ZPG Plc Annual Report 2017 ZPG Plc Annual Report 2017 Empowering smarter property and household decisions ZPG Plc 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 software and data providers with a range of products including Hometrack, 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. p20 Focused on delivering transparency and efficiency: Most useful resource for consumers p26 Focused on delivering transparency and efficiency: Best place for our teams Contents “ We have made significant progress Strategic report towards our mission of being the 02 Highlights platform of choice for consumers 04 At a glance and partners engaged in property 06 Chairman’s statement and household decisions.” 08 Chief Executive Officer’s statement and business review Alex Chesterman OBE, 12 M&A and partnership activity Founder & CEO 14 Business model 15 Strategy 16 Stakeholder engagement 18 Our markets 28 Key performance indicators 30 Risk management and key risks 36 Financial review 42 Our people and corporate social responsibility p22 Corporate governance 48 Chairman’s introduction to governance 50 Board of Directors 52 Corporate governance statement Focused on delivering 58 Audit Committee report transparency and efficiency: 64 Nomination Committee report Most effective partner for 66 Directors’ remuneration report the businesses we work with 92 Directors’ report (other disclosures) 95 Statement of Directors’ responsibilities Financial statements 96 Independent auditor’s report 105 Consolidated statement of comprehensive income 106 Consolidated statement of financial position 107 Consolidated statement of cash flows 108 Consolidated statement of changes in equity 109 Notes to the consolidated financial statements 144 Company statement of financial position 145 Company statement of cash flows 146 Company statement of changes in equity 147 Notes to the Company financial statements 152 Shareholder information IBC Note on forward-looking statements p24 Focused on delivering transparency and efficiency: Delivering value to our shareholders www.zpg.co.uk 01 Highlights Key highlights for the year Record performance and new milestones across the business. Revenue1 £m Adjusted EBITDA1, 3 £m Adjusted basic EPS2, 3 p £244.5m £96.4m 15.2p +24% +25% +20% 244.5 96.4 15.2 197.7 77.1 12.7 8.4 48.7 107.6 2015 2016 2017 2015 2016 2017 2015 2016 2017 Profit for the year4 £m Basic EPS per share p Dividend per share p £37.4m 8.8p 5.7p +2% -1% +10% 36.7 37.4 8.9 8.8 5.2 5.7 25.4 6.2 3.5 2015 2016 2017 2015 2016 2017 2015 2016 2017 1 Adjusted EBITDA is defined as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items. Adjusted EBITDA is reconciled tothe consolidated statement of comprehensive income on page 105. 2 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 Period. 3 When reviewing performance the Directors use a combination of both statutory and adjusted performance measures, including adjusted EBITDA and adjusted basic EPS, as they provide additional information in line with how financial performance is measured by Management and reported to the Board. 4 Profit for the year includes £27.6 million (FY16: £15.7 million) of exceptional items and amortisation of intangibles arising on acquisitions (adjusted for tax) recognised during the Period. 02 ZPG Plc Annual Report 2017 Record performance and new milestones across the business reportStrategic “We enjoyed another year of record performance across the business as we continued to provide transparency to our consumers to help them make smarter property and household decisions and continued to deliver efficiency to our partners to help them operate their businesses more effectively.” Alex Chesterman OBE, Founder & CEO Business highlights • Revenue increase of 24% to £244.5 million and adjusted EBITDA • Continued marketing investment in new national campaigns increase of 25% to £96.4 million resulting in record brand awareness • Record traffic of 648 million visits to platform generating record • Net debt5 increased to £191.5 million (FY16: £146.5 million) of over 56 million partner leads as result of further strategic acquisitions in year • Materially enhanced revenue diversification and cross-sell • Continued to be highly cash generative with strong cash opportunities resulting from acquisitions conversion ratio6 over 88% (FY16: 81%) • New Zoopla MovePlanner tool generating over 10,000 leads • Statutory Profit for the year was up 2% after acquisition related per month for Comparison partners costs and share-based payments Property Comparison • Revenue up 41% to £122.3 million driven by strong underlying • Strong switching levels across all verticals with revenue up 10% performance and acquisitions to £122.2 million over Period • Total number of unique partners7 (including acquisitions) up 12% • 34.3 million leads9 generated helping consumers save over to 24,962 as at end of Period £400 million off their household bills • UK Agency partners and inventory up 6% and 5% respectively • Account sign-ups up 60% to 1.9 million with average leads per to 14,775 branches and 969k listings consumer account up 6% to 1.3 • ARPP8 (including acquisitions) up by 5% to £358 due to success • Traffic to uSwitch up 14% YoY with unpaid traffic now accounting of additional product cross-sell for the majority of site visits • Average number of products per partner now stands at 1.4, • Zoopla delivering >25% of mortgage traffic to uSwitch up 27% from same time last Period demonstrating the cross-sell opportunity • £1 million+ in additional referral fees generated for our partners • Significantly enhanced our proposition with the acquisition so far through the MoveIT platform of Money, following end of the Period 5 Net debt is defined as loans and borrowings less cash and cash equivalents as per the consolidated statement of financial position. 6 Cash conversion ratio is calculated as: Net cash flows from operating activities less deal related transaction costs of £3.4 million/EBITDA. 7 The total number of unique Property partners has been restated to exclude 788 legacy software customers of Property Software Group who are not paying for an active support contract and to include Zoopla Advertising and Data partners. 8 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. 9 A Comparison lead is measured at the point when a consumer shows intent to switch via an application form hosted on the Company’s website, clicks through to a specific offer or at the point in time when the customer leaves the Company’s website having clicked through to a third party website. www.zpg.co.uk 03 At a glance ZPG helps empower smarter property and household decisions We operate a multi-brand, multi-channel approach across the property lifecycle with an unrivalled product proposition providing us with unique cross-sell opportunities. Our websites and mobile apps attract over 50 million visits per month with a highly engaged audience and over 25,000 business partners engage with our services to reach this audience. Our mission is to be the platform Money is one of the UK’s leading financial TechnicWeb is the UK’s leading estate agency of choice for consumers and services comparison websites, helping website design and hosting business specialising partners engaged in property consumers compare products including in designing and operating fully responsive and household decisions. mortgages, loans, credit cards, bank accounts websites for the property sector. and insurance from more than 600 providers. Ravensworth is the UK’s leading provider of Zoopla is the UK’s most comprehensive PrimeLocation is one of the UK’s leading print solutions to estate agents and offers a property website, helping consumers to property websites, helping house-hunters in comprehensive range of products and services research the market and find their next the middle/upper tiers of the market find their for every stage of the property marketing home by combining hundreds of thousands dream home from the top estate agents, journey from listing through to post-sale. of property listings with market data and letting agents and property developers. local information. Alto, Jupix and ExpertAgent are some SmartNewHomes is the UK’s leading of the leading cloud-based estate agency uSwitch is the UK’s leading comparison website dedicated exclusively to new and property management software systems website for home services switching, helping homes, helping buyers understand the used by thousands of property professionals consumers to find the best deal and save market and search for new build homes across the UK for the day-to-day management money on their gas, electricity, broadband, from all the leading property developers of inventory, marketing and communications. TV, phone and other products. across the country. PropertyFile and MoveIT are innovative Hometrack