the like-for-like performance can be found in the Appendix.

Statutory Profit for the Period and statutory basic EPS increased by 33% to £22.4 million and 28% to 5.1p respectively after the impact of exceptional costs, amortisation of intangibles assets arising on acquisitions and share-based payments.

During the Period, ZPG refinanced its debt and replaced its revolving credit facility with a new £200 million revolving credit facility and £200 million in unsecured senior notes, bringing the Company's total credit facilities to £400 million. The new debt package strengthens the Company's financial position by offering it increased financial flexibility, providing a more stable and appropriate capital structure and allowing it to secure attractive interest rates for the next 5 years. As at 31 March 2018, ZPG had a leverage1 of 2.6x (H1 2017: 2.3x) with Net Debt of £316.7 million.

The Board has resolved not to declare an interim dividend in respect of the six months to 31 March 2018 due to the Silver Lake offer made on 11 May 2018, which is outlined below.

Summary Income Statement

1Leverage ratio is calculated as Net Debt divided by 12 month rolling proforma Adjusted EBITDA

2Operating costs represent administrative expenses before depreciation and amortisation, share-based payments and exceptional items.

Revenue

As outlined in our financial year 2017 results, we have updated our divisional key performance indicators ('KPIs') to reflect the evolution of the business. Full details of the like-for-like performance under the financial year 2018 methodology (including acquisitions in both periods) can be found in the Appendix.

1. Marketing includes four months of trading from Technicweb in H1 2017

2. Software includes one month of trading from Expert Agent in H1 2017

3. Data includes two months of trading from Hometrack in H1 2017 and four months of trading from Calcasa in H1 2018

4. Finance includes six months of trading from Money in H1 2018

5. Like-for-like growth includes a full six months trading from all acquisitions in both periods

Property revenue increased by 34% to £74.9 million over the same period last year. As outlined in the Business Review: Marketing revenue was up 14% to £48.0 million driven by a strong underlying performance and the inclusion of six months of trading from Technicweb and Ravensworth; Software revenue increased by 27% to £12.2 million as a result of the inclusion of six months trading from Expert Agent and the on-going migration of partners from legacy desktop products to higher ARPP cloud-based products; and Data contributed £14.7 million (H1 2017: £4.0 million) driven by a combination of new and extended contract wins. This figure includes six months trading from Hometrack and four months trading from Calcasa.

The Comparison division generated £82.0 million of revenue, up 32% on the same period last year. As outlined in the Business Review: Energy had an exceptionally strong first half with revenue up 19% at £37.7 million driven by optimisation of the consumer experience and extreme weather conditions in the UK prompting increased switching; Communications generated £22.8 million of revenue despite a tough market backdrop for broadband switching; and Finance contributed £21.5 million (H1 2017: £7.9 million) of revenue predominantly due to the inclusion of six months of trading from Money and reflecting our targeted strategy of optimising for best-in-class verticals across both Money and uSwitch.

Operating costs

Operating costs increased to £93.5 million (H1 2017: £72.9 million) comprising Staff costs of £32.0 million (H1 2017: £23.7 million), Marketing costs of £49.2 million (H1 2017: £40.6 million) and Other costs of £12.3 million (H1 2017: £8.6 million). The increase in costs is largely attributable to the inclusion of acquisitions and growth of performance based marketing in line with revenue.

Adjusted EBITDA

Adjusted EBITDA increased by 41% to £63.4 million compared to the same period last year generating a margin of 40.4% (H1 2017: 38.2%). Property Adjusted EBITDA increased 43% to £35.1 million with a margin of 46.8% (H1 2017: 44.1%) driven by a strong underlying performance, the inclusion of six months of trading from prior year acquisitions and four months of trading from Calcasa. Comparison Adjusted EBITDA increased by 38% to £28.2 million with a margin of 34.4% (H1 2017: 32.9%) as a result of the inclusion of six months trading from Money, outperformance in the Energy vertical and the timing of ZPG's investment in uSwitch brand marketing which is weighted into the second half of the 2018 financial year.

Share-based payments

The share-based payments charge increased to £4.2 million (H1 2017: £3.5 million) in line with 2018 grants for the LTIP and other staff bonus schemes.

Depreciation & Amortisation of other intangibles

Depreciation increased to £0.8 million (H1 2017: £0.6 million) as expected due to the depreciation costs of assets from acquired businesses. Amortisation of other intangibles increased to £1.6 million (H1 2017: £1.3 million), as a result of amortisation of existing software and capitalised qualifying development costs.

Amortisation of acquired intangible assets

ZPG splits out amortisation of intangible assets arising on acquisitions and amortisation of other intangibles for the purposes of calculating Adjusted basic EPS. Amortisation of acquired intangible assets increased to £11.4 million (H1 2017: £5.8 million) as a result of the inclusion of a full six months amortisation from prior year acquisitions together with the amortisation of Money (acquired 1 October 2017) and Calcasa (acquired 1 December 2017).

Exceptional items

Exceptional items include costs that Management believes to be exceptional in nature by virtue of their size or incidence. Total exceptional items of £9.0 million (H1 2017: £8.8 million) primarily represent transaction costs relating to both the Money and Calcasa acquisitions in addition to charges for deferred and contingent payments in respect of prior year acquisitions.

Net finance costs

The Company incurred net finance costs of £6.9 million (H1 2017: £2.5 million) during the Period. This figure includes £2.0 million of costs incurred as a result of the write-off of capitalised fees on the Company's legacy credit facility.

Income tax expense

The Company's income tax charge was £7.1 million (H1 2017: £5.6 million) representing an effective income tax rate of 24.2%. This is higher than the statutory tax rate of 19.0% for the Period due to non-deductible transaction costs and deferred and contingent consideration expenses arising on acquisitions.

Profit for the Period

Adjusted Profit for the Period, calculated as profit for the period after adding back exceptional items and amortisation of intangible assets arising on acquisitions adjusted for tax, increased by 34% to £40.1 million. Statutory Profit for the Period increased by 33% to £22.4 million after the impact of increased exceptional costs, amortisation of intangibles assets arising on acquisitions and share-based payments.

Earnings per share (EPS)

Adjusted basic EPS, which strips out the impact of exceptional items and amortisation of intangible assets arising on acquisitions, increased by 30% to 9.2p. Statutory basic EPS increased by 28% to 5.1p.

Other comprehensive income

The Company recognised a non-cash gain of £1.1 million on a revaluation of ZPG's investment partnerships with some of the UK's leading technology start-ups.

Summary statement of financial position

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

2Includes both current and non-current balances

Intangible assets increased to £629.8 million reflecting goodwill and acquired intangible assets as a result of the Ravensworth, Money and Calcasa acquisitions. Available for sale financial assets of £5.2 million represents the Company's investment partnerships and the Company's 1% shareholding of Property Finder International Limited. The increase in property, plant and equipment to £11.0 million reflects the inclusion of assets from acquired businesses and the expansion of ZPG's headquarters. Net assets held for sale represents the Hometrack Australia business which on 30 April 2018 we agreed to sell for £71 million as outlined in the Subsequent Events section below. The Company recognised a liability of £80.6 million for deferred and contingent consideration payable as a result of acquisitions in the current and prior periods. Tax assets and liabilities increased to £26.5 million predominantly due to deferred tax liabilities recognised on intangible assets as part of the acquisitions of Money and Calcasa.

Net debt position

1Leverage ratio is calculated as Net Debt divided by 12 month rolling proforma Adjusted EBITDA

During the Period, ZPG refinanced its debt and replaced its revolving credit facility with a new £200 million revolving credit facility and £200 million in unsecured senior notes, bringing the Company's total credit facilities to £400 million. The new debt package strengthens the Company's financial position by offering it increased financial flexibility, providing a more stable and appropriate capital structure and allowing it to secure attractive interest rates for the next 5 years. As at 31 March 2018 the Company had net debt of £316.7 million including loans and borrowings of £335.4 million. The overall increase in net debt can be attributed to the funding of strategic acquisitions since 31 March 2017.

Summary statement of cash flows

The Company continues to be cash generative with net cash inflows from operating activities of £27.2 million (H1 2017: £37.2 million) during the Period. Net cash flow from operating activities was down year on year due to the payment of acquisition-related management bonuses and consideration. Excluding acquisition-related costs, net cash flow from operating activities increased to £43.4 million (H1 2017: £39.5 million).

Capital expenditure increased to £6.3 million as a result of developing new integrated projects such as MyHome on Zoopla and Bill Assistant on uSwitch as outlined in the Business Review and one-off costs relating to expansion of ZPG's headquarters reflecting the overall growth of the business. The Company had a net outflow of £113.9 million predominantly relating to the cash costs of the acquisitions of Money and Calcasa and deferred consideration relating to previous acquisitions. The Company used the majority of the proceeds from the issue of new debt to repay its existing credit facilities. ZPG also recognised an outflow of £10.3 million for the purchase of shares to fund ongoing share option and warrant obligations.

Dividends

During the Period, ZPG paid a final dividend of 3.8p equating to £16.6 million relating to its financial year 2017. The Board has resolved not to declare an interim dividend in respect of the six months to 31 March 2018 due to the Silver Lake offer made on 11 May 2018, which is outlined below.

Subsequent events

Hometrack Australia disposal

On 1 May 2018, ZPG announced that it has agreed to sell Hometrack Australia Pty Limited to REA Group Limited for AUD$130 million (£71 million) in cash, subject to approval from the Australian Competition and Consumer Commission. ZPG acquired Hometrack Australia as part of ​its acquisition of the wider Hometrack business in the UK​ in February 2017 and the sale demonstrates ZPG's focus on its core markets in the UK and Europe. 

Silver Lake offer

On 11 May 2018 ZPG and Zephyr Bidco Limited ("Bidco") announced that they had reached agreement on terms of a recommended cash acquisition of ZPG by Bidco, a wholly-owned indirect subsidiary of funds managed by Silver Lake Management Company V, LLC (the "Acquisition"). Under the terms of the Acquisition, which will be subject to a shareholder vote, ZPG shareholders would be entitled to receive 490 pence per share in cash. The Board believes that the terms of the offer acknowledge the quality of ZPG's businesses and the strength of its future prospects.

The expected timetable for the recommended offer is set out below:

Under the terms of the Acquisition, if any dividend is declared on or after 11 May 2018, Bidco reserves the right to reduce the Acquisition price by the amount of such dividend. As a result, the Board has resolved not to declare an interim dividend in respect of the six months to 31 March 2018.

Appendix 1: ZPG KPIs (unaudited)

The figures below are for the six-month periods to 31 March 2017 and 31 March 2018. Each period includes a full six month's trading from all acquisitions.

Principal risks and uncertainties

As set out in the Strategic Report within the Annual Report 2017, the Group has identified the following principal risks and uncertainties:

· Changing market environment - The Group participates in fast-moving marketplaces which are subject to rapid technological developments and changes in consumer trends which may impact the Group's ability to offer the best products and services to its partners and consumers.

· Integration of acquisitions - The Group is highly acquisitive, which presents inherent operational, strategic and cultural challenges.

· IT systems and cyber security - A number of the Group's IT systems are interdependent and a failure in one system or a security breach may disrupt the efficiency and functioning of the Group's operations. The Group is also exposed to the increasing risk associated with cyber-attacks. The Group holds consumer and partner data which could be susceptible to loss or theft.

· Retention and recruitment - Success depends on the continued retention and performance of the Group's valued employees. Skilled development, technical, operating, sales and marketing personnel are essential for the business to meet its strategic goals and the Group operates in markets with a high demand for high calibre personnel.

· Regulatory environment - The Group operates in a number of regulated environments. Certain revenue streams within the Comparison Services business are regulated by the FCA. The Comparison Services division also voluntarily complies with the Ofgem Confidence Code and is involved in regular communication with Ofcom.

· Macroeconomic conditions - The Group derives a material share of its revenues from the UK and also now internationally, with operations in the Netherlands. The Group is therefore largely dependent on the macroeconomic conditions in the UK as well as being exposed to changes in macroeconomic conditions internationally.

· Competitive environment - The Group operates in marketplaces which are highly competitive. The actions of the Group's competitors, and/or our own inaction, can have a significant and adverse impact on the Group.

· Data governance - The Group's operations rely on the effective governance and appropriate use of data we control and process for the benefit of consumers and our customers.

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

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

The Directors' assessment of the risks impacting the Group continue to be those identified above, The Directors continue to monitor these risks on an ongoing basis and have not identified any changes which have materially impacted the assessment and disclosure of the risk as set out in the Annual Report 2017. The risks identified above will continue to affect the Group in the second half of the year, no other material risks have been identified in the period. Actions taken to mitigate the risks identified have been disclosed in the Strategic Report within the Annual Report 2017.

Related party transactions

Details of related party transactions are set out in Note 20 to the condensed set of financial statements.

Going concern

As stated in Note 2 to the condensed set of financial statements, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Responsibility statement

We confirm that to the best of our knowledge:

a) the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

Independent review report to ZPG Plc

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2018 which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of cash flows, the condensed consolidated statement of changes in equity and related notes 1 to 21. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review 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, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

London, United Kingdom

22 May 2018

Condensed set of financial statements

Consolidated statement of comprehensive income

For the six months ended 31 March 2018

Consolidated statement of financial position

As at 31 March 2018

Consolidated statement of cash flows

For the six months ended 31 March 2018

*re-presented. See Note 2

Consolidated statement of changes in equity

For the six months ended 31 March 2018 (unaudited)

Consolidated statement of changes in equity (continued)

For the six months ended 31 March 2017 (unaudited)

1The transfer from merger reserve to retained earnings in each period 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.

Consolidated statement of changes in equity (continued)

For the year ended 30 September 2017 (audited)

1The transfer from merger reserve to retained earnings in 2017 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. The intangible assets are now fully amortised

Notes

1. General information

ZPG Plc (the "Company") is a digital media and lead generation platform registered in England and Wales under Company Number 09005884. The principal activity of the Company is the operation of some of the UK's most trusted digital platforms including Zoopla, uSwitch, Money, Property Software Group, Primelocation and Hometrack. A copy of the Company's statutory accounts for the year ended 30 September 2017 has been delivered to the Registrar of Companies. The accounts are available on the Company's website at www.zpg.co.uk/investors. The Company's auditor reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2. Accounting Policies

Basis of preparation

The consolidated financial statements incorporate the accounts of 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.

The annual financial statements of the Group and the Company are prepared in accordance with International Financial Reporting Standards, International Accounting Standards and IFRIC interpretations (collectively "IRFS") issued by the International Accounting Standards Board as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard ("IAS") 34 'Interim Financial Reporting', as adopted by the European Union.

The half year results for the six months ended 31 March 2018 are unaudited. The auditor, Deloitte LLP, has carried out a review of the condensed set of financial statements and their report is included within this announcement. The comparative figures for the year ended 30 September 2017 have been extracted from the Annual Report 2017. These comparatives have been audited by the auditor and their report was unqualified. The comparative figures for the six months ended 31 March 2017 have been extracted from the Group's half year results for the six months ended 31 March 2017 which were reviewed by the auditor.

Changes in accounting policies and standards

The accounting policies applied by the Group are the same as those applied for the year ended 30 September 2017 as set out in the Annual Report 2017 with the exception of the changes and additions the set out below. There are no new standards or amendments to standards effective for the periods presented that have a material impact on the Group.

Change in Accounting Policy - Consolidated statement of Cash Flows

The Group previously considered all payments of deferred and contingent consideration to be cash flows used in investing activities. Payments made to management shareholders where the consideration was contingent on their continued employment were disclosed in the Notes to the accounts. From 1 October 2017 the Group has amended its policy to present such amounts separately within cash flows from operating activities, following the treatment of the expense which is recognised as an operating expense in the statement of comprehensive income. The comparatives for 30 September 2017 and 31 March 2017 have been re-presented accordingly. The impact decreased both net cash flows from operating activities and net cash flows used in investing activities by £9.7 million in the year to September 2017 and had nil impact for the period to March 2017. Under the previous policy net cash flows from operating activities for the period ended 31 March 2018 would have been higher by £6.3 million and net cash flows used in investing activities higher by £6.3 million. There is no impact on the net increase/decrease in cash and cash equivalents in any period presented.

As set out in the Annual Report 2017 the consolidated statement of cash flows was re-presented to move transaction costs on acquisitions to operating cash flows during the year to 30 September 2017. The impact for the 31 March 2017 comparative was to reduce net cash flows from operating activities by £2.3 million to £37.2 million and to reduce the net cash flows used in investing activities by £2.3 million to £156.8 million.

New Policy - Assets held for sale

An asset or disposal group is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset or disposal group, and the sale is highly probable.

A sale is considered to be highly probable when Management is committed to a plan to sell an asset or a disposal group, an active programme to locate a buyer and complete the plan have been initiated, the asset or disposal group is actively marketed for sale at a price that is reasonable in relation to its current fair value and the sale is expected to qualify for recognition as a completed sale within one year from the date of classification.

An asset or disposal group classified as held for sale is measured at the lower of their carrying amount and fair value less costs to sell. Following their classification as held for sale, non-current assets (including those in a disposal group) are not depreciated. The results of operations held for sale are included in the consolidated statement of comprehensive income up to the date of disposal.

During the period Hometrack Australia PTY Limited was classified as held for sale as set out in Note 13. The operations of Hometrack Australia PTY Limited are not considered to be a discontinued operation as the business does not represent an independent cash generating unit or a material component of the Group.

Impact of future standards

IFRS 9 - Financial Instruments is effective for the first time for the financial year commencing 1 October 2018. The implementation of IFRS 9 will require the reclassification of the Group's Available for sale financial assets. From 1 October 2018 these assets will be measured as Fair value through other comprehensive income in accordance with IFRS 9. As this treatment mirrors the Group's current policy, there is not expected to be any material impact on the Group's reported results; however, Management notes that any gain or loss arising on the sale of these assets may no longer be able to be recognised in the Consolidated income statement but will remain within Other Comprehensive Income.

IFRS 15 - Revenue from Contracts with Customers was issued in 2014 and was endorsed by the EU in 2016. IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue. IFRS 15 applies to an entity's first financial statements beginning or after 1 January 2018. The standard shall be adopted by ZPG Plc in the year commencing 1 October 2018.

During the period a systemic review commenced to ensure that the impact of the new standard is fully understood in advance of the effective date. The review is being conducted using a contract portfolio basis, disaggregating ZPG revenue into separate portfolios of homogenous contract types. A sample of contracts was selected from the portfolios based upon the aggregate value of those contracts and those most likely to be impacted by IFRS 15. The five step IFRS 15 model is being applied to each of the sampled contracts to determine the performance obligations under each contract, reassess the transaction price and, where relevant, allocate the transaction price to each performance obligation. The review is ongoing and has not been reviewed or audited by the external auditor. A full quantitative assessment will be provided in the financial statements for the year ending 30 September 2018. The following summarises the initial findings of the review highlighting any expected differences to the Group's current revenue recognition policies:

Marketing revenue

Marketing revenue derives principally from subscriptions to the Group's property portal. The initial assessment has indicated that portal subscription represents a single performance obligation where control is transferred over time which is consistent with the current recognition.

Software revenue

Software revenue includes subscription to Software as a Service (SaaS), desktop software licencing, support and installation. Software contracts with ZPG Partners contain both obligations in which control is transferred at a point in time, such as training and installation, and obligations transferred over the term of the contract. The contract value is therefore expected to be allocated to each obligation on a standalone selling price basis. The initial assessment has indicated that the provision of desktop (as opposed to SAAS) software licences represents a right to use the asset which is transferred at a point in time. Therefore, revenue is expected to be recognised at the point of installation leading to a difference from the current recognition over time.

Data revenue

Data revenue derives principally from subscription to the Groups Automated Valuation Models (AVM). The initial assessment has indicated that the provision of AVM subscription is an obligation satisfied overtime consistent with the current recognition. Similarly, one-off portfolio valuations and other ad-hoc performance obligations will continue to be recognised at the point at which the obligation is satisfied.

Comparison revenue

Comparison revenue is derived from fees received for the comparison of home related services. Revenue is currently recognised at the point a lead is generated to a home service provider. The initial assessment has considered our agreement with the home service providers across each vertical and has indicated that the treatment under IFRS is expected to be consistent with the current recognition.

Incremental costs of obtaining a contract

The Group operates an in-house sales team for a number of its products in which employees are incentivised by commission which is earned based upon the achievement of sales contracts and customer retention. Under IFRS 15 it is expected that these commission costs will meet the criteria of incremental costs of obtaining a contract. Currently sales commission is recognised as an expense in the month earned by the employee. Under IFRS 15 these costs could be recognised as an asset and amortised over the expected life of the obtained partner relationship.

Principal verses agent considerations

The review includes examining whether any revenue might be deemed to be more appropriately recorded on an agency or net basis, rather than a gross basis, under IFRS 15 and nothing has been identified which would be expected to have a material impact on the Group's revenue.

Disclosures

IFRS 15 disclosure requirements are more detailed than under current IAS 18. The Group is in the process of assessing the disclosures required to be reported in 2019.

The impact of IFRS 16 - Leases will require the Group to record its current property leases and fleet of motor vehicles on the statement of financial position. The leases impacted are currently treated as operating expenses. The change in recognition is expected to increase future depreciation charges and lead to a reduction in operating expenses. However, as IFRS 16 is effective for the first time for the financial year commencing 1 October 2019 a full assessment of the standard has not yet been made and therefore the standard could have a material impact on the future results of the Group.

Going Concern

The financial position of the Group shows a positive net asset position with significant cash resources and positive net cash flows from operating activities. 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.

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 consistent with those disclosed in the Annual Report 2017.

In addition, the Directors' have made the judgement to impair one of the Group's existing available for sale financial assets. The Directors believe that this impairment fairly represents the current level of uncertainty surrounding the future cash flows generated from this investment.

Accounting for acquisitions, in particular the process of determining the fair value of intangible assets acquired requires an estimation of future cash flows arising from acquired intangibles and there is a risk that inaccurate estimation could lead to the valuation of acquired intangibles and goodwill being misstated. The details of assets and liabilities recognised upon acquisition is set out in note 9. The Group engaged third party valuation to mitigate the risk associated with the valuation of assets and liabilities upon acquisition; however, judgement exists in determining the valuation models to be used, as well as estimation uncertainty in the preparation of forecasts that underpin the valuation models. Intangibles recognised are subsequently amortised over their useful economic lives; as such, no future revaluation of the assets recognised will be made except for the purposes of impairment reviews.

Adjusted performance measures

In the analysis of the Group's financial performance certain information disclosed in the consolidated 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. When reviewing performance, the Directors use a combination of both statutory and adjusted performance measures. The adjusted performance measures, including Adjusted EBITDA and Adjusted basic EPS, provide additional information to help assess the underlying performance of the business as they strip out deal related costs and give a closer approximation to ZPG's cash flows, whilst Net Debt gives an indication of the Group's current indebtedness. The non-GAAP measures are designed to increase comparability of the Group's financial performance between periods. 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 4); and

· Adjusted basic EPS - which is defined as profit for the period, excluding exceptional items and amortisation of intangible assets arising on acquisitions, adjusted for tax (adjusted profit for the period) and divided by the weighted average number of shares in issue for the period (Note 8).

· Net debt - which is defined as Loans and borrowings less cash and cash equivalents as per the statement of financial position.

Both of these measures are used in determining the remuneration of the Executive Directors and Management and are used by the Company's external debt providers to assess performance against covenants and determine the interest charge.

3. 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 4), depreciation and amortisation, share-based payments, exceptional items, finance income and costs and income tax are all monitored on a consolidated basis.

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. This reporting structure was implemented from 1 October 2017 as set out in the Group's Annual Report 2017 to better align with the nature of the business post a number of acquisitions. The six revenue streams are grouped under two headings: Property and Comparison. Adjusted EBITDA is monitored on an aggregated basis under these two headings. Certain central costs such as Board fees, property costs and the salaries of shared service functions allocated across the two divisions based on revenue contribution or headcount depending on the nature of the expense.

Revenue and costs shown under Data revenue include four months of trading for Calcasa as set out in Note 9. Revenue and costs shown under Finance revenue include six months of trading for Money as set out in Note 9. The consolidated results for 2018 are therefore not a like for like comparative with 2017.

Property:

Comparison:

All material revenues are generated from within the UK (£150.9 million), Netherlands (£2.5 million) and Australia (£3.5 million). In the year ended 30 September 2017 and the period ended 31 March 2017 all material revenues were generated from within the UK (Sept 2017: £240.1 million, 31 March 2017: £116.8 million) and Australia (Sept 2017: £4.4 million, 31 March 2017: £1.1 million).

1Underlying costs represent administrative expenses before depreciation and amortisation, share-based payments and exceptional items.

4. Adjusted EBITDA

The performance measure Adjusted EBITDA provides additional information to help assess the underlying performance of the business as it strips out deal related costs and gives a closer approximation to ZPG's cash flows. Adjusted EBITDA is used by Management to run the business, in determining the remuneration of the Executive Directors and Management and is used by the Company's external debt providers to assess performance against covenants and to determine the interest charge.

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 income 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 that may have a non-recurring nature together with reorganisation costs and similar charges. In 2018 the majority of exceptional items relate to the acquisition of subsidiaries set out in Note 9.

This is 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 an alternative measure of the consolidated underlying financial performance and a closer approximation to the consolidated operating cash flows.

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

1Charges for exceptional Management deferred consideration, earn-out consideration and deal-related performance bonuses relate to future payments to Management shareholders as part of the transaction, where the consideration or bonus requires their continued employment until the date of settlement.

5. Finance costs

The impairment of capitalised fees represents the write off of costs capitalised under the Group's previous debt facility following the debt restructuring in January 2018 as set out in Note 17.

6. Income tax expense

The effective tax rate applied to profit before tax for the six months ended 31 March 2018 is 24.2% (31 March 2017: 24.9%, 30 September 2017: 22.2%). The rate represents Management's best estimate of the weighted average UK tax rate for the full financial year after adjusting for discrete items. The effective rate is higher than the statutory rate principally due to disallowable transaction costs incurred on the acquisitions of Money and Calcasa and on-going charges relating to deferred and contingent consideration in respect of previous acquisitions.

7. Dividends

Following the period end the Directors have decided not to declare an interim dividend in respect of the six months to 31 March 2018 due to the announcement of a recommended cash acquisition of ZPG Plc as disclosed in Note 21.

8. Earnings per share

Adjusted Earnings per share figures exclude exceptional items and the amortisation of intangible assets arising on acquisitions 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 dilutive effect of share options and warrants arises from the various share schemes operated by the Company as set out in Note 19.

The 6.1 million potentially issuable shares relate to the ability to settle certain deferred and contingent consideration liabilities in cash or in shares at the Company's election.

9. Acquisitions

Money

On 1 October 2017 ZPG Plc completed its acquisition of Money through the purchase of 100% of the issued share capital of Dot Zinc Holdings Limited for total consideration of £109.8 million as measured in accordance with IFRS 3.

Money was included in the consolidated financial statement from the date of acquisition. In the period, Money contributed revenue of £14.0 million and adjusted EBITDA of £5.6 million to the consolidated results of the Group.

The purchase has been accounted for as a business combination under the acquisition method in accordance with IFRS 3. The Group has completed its preliminary assessment of the fair value of assets acquired as set out below. The assessment is considered preliminary whilst the third-party purchase price allocation exercise is ongoing. This assessment will be finalised and audited prior to the announcement of the Group's full year results for the year ending 30 September 2018. In calculating the goodwill arising on acquisition the fair value of net assets acquired was assessed and no material adjustments from book value were made to existing assets and liabilities other than the recognition of liabilities arising directly as a result of the acquisition. The Group has also recognised a number of separately identifiable intangibles as part of the acquisition, details of which are set out in the table below.

The preliminary fair values of the assets and liabilities acquired are as follows:

Brand

Money is one of the UK's leading financial services comparison websites, helping consumers compare products including mortgages, loans, credit cards, bank accounts and insurance. The brand is highly recognisable within the consumer financial market.

Customer relationships

Money compares thousands of deals from over 600 providers across more than 60 product categories including mortgages, loans, credit cards, bank accounts and insurance. The strong relationship with the providers underpinning the business are expected to continue post acquisition.

Intellectual property

Money provides an online price comparison website that allows users to compare various financial products. The online platform enables user to use tools and filters to find the best deals available on the market and facilitates making informed financial decisions. The online platform was internally developed by Money and included as part of the acquisition.

Deferred consideration

On acquisition the Group recognised deferred consideration of £19.7 million and a further £35.1 million representing the fair value of a £nil to £60 million commercial earn-out agreement with the sellers payable in two tranches with the final payment expected in December 2018. A further contingent amount with a fair value of £11.4 million is payable by the business to employees in relation to the acquisition and is included as a liability within the net assets acquired.

The following table sets out the amounts included in the consolidated statement of cash flows:

Calcasa

On 30 November 2017 ZPG Property Services Limited, a direct subsidiary of ZPG Plc, completed its acquisition of Calcasa through the purchase of 100% of the issued share capital of Calcasa B.V. for total consideration of £48.3 million as measured in accordance with IFRS 3.

Calcasa was included in the consolidated financial statements from the date of acquisition. In the period, Calcasa contributed revenue of £2.5 million and adjusted EBITDA of £1.8 million to the consolidated results of the Group.

The purchase has been accounted for as a business combination under the acquisition method in accordance with IFRS 3. The Group has completed its preliminary assessment of the fair value of assets acquired as set out below. The assessment is considered preliminary whilst the third-party purchase price allocation exercise is ongoing. This assessment will be finalised and audited prior to the announcement of the Group's full year results for the year ending 30 September 2018. In calculating the goodwill arising on acquisition the fair value of net assets acquired was assessed and no material adjustments from book value were made to existing assets and liabilities.

The provisional fair values of the assets and liabilities acquired are as follows:

Intellectual property

Calcasa is a leading provider of Automated Valuation Model ("AVM") services in the Netherlands. The AVM technology enables Calcasa to offer a range of products and services to its customers. The AVM technology was internally developed and included as part of the acquisition.

Brand

The Calcasa brand is synonymous with AVM technology in the Dutch market and regularly publishes House Price Index data. Calcasa has strong brand recognition across the Netherlands, the name having been in use for a number of years, initially as the name of the AVM and from 2010 the Company.

Customer relationships

Calcasa offers products and services to the top ten mortgage lenders in the Netherlands, including the three biggest Dutch banks, and also works with housing associations and real estate professionals. The strong relationship with the customers and are expected to continue post acquisition.

Deferred consideration

On acquisition the Group recognised deferred consideration of £22.3 million which represents the fair value of a commercial earn-out agreement with the sellers, which will be in the range of £nil to €50 million, payable over a period of 36 months post acquisition.

The following table sets out the amounts included in the consolidated statement of cash flows:

Like-for-Like basis

Money was consolidated from the commencement of the 2018 financial year. Had Calcasa been acquired and consolidated from the commencement of the 2018 financial year, the combined Group would have recorded revenue of £158.0 million and adjusted EBITDA of £64.1 million for the period.

10. Intangible assets