ZPG PLC Regulatory News (ZPG)

20 May 2015

ZOOPLA PROPERTY GROUP REPORTS RECORD REVENUES AND PROFITS

Half year results for the six months ended 31 March 2015

Zoopla Property Group Plc (LSE: ZPLA), the digital media business and operator of leading UK online property portals including Zoopla and PrimeLocation, announces its half year results and KPIs for the six months ended 31 March 2015.

Business highlights

· Record revenues up 10% to £42.0m

· Adjusted EBITDA up 14% to £21.4m

· Strong Agency ARPA up 13% as members continue to buy additional premium products

· Traffic up 11%, with average monthly visits of 44.2 million

· UK Agency churn has slowed significantly and is moving towards normal historic levels

· Robust Developer performance as the Group drives membership growth and expands product offering

· Declared interim dividend of 1.0 pence per share

· Appointment of three new senior executives: Chief Marketing Officer, Chief Product Officer and Chief Technology Officer

· Proposed acquisition of uSwitch for £160m plus performance-based earn out of up to £30m

Commenting on today's announcement Alex Chesterman, Founder & CEO of Zoopla Property Group Plc said, "We had a strong first half with both revenues and profits seeing double-digit increases and ARPA at record levels despite the reduction in members during the period. Our audience continued to grow with average monthly visits during the first half at 44.2m and mobile devices accounting for over 60% of these, up 34% year-on-year. We have also reached a significant milestone of over 6m app downloads as consumers continue to choose our websites and mobile apps as their primary resource when researching the property market and looking for their next home.

"We have always led innovation in our sector and the recently announced proposed acquisition of uSwitch, the UK's leading price comparison website for home services switching, is a natural next step in our journey towards being the UK's most useful resource for consumers and most effective lead generation engine for professionals in the property space and we expect this deal to complete in June 2015. We remain focused on providing consumers with the market-leading tools to help them make smarter property decisions and being the most effective partner to property professionals."

Current Trading & Outlook

Our consumer-led approach and proposition is driving strong engagement on our websites and mobile apps as consumers continue to rely on the unique services and data we provide. Since the end of the period, UK agency churn has slowed significantly with a net loss of 106 UK Agency members in April. We expect agency churn to return to normal historic levels over the coming months as we remain by far the best value digital marketing proposition available to property professionals in the UK. The Group is trading in line with management expectations and is well positioned for long-term growth.

Our next trading update is scheduled for 13 August 2015.

-ENDS-

For further information, please contact:

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

A slide webcast of the management team presentation to analysts and investors will be made at 08.30 today and can be accessed here.

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

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

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

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

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

6. The 2014 H1 comparatives have been disclosed on the basis that Zoopla Property Group Plc was in existence from 1 October 2013. The comparatives are stated as though the transactions occurred within Zoopla Property Group Plc and are based on those of the previously existing Group.

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 Group's consumer-led approach and proposition continues to drive strong engagement across its websites and mobile apps as consumers increasingly rely on the Group's unique tools and data for property search and research. The Directors are pleased with the Group's progress in the six months ended 31 March 2015 with revenue of £42.0m and Adjusted EBITDA(1) of £21.4m.

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

Below is a selection of unaudited key performance indicators ("KPIs") for the six months ended 31 March 2015.

Key performance indicators

ARPA

The Group is committed to maximising the return on marketing investment for its members and continues to innovate with new products and solutions and periodically conducts rate reviews to ensure that its subscription pricing reflects the value offered to members. The Group's average blended ARPA has increased by 13% from £301 per month in 2014 H1 to £340 in 2015 H1. The six months to 31 March 2015 saw ARPA growth across all channels. ARPA fluctuates across the different businesses within the Group.

The Group experienced strong Agency ARPA growth over the period as members continue to see the benefits of digital marketing with the Group. The increase in Agency ARPA has been driven by (i) current members purchasing more products; (ii) members upgrading packages; and (iii) lower ARPA members leaving the Group.

The Group has also seen strong overall Developer performance due to the Group's investment in developing a compelling product proposition. The increase in Developer ARPA has been driven by (i) current members upgrading packages; and (ii) increasing spend on targeted email campaigns and other products.

Overseas agent ARPA has seen a 4% increase over the period as the Group focuses on growing overseas members and listings. In addition, the Group continues to focus on membership and listing growth of the new Commercial channel which was launched in H1 2015.

Number of members

The Group has experienced UK Agency membership churn in the period due to increased competition, notably from the launch of Agents' Mutual and its restrictive 'only one-other portal' rule. However, churn levels have slowed significantly over the past few months and are returning towards normal historic levels. At the same time the Group has seen strong growth in membership numbers across its other channels including the growth in its newly established dedicated commercial property offering which had 182 members at 31 March 2015.

Number of visits

The Group has continued to experience strong traffic growth as visits to the Group's websites and mobile apps increased by 11% to 265.5 million in the six months ended 31 March 2015, with average monthly visits of 44.2 million (H1 2014 : 39.9m) over the period. Mobile devices now account for 63% of monthly visits and are up 34% compared with the same period last year, as consumers continue to use the Group's services to search and research the property market at work, home and on the move.

Proposed acquisition of uSwitch

On 30 April 2015, the Group announced the proposed acquisition of uSwitch, the UK's #1 price comparison website and lead generation engine in the home services sector (energy and communications) by market share(2) and one of the most widely recognised and trusted brands in the price comparison space. The total consideration for the acquisition is £160m, plus a performance-based earn out of up to £30m, based on a cash-free, debt-free enterprise value.

uSwitch generated revenues of £62.9m and Adjusted EBITDA of £16.2m in the year ended 31 December 2014 with revenue CAGR of 20% (2012-2014). In 2014 the uSwitch website saved consumers over £112m off their energy bills alone.

The acquisition of uSwitch is a significant step in the Group's mission to be the most useful resource for consumers and the most effective marketing partner for professionals across the property space. The transaction brings together two of the UK's best-known digital consumer brands and fastest-growing technology businesses of the past few years.

With its highly engaged audience of over 44m visits per month to its websites and mobile apps, the Group is well positioned to lead the next phase of innovation across the property portal space and the creation of a single platform where consumers can research, find and manage their home is a natural next step. The businesses have highly complementary brands and both are consumer champions empowering consumers to make smarter property decisions.

The combined group will offer advertisers enhanced lead generation, more frequent user engagement and additional revenue opportunities from new products and data. uSwitch will continue to operate as a standalone brand and platform and the uSwitch management team will remain with the business including CEO Steve Weller. The acquisition is expected to complete by end of June 2015.

Completion is conditional upon shareholder approval at a General Meeting of the Company which will be held later today; and FCA approval of the change of control of uSwitch, which is expected to be received in June 2015.

(2) Market share based on data for the 2013 calendar year.

Finance Review

The six months to 31 March 2015 saw revenue and Adjusted EBITDA growth of 10% and 14% respectively despite increased competition. The Group also continued to generate high levels of cash, with £12.2m generated from operating activities net of tax during the first half of the year. The Group intends to return cash to shareholders in line with the Group's dividend policy and the Directors have declared the payment of an interim dividend of 1.0 pence per share.

Summary income statement

The Group's summary income statement for the six months ended 31 March 2015 is shown below:

(3)Adjusted profit for the period is defined as profit for the period excluding exceptional items

Revenue

The Group's revenue increased by 10% to £42.0m in 2015 H1, up from £38.3m in 2014 H1. There was strong growth in Developer revenue, which increased by 38%, reflecting our continued focus on developing a targeted product offering in the new homes sector. Agency revenue also saw growth of 4% despite a fall in member numbers as the Group continues to provide value to its members and grow ARPA.

Other revenues increased by 23%, compared to 2014 H1, principally driven by growth in advertising revenue. The Group also continued to invest in its new channels with Overseas membership up 89% compared with 2014 H1 and the successful launch of a dedicated Commercial property offering.

Staff costs and other operating expenses

Underlying administrative expenses were up 5% to £20.6m, compared to 2014 H1. The increase has been driven by a rise in staff costs of 31%, to £7.6m as the Group continues to invest in its product and technical expertise through increased headcount up 17% to 244. The Group's senior management team has also been strengthened with the appointment of three senior executives: Mike Blakemore, Chief Technology Officer joins from M&S and will replace Simon Kain at the beginning of June; Gareth Helm joined in April as Chief Marketing Officer from MoneySuperMarket and Matthew Cohan, Chief Product Officer who joined the business from PhotoBox in December 2014.

Other operating costs have fallen 6% to £13.0m due to a planned reduction in marketing costs, such as the termination of the Group's sponsorship of West Bromwich Albion F.C, partially offset by an increase in operating costs in line with revenue growth.

Adjusted EBITDA

The Group's Adjusted EBITDA grew by 14% from £18.7m in 2014 H1 to £21.4m in 2015 H1. This increase was primarily driven by the growth in revenue during the period. The Group's high operational gearing has led to the increase in Adjusted EBITDA exceeding the Group's revenue growth and an improvement of in the Group's overall margins from 48.8% to 51.0%.

There has been no significant movement in depreciation and amortisation for the period; however, share-based remuneration schemes launched at IPO in June 2014 and a final grant under the Employee Share Option Scheme in January 2014 have led to an increase in the share-based payments charge of £0.7m for the six months to 31 March 2015. Exceptional items of £1.3m for 2015 H1 represent transaction costs incurred on the Group's proposed acquisition of the uSwitch Group which was announced on 30 April 2015. Exceptional items recognised in 2014 H1 related to one-off costs incurred on the IPO.

Income tax expense

The Group's effective income tax rate for 2015 H1 was 22.1% (2014 H1: 21.8%) which is higher than the average statutory tax rate of 20.5% for the full year due to non-deductible expenses incurred in relation to the proposed acquisition of the uSwitch Group.

Profit for the period

Adjusted profit for the period increased by 10% to £15.6m for the six months ended 31 March 2015. Statutory profit increased by 12% to £14.3m.

Earnings per share (EPS)

Adjusted basic EPS, which strips out the impact of exceptional items, has increased by 9% to 3.8 pence per share in line with the Group's increase in revenue and adjusted profit for the year. Statutory basic EPS also grew by 13%, compared to 2014 H1, to 3.5 pence per share.

Summary statement of financial position

(4)Working capital is defined as trade and other receivables less trade and other payables

The Group's statement of financial position remained strong at 31 March 2015 as the business generates high levels of cash. Net assets at 31 March 2015 were £108.9m. The Group ended the period with £38.8m of cash and cash equivalents and net current assets of £33.2m.

Summary statement of cash flows

Net cash inflows from operating activities

The Group saw high cash generation for the period with net cash inflows from operating activities of £12.2m for the six months to 31 March 2015. The decrease relative to 2014 H1 was driven by movements in working capital. The six months to 31 March 2015 saw an increase in trade receivables as the Group grows its developer and other revenue streams, which have longer collection periods. During the period the Group also prepaid approximately £1.0m for future server hosting fees. £0.6m of this balance was still held on the statement of financial position at 31 March 2015. In addition, the six months to 31 March 2015 saw a decrease in trade and other payables due to the final settlement of the Group's IPO costs.

Dividends

In February 2015 the Group paid its first dividend as a listed company of 1.1 pence per share, in respect of its final dividend for the year ending 30 September 2014, returning a total of £4.5m to shareholders. The Directors have declared an interim dividend in respect of the year ending 30 September 2015 of 1.0 pence per share. The interim dividend will be paid on 24 June 2015 to those shareholders on the share register as at 29 May 2015. The Group remains committed to its dividend policy to return between 35% and 45% of the Group's full year profit excluding share-based payments and exceptional items to shareholders.

Principal risks and uncertainties

As set out within the Strategic Report within the Annual Report 2014, the Group has identified the following principal risks and uncertainties:

· Macroeconomic Conditions - The Group derives most of its revenues from the UK residential property market and is thus dependent on this market and macroeconomic conditions in the UK.

· New Entrant to the Market - Agents' Mutual - Agents' Mutual was founded to create a new industry-owned property portal and requires its members to list on a maximum of only one other property portal. The Agent's Mutual property portal launched in January 2015.

· Changing Online Property Landscape - The Group participates in a competitive market with new technology developments.

· Retention and Recruitment - Success depends on the continued service and performance of the Group's senior management team and other key employees. Skilled development, technical, operating, sales and marketing personnel are also required.

· IT Systems - 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 Directors' assessment of the risks identified above has not changed materially during the six month period to 31 March 2015. The risks identified above will continue to affect the Group in the second half of the year. Actions taken to mitigate the risks identified have been disclosed in the Strategic Report within the Annual Report 2014.

On 30 April 2015, the Company announced the proposed acquisition of the uSwitch group, which operates one of the leading UK based online and telephone price comparison and switching services. The Group has identified a number of potential risks which would be applicable to the Enlarged Group post completion. Details of these risks are set out in the proposed acquisition circular to shareholders which is available on the Group's website at www.zpg.co.uk/investors.

Related party transactions

There have been no material related party transactions in the period. Details of related party transactions are set out in Note 13 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 Zoopla Property Group 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 2015 which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated statement of financial position, the condensed consolidated statement of cash flows and related notes 1 to 14. 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 2015 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

Chartered Accountants and Statutory Auditor

London, United Kingdom

19 May 2015

Condensed set of financial statements

Consolidated statement of comprehensive income

For the six months ended 31 March 2015

Consolidated statement of financial position

As at 31 March 2015

Consolidated statement of cash flows

For the six months ended 31 March 2015

Consolidated statement of changes in equity

For the six months ended 31 March 2015

(1)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. 31 March 2014 and 30 September 2014 comparatives are stated as though the transactions had occurred within Zoopla Property Group Plc.

(2)The 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.

Notes

1. General information

Zoopla Property Group Plc (the "Company") is a digital media business registered in England and Wales under Company Number 06074771. The principal activity of the Company is the operation of some of the UK's leading online property portals including Zoopla, PrimeLocation, SmartNewHomes and HomesOverseas. A copy of the Company's statutory accounts for the year ended 30 September 2014 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 annual financial statements of the Group and the Company 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.

The half year results for the six months ended 31 March 2015 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 2014 have been extracted from the Group's 2014 Annual Report. These comparatives have been audited by the auditor and their report was unqualified. The comparative figures for the six months ended 31 March 2014 have been extracted from the Group's Prospectus - prepared as part of the Group's IPO in June 2014. These comparatives have been audited in accordance with Standards for Investment Reporting by the auditor and their report was unqualified.

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.

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 wholly owned direct subsidiary of Zoopla Property Group Plc through a share-for-share exchange. Full details of the reorganisation and the basis of preparation for the year ended 30 September 2014 are included in the 2014 Annual Report. Comparatives for the period ended 31 March 2014 are stated as though the transactions occurred within Zoopla Property Group Plc and are based on those of the previously existing group.

Changes in accounting policies

The accounting policies applied by the Group are the same as those applied for the year ended 30 September 2014 as set out in the 2014 Annual Report.

There are no new standards or amendments to standards effective for the periods presented that have a material impact on the Group.

Going Concern

The financial position of the Group shows a positive net and current asset position with significant cash resources and high cash generation. Furthermore, the Group continues to generate both positive adjusted EBITDA and profit after tax. As a consequence, the Directors believe that the Group is well placed to manage its business and financial risks successfully.

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

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 2014 Annual Report:

· Impairment of goodwill and intangibles - 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.

· Share-based payments - The Group operates a number of different share-based payment schemes. These are measured at their estimated fair value at the date of grant, calculated using an appropriate option pricing model. The inputs into this model are subject to Management judgement and estimation.

Non-GAAP performance measures

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

· Adjusted EBITDA - which is defined as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items (Note 4).

· Adjusted basic EPS - which is defined as profit for the period excluding exceptional items divided by the weighted average number of shares in issue for the period (Note 7).

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 stream level; administrative expenses, finance income and costs, and income tax are all monitored on a centralised basis. Accordingly, there is no profitability information below the Group level and thus there is a single operating segment.

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

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

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

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

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

All material revenues are generated from within the UK. The following table analyses the Group's revenues as described above:

4. Adjusted EBITDA

Adjusted EBITDA is used by Management as a key measure to monitor the Group's business and the Directors believe it should be disclosed on the face of the income statement to assist in the understanding of the Group's underlying financial performance.

The Group defines EBITDA as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items. Adjusted EBITDA is arrived at by making adjustments for costs and profits which Management believe to be exceptional in nature by virtue of their size or incidence. Such items would include costs associated with business combinations, one-off gains and losses on disposal, and similar items of a non-recurring nature together with reorganisation costs and similar charges. This is further adjusted for share-based payment expenses which are comprised of charges relating to (i) warrants issued to certain of the Group's members in order to establish a critical mass of property listings on the Group's platform; and (ii) employee incentive plans which are aimed at retaining staff and aligning employee objectives with those of the Group. The Directors consider that excluding these non-cash charges in arriving at adjusted EBITDA gives a more appropriate measure of the Group's underlying financial performance.

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

Exceptional items for the six months ended 31 March 2015 relate to transaction fees incurred on the proposed acquisition of Ulysses Enterprises Limited. Exceptional items for the periods ended 31 March 2014 and September 2014 relate to costs incurred as part of the Group's IPO in June 2014.

5. Income tax

The effective tax rate applied to profit before tax for the six months ended 31 March 2015 was 22.1% (31 March 2014: 21.8%, 30 September 2014: 26.5%). The rate applied represents Management's best estimate of the weighted average tax rate for the full financial year after adjusting for the tax impact of exceptional items, amortisation, share-based payments and other items.

6. 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 Group's 2014 Annual Report occurred at the beginning of the comparative period.

After the period end the Directors declared an interim dividend of 1.0 pence per share resulting in an interim dividend of £4.1m payable on 24 June 2015 to those shareholders on the register at 29 May 2015. The interim dividend has not been included as a liability at the statement of financial position date.

7. Earnings per share

The nil-cost options granted under the Group's Long Term Incentive Plan are not considered dilutive for the periods presented. The 31 March 2014 and 30 September 2014 weighted average number of shares have been stated as if the Group reorganisation as set out in the Group's 2014 Annual Report had occurred at the beginning of the comparative period.

8. 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.

9. Trade and other payables

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

10. Investment in subsidiaries

There have been no material changes to the Group's structure during the period.

11. Equity

Share capital

The nominal value of the Group's Ordinary Shares as at 31 March 2015 amounted to £418,000 (31 March 2014: £4,000, 30 September 2014: £418,000). On 23 February 2015 Group issued 23,770 Ordinary Shares with a nominal value of £0.001 to settle the exercise of warrant instruments (Note 12). The total number of Ordinary Shares in issue at 31 March 2015 was 418,116,472.

Other reserves - Merger reserve

The opening merger reserve was created in May 2012 from the premium on shares issued for the acquisition of The Digital Property Group Limited. The increase during the year ended 30 September 2014 represents the impact of the Group's reorganisation prior to the IPO in June 2014.

Other reserves - EBT share reserve

This represents shares in issue that are held by the Employee Benefit Trust (EBT) for the purpose of settling the Group's obligations under the Employee Share Option Scheme (Note 12).

12. Share-based payments

The Group operates a number of share-based incentive schemes for both its employees and certain estate agent members. The Group recognised a total share-based payments charge of £1.0m for the six months ended 31 March 2015 (31 March 2014: £0.3m, 30 September 2014: £3.9m) as set out below.

(i) Long Term Incentive Plan (LTIP)

On Admission to the London Stock Exchange the Group introduced a Long Term Incentive Plan. On 1 August 2014 1,236,402 nil-cost options were granted under the scheme. The vesting of the options is subject to both adjusted Earnings per share ("EPS") and Total Shareholder Return ("TSR") performance criteria. The options will vest, subject to meeting the performance criteria, on 30 September 2017. A further 69,444 options were granted on 1 December 2014. These options will vest, subject to meeting the performance criteria, on 30 November 2017.

A charge of £292,000 has been recognised in the six months ended 31 March 2015 (31 March 2014: £nil, year ended 30 September 2014 £86,000).

The following information is relevant in the determination of the fair value of the LTIP options granted in August 2014 and December 2014:

The volatility assumption, measured at the standard deviation of expected share price returns, has been calculated using historic daily data of six comparator companies over a term commensurate with the expected life of each option. Dividend equivalent payments will be made in respect of vested options in the form of additional shares.

(ii) Deferred Bonus Plan

From 1 October 2014 the Group has operated a Deferred Bonus Plan (DBP) which defers a proportion of eligible employees' bonuses into nil-cost options. The options vest over a period of between one and three years from the end of the performance period. The performance period for the 2015 DBP runs from 1 October 2014 until 30 September 2015. To date, £72,000 has been accrued in respect of the 2015 DBP based on Management's expectation of the value of the final award.

(iii) Warrants

On 12 January 2015 the Company issued 84,856 warrants with an exercise price of £0.001 to certain estate agent members as part of five year agreements made in January 2014. 23,770 of the warrants were exercised during the period. Zoopla Property Group Plc issued 23,770 new shares for £0.001 each in order to fulfil the exercise. The remaining 61,086 warrants were outstanding as at 31 March 2015. On 4 March 2015 the Company issued a further 68,530 warrants with an exercise price of £0.001. These warrants were still outstanding as at 31 March 2015. The total number of warrants outstanding at 31 March 2015 had a weighted average exercise price of £0.001 and a weighted average remaining contractual life of 4.9 years.

The number of warrants issuable over shares in Zoopla Property Group Plc under existing member contracts at the date of this report is 1,198,300.

(iv)The Employee Benefit Trust (EBT) and Share Incentive Plan Trust (SIP Trust)

At 31 March 2015 5,183,263 shares were held by the EBT in order to satisfy future exercises under the Employee Share Option Scheme (31 March 2014: nil, 30 September 2014: 5,908,116). A further 427,515 shares are held by the SIP Trust to satisfy future Partnership and Matching Share exercises (31 March 2014: nil, 30 September 2014: 427,515). The cost of shares held in trust has been deducted from equity.

13. Related party transactions

Key management personnel

The Chairman and the Directors are considered to be the key management personnel of the group. There have been no transactions with key management personnel during the period outside of the remuneration policies outlined in the Group's 2014 Annual report.

Other Group companies

Transactions with other Group companies have been eliminated on consolidation.

Other related parties

Other related party transactions are as follows:

Daily Mail and General Trust plc ("DMGT") owned 31.8% of the share capital of Zoopla Property Group Plc at 31 March 2015 (30 September 2014: 31.8%, 31 March 2014: 52.6% of ZPG Limited, the Group's former parent).

A&N Media Finance Services Limited ("ANMFS"), a subsidiary of DMGT, supplied various shared services to ZPG Limited for which the fee was £23,000 for the period (31 March 2014: £65,000, 30 September 2014: £89,000). The balance outstanding at 31 March 2015 was £nil (31 March 2014: £10,000, 30 September 2014: £nil).

There were no transactions with any other related parties in the period.

14. Subsequent events

On 30 April 2015, the Company announced that it had conditionally agreed to acquire the entire issued share capital of Ulysses Enterprises Limited from LDC II LP and certain other institutional and management shareholders. The acquisition involves the proposed acquisition of the entire group of undertakings forming the uSwitch group, which operates one of the leading UK based online and telephone price comparison and switching services.

The total consideration for the acquisition is £160m, plus a performance-based earn out of up to £30m, based on a cash-free, debt-free enterprise value. Per the audited, consolidated financial statements of Ulysses Enterprises Limited for the year ended 31 December 2014 the uSwitch group had total assets of £79.9m including £53.6m of goodwill and intangible assets and annual revenue of £62.9m.

Shareholder information

Financial Calendar 2015

Shareholder enquiries

The Company's registrar is Equiniti. They will be pleased to deal with any questions regarding your shareholding or dividends. Please notify them of your change of address or other personal information. Their address details are:

Equiniti

Aspect HouseSpencer RoadLancingWest Sussex BN99 6DA

Equiniti is a trading name of Equiniti Limited.

Equiniti helpline: 0871 384 2030 (calls cost 8 pence per minute plus network extras) (Overseas: +44 121 415 7047). Lines open 8.30am to 5.30pm, Monday to Friday (excluding public holidays).

Shareholders are able to manage their shareholding online and facilities included electronic communications, account enquiries, amendment of address and dividend mandate instructions.