Zoopla Property Group Plc
Annual Report 2014
Zoopla Property Group Plc Annual Report 2014
Innovative.
Entrepreneurial.
Growing.
Zoopla Property Group is a digital media business that owns and
operates some of the UK’s leading online property brands including
Zoopla, PrimeLocation, SmartNewHomes and HomesOverseas.
Our goal is to provide the most useful resources for UK property
consumers and to be the most effective partner for property
professionals in the UK.
We help consumers to find their next home and to research the market by combining
hundreds of thousands of property listings with market data, local information and
community tools. Each of our brands has a distinct market position and attracts
aunique audience, delivering increased exposure and enquiries for our members.
Our members consist of over 19,600 estate agents, lettings agents and new homes
developers who now advertise on our websites. Throughout the 2014 financial year
ourwebsites and mobile apps attracted an average of 43 million visits per month
andgenerated over 2.4 million enquiries per month for our estate agent, letting
agentand newhomes developer members.
In addition to operating our own websites we exclusively power the property search
facility on a number of the UK’s biggest websites which means that we provide our
members with exposure to an unrivalled property audience in the UK.
Read more about our business
andstrategy from page 8
Visit our corporate website forthe latest
investor news andannouncements at
www.zpg.co.uk
Overview
Introduces Zoopla Property
Group and presents the year’s
performance highlights and the
Chairman’sstatement.
02 Zoopla Property Group at a glance
04 Chairman’s statement
Strategic report
Provides an overview ofthe
Company’s business model,
strategy, performance and
future prospects.
06 Chief Executive Officer’s statement
08 Our strategy and objectives
09 Our business model
10 What sets us apart
12 Our brands at a glance
13 Our exclusive partnerships
14 Our market
15 Our KPIs
16 Risk management and key risks
18 Financial review
22 Our people and corporate responsibility
Corporate governance
Includes reports from the
Directors and each of the
Board committees.
24 Chairman’s introduction to governance
26 Board of Directors
28 Corporate governance statement
32 Audit Committee report
36 Nomination Committee report
38 Directors’ remuneration report
62 Directors’ report (other disclosures)
65 Statement of Directors’ responsibilities
Financial statements
Presents the financial
statements with their
accompanying notes.
66 Independent auditor’s report
69 Consolidated statement of comprehensive income
70 Consolidated statement of financial position
71 Consolidated statement of cash flows
72 Consolidated statement of changes in equity
73 Notes to the financial statements
92 Company statement of financial position
93 Company statement of cash flows
94 Company statement of changes in equity
95 Notes to the Company financial statements
97 Shareholder information
97 Note on forward-looking statements
In this report:
Financial statements
01
Zoopla Property Group Plc zpg.co.uk
Overview Strategic report Corporate governance
Zoopla Property Group at a glance
In the year of our successful IPO
the Group has experienced strong
growth and record levels of traffic.
Operational highlights
29.2m
Total leads (2013: 26.1m)
513.5m
Total site visits (2013: 386.4m)
19,663
Members at 30 September
(2013:18,676)
Our journey so
far: astory of
innovation and
differentiation.
f Zoopla.co.uk launched
f Launch of Automated Value
Model (AVM)
f Winner of UK’s Most
Promising Internet Company
(First Tuesday)
f Winner of UK’s Best Property
Website (WebUser)
f Acquired:
BytePlay
f Winner of 100 Most Innovative
UK Businesses (Smarta)
f Launch of ZooplaPro
f Listed as one of the Top UK
Tech Companies (Guardian)
f Acquired:
PropertyFinder.com
HotProperty.co.uk
ThinkProperty.com
f #2 property portal by unique
visitors in under two years
f Launch of property listings
f Winner of Best UK Property
Portal (Daily Mail Awards)
f Winner of Best Real
EstateWebsite (Website
ofthe YearAwards)
f Traffic up 33% to 513.5 million (2013: 386.4 million)
f Number of members increased 5% to 19,663
(2013:18,676)
f Number of leads increased by 12% to 29.2 million
(2013: 26.1 million)
f Successful IPO in June of this year
f Continued focus on mobile, which now drives
57%ofthe Group’s traffic
f Up-sell of depth products to members driving ARPA
f SmartNewHomes acquisition fully embedded with
49% increase in developer revenue
f Zoopla Ltd founded
2007
0.3m leads pm
2008 2009 2010
0.4m visits pm 2m visits pm 5m visits pm
02
Zoopla Property Group Plc Annual Report 2014
1 Adjusted EBITDA is defined as operating profit after adding back depreciation
andamortisation, share-based payments and exceptional items.
2 Adjusted profit for the year excludes exceptional items.
3 The Directors believe that the adjusted figures give a more appropriate measure
of the Group’s underlying financial performance.
27,962
29,433
Financial highlights
Revenue (£000)
£80,230
+24%
13 14
80,230
64,498
13 14
Adjusted EBITDA¹
,
³ (£000)
£39,614
+35%
39,614
13 14
Operating profit (£000)
£28,467
+2%
28,467
13 14
Adjusted profit
fortheyear²
,
³ (£000)
£26,656
+19%
22,330
f Acquired:
UpMyStreet.com
PrimeLocation.com
FindaProperty.com
Globrix.com
f Acquisition and integration
ofDPG created Zoopla
Property Group Ltd
f Acquired:
HousePrices.co.uk
f Winner of Best Property
Portal: Western Europe
(Property PortalAwards)
f Winner of Innovative Business
of the Year (Fast Growth
BusinessAwards)
f Listed as one of the Top
100UK Tech Companies
(DailyTelegraph)
f Acquired:
SmartNewHomes.com
HomesOverseas.co.uk
f Winner of Best Brand (Sunday
Times Tech Track2013Awards)
f Winner of Company of
theYear (Growing
BusinessAwards2013)
f Winner of Europe’s Most
Exciting Investor Backed
Company of the Year (Investor
Allstars Awards 2013)
f Successful IPO on the
London Stock Exchange
f Rated an “Outstanding” place
to work by Best Companies
f Launch of commercial
property channel
2.2m leads pm 2.4m leads pm1.0m leads pm0.6m leads pm
2011 2012 2013 2014
10m visits pm 16m visits pm 35m visits pm 43m visits pm
Membership evolution (number)
2014 (19,663, +5%)
Agency (16,373, +3%)
Developer (2,715, +7%)
Overseas (575, +106%)
2013 (18,676)
Agency (15,858)
Developer (2,539)
Overseas (279)
Average revenue per advertiser (ARPA) (£)
2013 (£264)
Agency (£275)
Developer (£206)
Overseas (£143)
2014 (£312, +18%)
Agency (£323, +17%)
Developer (£270, +31%)
Overseas (£139, -2.8%)
26,656
Financial statements
03
Overview Strategic report Corporate governance
Zoopla Property Group Plc zpg.co.uk
We have evolved with the demands of the
market to develop highly effective mobile
andtablet platforms.
“ Our brand strength and
reputation has grown
strongly, supported by
a successful marketing
campaign in thepast
year…”
Chairman’s statement
Mike Evans, Chairman
Zoopla Property Group has experienced
another strong year in 2014. Following
oursuccessful IPO in June, I am delighted
toannounce a positive set of results for the
Group. Our revenue and profits continue
togrow. Total income has increased by 24%
to£80.2 million and adjusted EBITDA has
increased by 35% to £39.6 million, while we
have continued to make significant long-term
investment. The Group remains well funded
and debt free.
This accomplishment is due to a variety of factors. We have continued
to attract users to our sites because of the quality of marketing and
products, providing a compelling user experience. We have evolved
with the demands of the market todevelop highly effective mobile
andtablet platforms. Our sites, products and platforms have attracted
a record 513 million visits overthe past 12 months, a substantial
increase from 386 million in2013.
Finally, growth of the Group’s business partially depends on its strong
brands and reputation to attract and retain users and, in turn, the
members who choose to subscribe to and advertise on the Group’s
sites. Our brand strength and reputation have grown strongly,
supported by a successful marketing campaign in the past year.
Dividend
The Directors have proposed a final dividend of 1.1 pence per share
tobe paid in respect of the year ended 30 September 2014. This will
be paid on 23 February 2015 to all shareholders on the register on
5December 2014.
Capital structure
The Company was admitted to the London Stock Exchange on
23June2014. This was facilitated by a number of our larger shareholders
reducing their holdings and accepting a lock-in of their remaining shares
for a period of six months from Admission. Management agreed to lock-ins
of 12 months. Daily Mail and General Trust Plc (DMGT) remains the
largest single investor with a31.8% holding. AlexChesterman, Founder
and Chief Executive Officer, continues tohold 4.1%. Inaddition, we
continue to build up a register of well regarded institutionalshareholders.
04
Zoopla Property Group Plc Annual Report 2014
Financial performance
Adjusted EBITDA was up 35% to £39.6 million (2013: £29.4 million)
and adjusted earnings per share (EPS), which excludes exceptional
items, was up 20% to 6.5 pence pershare (2013: 5.4 pence per
share). The Group continues to generate high levels of cash and
asat30September 2014 the cashposition was £31.0 million
(2013:£28.1million).
The Board
In anticipation of the IPO, the Group reviewed and revised the Board
composition, appointing three new independent Directors. Our Board
now has a diverse mix of backgrounds, skill and experience and its
members are committed to setting the strategic direction whilst maintaining
the highest standards of corporate governance and instilling a sound
framework for the control and management of the Group, driving it
to further success. Biographies of all members of the Board appear
on pages 26 and 27.
I joined the Board in May this year and have been extremely impressed
by the dedication and determination of the Executive, Management
and Employee teams. Everyone at Zoopla Property Group is focused
ondelivering excellent value to our estate agent, letting agent and new
home developer members, while enhancing the user experience for
consumers. Going through an IPO process has thepotential to be
hugely distracting for Management. Careful and thoughtful planning
from Alex Chesterman and his team ensured the Group was able to
successfully complete the IPO whilst continuing togrow the business.
Iam confident that the Zoopla Property Group team will execute the
Group’s strategy effectively, showing diligencethroughout.
The Board and I would like to thank all of our users, members and
employees for their commitment to the Group over the past 12 months.
It has been a challenging year but also a transformative andsuccessful
one and I look forward to the future with confidence.
Mike Evans
Chairman
Financial statements
05
Zoopla Property Group Plc zpg.co.uk
Overview Strategic report Corporate governance
Chief Executive Officer’s statement
Alex Chesterman, Chief Executive Officer
I am delighted to present Zoopla Property
Group Plc’s (ZPG) first annual report. Ithas
been an incredible journey inarelatively short
period oftime since we launched the business
in 2008. Back then weset out totransform the
way that UK consumers searched for property
and researched the market and I think that
wehavemade some great steps towards
fulfilling that goal. However, there remain
someexciting opportunities andinteresting
challenges ahead.
During the last 12 months we have grown our user audience torecord
levels as more consumers than ever used our platform to search for
properties and research the property market. User visits toour websites
and mobile applications increased by 33% over the year, with mobile
devices now accounting for over 57% of total user visits, as consumers
engaged with our services at work, athome and on the move. This growth
was driven in part by the continued shift of the property experience
online, together with renewed confidence in the UK property market
during the year.
Our growing user audience together with the increased levels of activity
in the property market resulted in our advertising members (estate agents,
letting agents and new home developers) enjoying record levels of
exposure and enquiries, with over 29 million leads generated from our
platform over the year, an increase of 12%. Overthe past 12 months
40,000 individual home sellers used the ZPG valuation tool to contact
local agents about selling their home, equating to around £150 million
of potential fees for ZPG members. These figures show our ongoing
commitment to helping our members win new business and the
exceptional value we provide.
We have grown our member base by over 5% over the past 12months
and seen average revenue per member increase by18% during the
period, with a significant portion of the ARPA growth being driven by
our members purchasing additional products and services togenerate
greater standout on our platform. Our revenue growth reflects the
overall recovery in the property market and the continued shift from
print to digital in property marketing.
“ During the last 12 months
we have grown our user
audience to record levels
as more consumers
than ever have used
ourplatform…”
It’s been an incredible journey in a relatively
short period of time since we launched the
business in 2008.
06
Zoopla Property Group Plc Annual Report 2014
Our strategy
Our goal is very simply to provide the most useful online resources to
UKproperty consumers and to be the most effective partner to our
advertising members. Over the past few years we have made a lot
ofprogress towards achieving that goal having built a market-leading
digital property proposition for our users and members.
We help our users to both research the property market and also to
find their next home through our huge inventory of available properties
and best in class search tools and associated data. We provide
unrivalled exposure for our members to a unique audience of online
property consumers via the various brands that we own and power.
Our core brands, Zoopla and PrimeLocation, attract millions of unique
users each month allowing us to deliver exceptional value to our members
whilst delivering strong revenue and EBITDA growth to our shareholders.
We own a number of other leading brands, including SmartNewHomes
and HomesOverseas, which allow us to target niche audiences within
the property market as well as powering the online property search
function for some of the UK’s leading third party brands including
TheTimes, the Daily Telegraph, the Evening Standard, Barclays,
Halifax and many more.
During the last 12 months we have invested heavily in our brands in
terms of both product and marketing. We continue to innovate and
have launched a number of new features to increase engagement
onour platforms, including commute time search, a new commercial
property channel and enhanced features within ZooplaPro including
MarketView, PropertyWatch and new Comparables Reports. We have
also broadened our marketing channels to now include TV, radio,
cinema, print and outdoor campaigns.
Over the coming months we plan to invest further in growing our user
engagement and awareness, ensuring that we deliver even more value
to our members as we develop new products and services to monetise.
With most consumers shifting from print to online as their preferred
method of property search, we are very well positioned to capture
arising share of the growing digital property spend as it further
transitions away from traditional print media.
Business model
Consumers engage with our brands when searching or researching
the property market. We display over 1 million properties advertised
byour members available for sale or rent along with other useful data
and information to help our users make smarter property decisions.
Our principal source of revenue is the monthly subscription fees
paidby our members to advertise their properties on our platform.
Ouraverage cost per lead is significantly lower than Rightmove
andweoffer a variety of subscription packages with varying levels
ofservices included in each. In addition, our members buy additional
products toenhance their brand prominence, such as Area Sponsorship
and Appraisal Booster, or to enhance exposure and drive additional
enquiries for their property listings, such as Premium Listings and
FeaturedProperties.
We benefit from strong network effects where the more consumers
who use our platform, the more attractive it is for our members to
advertise and purchase enhanced marketing products. Almost 90%
ofestate agents, letting agents and new home developers throughout
the UK advertise on our platform to benefit from the high level of
exposure and enquiries that we deliver. We also generate additional
revenues from third party advertising and partnerships.
Looking forward
There are significant opportunities that we are very excited about for
our business as we go forward. Whilst we remain behind Rightmove
currently in terms of audience and revenues, we have closed the gap
in terms of brand awareness and the number of advertising members
and the gaps in other key performance indicators (KPIs) continue
tonarrow.
There are also challenges ahead. The next 12 months will see further
competition in the form of Agents’ Mutual, an agent-led portal which
plans to launch in early 2015 and which proposes to exclude its
members from advertising with either us or Rightmove. We will ensure
that we demonstrate effectively to our members and consumers the
value we provide in the property search process. We believe that
ultimately it is in the commercial interests of our members to advertise
with us given the unique scale and nature of our audience and the
exceptional value that we deliver. Further uncertainties surrounding
theupcoming election, interest rates and policy issues such as the
proposed mansion tax will also challenge the overall housing market
recovery but we are confident that we are well placed to deal
withthese.
We believe we have built a business in seven short years that
combines a market-leading consumer proposition with an unequalled
value-for-money member proposition. We look forward to addressing
the opportunities and challenges ahead and remain convinced that
thelong-term winners will be those that offer the best service for
consumers and members alike.
Finally, we continue to attract and retain the best talent in the market
and continue to build a team that I am extremely proud of and that
stands us in great stead as we go forward.
Alex Chesterman
Chief Executive Ofcer
Financial statements
07
Zoopla Property Group Plc zpg.co.uk
Corporate governanceStrategic reportOverview
1
Grow brand awareness and
useraudience
The Group plans to continue to grow its
brandawareness through advertising,
publicrelations, digital marketing and
socialmedia campaigns and recognises
theimportance of increasing its organic
andunpaid search traffic.
The Group has achieved significant growth
inbrand awareness for its core brand, Zoopla,
over the last few years. The prompted brand
awareness of the Zoopla brand amongst all
UK adults has grown from 26% to 77%
between November 2010 and October 2014
according to brand surveys conducted by
Harris Interactive.
2
Extend inventory
The Group aims to attract the remaining
UKproperty professionals (around 10%
ofmarket) that are not currently members
bycommunicating the value of the Group’s
products, its niche brand strategy and the
benefits of accessing the Group’s significant
and unique user audience.
Extending the listings inventory to cover
thewhole of the market would improve
userexperience and increase the Group’s
value to its users and members.
The Group has extensive field-based and
telesales teams that work on building
relationships with property professionals
whoare prospective members.
The Group focuses
on the following core
strategies in order
todeliver on its goal:
3
Develop additional products
The Group aims to be the most effective
partner to property professionals in the UK.
The Group’s strategy is to develop products
that assist members as much as possible
to attract new clients and generate leads.
The Group’s products, such as ZooplaPro
and MarketView, have been developed to
provide members with information on their
marketing performance and their competitive
position in a local area.
4
Increase user engagement
The Group intends to further increase
itsuserengagement levels by continuing
itsconsumer-centric approach to
productdevelopment.
The Group also generates unique property
related content that is useful for users as a
means to increase engagement. The Group
will continue to add more data andcontent
toits platform and develop newfeatures
andtools to further improve userexperience
and deepen engagement with the Group’s
websites and mobile applications, thereby
improving the volume and quality of leads
delivered to members.
5
Develop opportunities
inrelated markets
The Group is pursuing additional opportunities
in related markets:
f Further products and services for
members. The Group seeks to offer its
members additional services, including
other marketing and data services.
f Complete ownership of the property
journey. The Group plans to develop
further services to engage users with the
Group’s websites and mobile applications
at different points in their property journey.
f Overseas and commercial property.
TheGroup acquired and re-launched
aleading overseas property portal,
HomesOverseas.co.uk, and developed
acommercial property channel in 2014.
f Property dataset. The Group continues
to explore new ways to monetise its
unique UK property data resource
comprised of historic sales transaction
data, property listings information and
proprietary user-generated content.
Our strategy and objectives
08
Zoopla Property Group Plc Annual Report 2014
The Group benefits from powerful network
effects where the size of its user audience
reinforces the value to its members of listing
their properties on the Group’s platform.
More investment/
marketing spend
More visitors/
moreleads
More members/
moreinventory
Higher ARPA/
morerevenue
In turn, users are further drawn to the Group’s
websites and mobile applications to access the
Group’s comprehensive property listings. The
unique tools andcontent available on the Group’s
platform (includingproprietary content generated
by users) reinforce thesenetwork effects.
Our business model
How we deliver it
Financial statements
09
Zoopla Property Group Plc zpg.co.uk
Corporate governanceStrategic reportOverview
What sets us apart
Our key differentiators.
1
Multi-brand strategy
Broader consumer audience
2
Long-term customer relationships
Business model stability
3
Exclusive distribution partnerships
Maximising customer reach
4
Proven track record of innovation
Consumer and industry champion
5
Automated valuation model
Market transparency and efficiency
6
Proprietary property dataset
Unique insights/opportunities
28m+
property pages
9.5m+
homes with
user data
19m+
sold prices
6.5m+
archive listings
Core brands
Valuation estimates
Niche brands
HeatMaps SmartMaps
c.2,300 branches representing 12% of the market
10
Zoopla Property Group Plc Annual Report 2014
Valuation models
Financial statements
11
Corporate governanceStrategic reportOverview
Zoopla Property Group Plc zpg.co.uk
Our brands at a glance
Each of our brands has a distinct market
position and attracts a unique audience.
Segment Brands
New home developers
SmartNewHomes.com is the UK’s only dedicated website for new build properties and lists
new developments available for sale from all the leading UKnew homes developers.
Agency directory
AlltheAgents.co.uk is an estate agent and letting agent directory, helping users find the most
suitable local agent for their property needs.
UK agencies
The Group’s brands include Zoopla and PrimeLocation, the second and third most-visited
property websites in the UK,respectively.
Zoopla.co.uk is the UK’s most comprehensive property website, focused on empowering users
with the resources they need to make better-informed property decisions.
PrimeLocation.com focuses on helping house hunters in the middle and upper tiers of the
market to find their nexthome.
Overseas agencies
HomesOverseas.co.uk is the UK’s leading website dedicated entirely to helping users find the
perfect holiday property abroad.
12
Zoopla Property Group Plc Annual Report 2014
Our exclusive partnerships
We exclusively power the property search
facility on a number of the UK’s biggest
websites and apps.
Our exclusive partners
In addition to operating our own websites, we
exclusively power the property search facility
ona number of the UK’s biggest websites,
which means that we offer our members
exposure to an unrivalled property audience
inthe UK.
Our exclusive partnerships include The Times,
The Daily Telegraph, The Independent,
theEvening Standard, Homes & Property,
AOL, MSN, Homes24 and more.
We continue to develop our exclusive
listings distribution partnerships.
Visitourwebsite forthe latest:
www.zpg.co.uk
Financial statements
13
Zoopla Property Group Plc zpg.co.uk
Corporate governanceStrategic reportOverview
Technology is changing the way users search
for homes and the way that professionals
market their listings.
UK residential property market
Residential property is one of the largest sectors of the UK economy and
is currently undergoing a transformation: technology is changing the way
users search for homes and the way that professionals market their
listings and build their businesses. The 2008 downturn and subsequent
partial recovery in the UK property market have served to accentuate
this transformation as users are seeking more comprehensive information
and professionals are seeking more effective marketing channels.
Finding a home is often one of the most important decisions a consumer
will make, especially given that a property is likely to be one of their most
valuable assets. As a result, users spend a significant amount of time
seeking information related to the property search process, such as
available properties, historic and current house prices, neighbourhood
information and financing options. As users increasingly conduct
theirproperty search and research online, property professionals are
naturally shifting their marketing budgets towards online advertising
toreach these users. Equally, for home sellers, getting the best price
for one of their most valuable assets is critical and therefore ensuring
that the property professional they engage to conduct this process
ismarketing their home widely online is essential. Property portals
playa vital role in allowing home sellers to reach the widest audience.
The market downturn saw the average number of residential property
sales transactions in England and Wales fall from an average of
approximately 1,185,000 transactions per year from 2000 to 2007
to665,000 transactions per year from 2008 to 2013, reaching a low
in2009 relative to historical averages. Since then, annual residential
property sales transaction volumes have started to recover, with
anincrease of 17.6% in 2013 as compared with 2012, reflecting
aperceived improvement in UK economic conditions. This recovery
continued into 2014, but the second half of the year has seen a
slowdown in activity with potential buyers mindful of continuing
economic uncertainty and the upcoming general election.
Similarly, mortgage approval rates, which experienced a rapid decline
in 2008 to reach a recent historical low in 2009, have since increased
in 2013 and the first part of 2014 to the highest level since the start
ofthe financial crisis (source: Bank of England). According to Halifax,
mortgage payments as a percentage of income were 27% in 2013, the
lowest level since 1999. There are a number of current UK government
initiatives aimed at increasing home ownership and transaction volumes
in the UK, including the NewBuy Guarantee Scheme, launched in
March 2012, aimed at increasing mortgage availability for newly built
properties; the Help-to-Buy equity loan scheme, launched in April 2013,
a three year initiative aimed at stimulating home sales; and the Funding
for Lending Scheme, aimed at increasing overall property lending. As a
result of the historically low Bank of England base rate, mortgage interest
rates remain extremely competitive, although the potential threat of
a base rate increase looms on the horizon.
The FCA implemented the Mortgage Market Review at the end of
April2014, which requires lenders to carry out more detailed checks
on applicants before granting mortgages. Its purpose is to ensure
themortgage market is sustainable and works better for consumers.
Structural shift towards digital advertising
In 2007, the pre-crisis property advertising market was worth in the
region of £700 million with approximately 85% being spent on print.
In2014, total advertising spend on property advertising remains below
pre-crisis levels at c.£400 million; however, a clear shift towards digital
advertising can be seen with c.50% now being spent on digital advertising.
This print-to-digital shift reflects consumer search preferences as UK
adults are spending more time online than ever before, aided by the
proliferation of smartphones.
Property portals have transformed consumer and agent behaviour with
over 90% of home movers starting their searches online. For the user,
convenience, price transparency, local area information, real time alerts
and advice are driving change. For the agents, efficacy of marketing
spend, enhanced reach and exposure, measurable ROI, real time
enquiries and market knowledge are enabling increased productivity.
Our market
Annual sales transactions volumes (000)
England and Wales
00 01 02 03 04 05 06 07 08 09 10 11 12 13
Source: Land Registry for England and Wales.
780
663
654
656
616
621
1,226
1,279
1,027
1,184
1,186
1,297
1,194
1,087
697
547
359
383
383
389
399
427
441
452
465
Property classified ad spend (£m)
07 08 09 10 11 12 13 14E 15E 16E 17E
Source: Enders analysis (2007–2013). Consensus of selected brokers (2014–2017).
Print
Digital
14
Zoopla Property Group Plc Annual Report 2014
Our KPIs
Our key performance indicators (KPIs) help
to ensure that we are delivering against our
strategic objectives.
Revenue (£m)
£80.2m
+24%
The Group generates revenue
from threedifferent sources:
agency revenue, developer
revenue and other revenue
whichincludes overseas,
advertising anddata services.
13 14
80.2
64.5
13 14
39.6
29.4
Adjusted EBITDA (£m)
£39.6m
+35%
Adjusted EBITDA excludes
share-based payments and
exceptional items.
13 14
312
264
ARPA (£)
£312
+18%
Average revenue per advertiser
(ARPA) is the revenue from
member subscriptions in a given
month divided by the total
number of members during the
month, measured as a monthly
average over theperiod.
13 14
6.5
5.4
Adjusted basic EPS (pence per share)
6.5p
+20%
Adjusted basic EPS is calculated
as adjusted profit for the year
divided by theweighted average
number of shares in issue for the
period. Adjusted profit forthe
year is defined as profit for the
year excluding exceptional items.
13 14
29.2
26.1
Leads (m)
29.2m
+12%
Leads are enquiries made to the
Group’smembers initiated either
throughthe telephone number
oremailform displayed on the
Group’s websites andmobile
applications.
13 14
513.5
386.4
Visits (m)
513.5m
+33%
Visits comprise individual
sessions on the Group’s websites
or mobile applications by users
for the period indicated as
measured by Google Analytics.
13 14
1.1
1.1
Number of listings (m)
1.1m
No change
Number of listings represents the
totalnumber of properties being
advertised for sale or to rent at
the endofthe period.
13 14
19,663
18,676
Members (number)
19,663
+5%
Members represent the total
number of UK estate and lettings
agency branches, new home
developers and overseas agency
branches paying subscription
fees to advertise their listings at
the endof period.
Financial statements
15
Zoopla Property Group Plc zpg.co.uk
Corporate governanceStrategic reportOverview
Description Impact Management and mitigation
Assessment
of risk
year-on-year
Macroeconomic conditions
The Group derives most of its revenues from the UK residential property market
andisthusdependent on the market and macroeconomic conditions in the UK.
If the UK economy contracts or if interest rates increase,
average property prices, the number of mortgage approvals,
the volume of transactions in the UK housing market and
estate agents’ and lettings agents’ marketing budgets
could decrease, which could reduce the number of
agents who subscribe for the Group’s services or the
amount they spend on services.
f Regularly reviewing market conditions and indicators to assess
whether any action is required to reduce costs or vary the
products and services.
f Maintaining a balance between different streams of revenues
andprofits in order to provide protection against volatility within
property sales markets.
f Developing revenue streams in related/adjacent markets.
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.
If Agents’ Mutual successfully launches in 2015 with
itsproposed restrictive advertising provision, a portion
ofthe Group’s existing members may terminate their
subscriptions with the Group.
Agents’ Mutual’s launch may also result in fewer
consumers using the Group’s websites, a loss of
advertisers and a loss of market share for the Group.
f Communicating to members the value proposition of advertising
on Group websites.
f Offering attractive and competitive subscription packages
tomembers.
f Increasing consumer brand awareness through marketing.
f Increasing revenue from channels that are not susceptible
toAgents’ Mutual (new homes, commercial, overseas,
onlineagents, data services).
Changing online property landscape
The Group participates in a competitive market with new technology developments,
whichmay impact its ability to offer the best service to customers and members.
New or existing competitors may develop new methods
of working to provide services and products in the
property market that are more attractive to the Group’s
consumers and members, resulting in fewer consumers
using the Group’s websites or mobile applications, aloss
of members and advertisers and a loss of marketshare.
f Increasing user engagement levels by continuing a consumer-centric
approach to product development to extend value to members.
f Continually monitoring and undertaking regular reviews of
competitor strategies that are built into the regular business
planning cycle.
f Maintaining organisational flexibility, allowing fast responses
tonew business opportunities or threats.
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 essential.
Competition for qualified employees is intense and the
loss of a number of qualified employees to competitors,
new entrants or otherwise, or an inability to attract, retain
and motivate additional highly skilled employees required
for the expansion of the Group’s activities could materially
adversely impact the Group’s business, results of
operations, financial condition or prospects.
f Investing in succession planning and improving learning and
development, giving opportunities for employees to upgrade skills.
f Providing competitive compensation packages to staff, including
a blend of short and long-term incentives for managers.
f Maintaining the culture of the Group, which generates significant
staff loyalty within senior and mid-management.
f Planning a structured approach to recruitment using specialist
teams to increase the recruitment of high-quality employees quickly.
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.
Any failure of the internet and/or mobile network
infrastructure generally, or any failure of existing or future
computer or communication systems or software
systems, or any security breach could impair the
processing and storage of data and the day-to-day
management of the Group’s business.
f Operating extensive disaster recovery and business continuity
contingency plans.
f Regular security testing of the IT systems and platforms.
f Ensuring that all systems that the Group relies on are uptodate
and the most secure version.
Risk management and key risks
The effective management of risk is a major
component in delivering on the strategic aims
of the Group.
The principal risks
relating to the Group
and its sector are
summarised in the
tableopposite.
The table also shows how these risks are
managed by the Group and how the Group
plans to mitigate these risks.
The risk factors described opposite are not
anexhaustive list or an explanation of all
risks.Additional risks and uncertainties
relating to the Group, including those that
arenot currently known to the Group or
thatthe Group currently deems immaterial,
may individually or cumulatively also have
amaterial adverse effect on the Group’s
business, results of operations and/or
financial condition.
Remained the same
Risk increased
Risk decreased
16
Zoopla Property Group Plc Annual Report 2014
Description Impact Management and mitigation
Assessment
of risk
year-on-year
Macroeconomic conditions
The Group derives most of its revenues from the UK residential property market
andisthusdependent on the market and macroeconomic conditions in the UK.
If the UK economy contracts or if interest rates increase,
average property prices, the number of mortgage approvals,
the volume of transactions in the UK housing market and
estate agents’ and lettings agents’ marketing budgets
could decrease, which could reduce the number of
agents who subscribe for the Group’s services or the
amount they spend on services.
f Regularly reviewing market conditions and indicators to assess
whether any action is required to reduce costs or vary the
products and services.
f Maintaining a balance between different streams of revenues
andprofits in order to provide protection against volatility within
property sales markets.
f Developing revenue streams in related/adjacent markets.
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.
If Agents’ Mutual successfully launches in 2015 with
itsproposed restrictive advertising provision, a portion
ofthe Group’s existing members may terminate their
subscriptions with the Group.
Agents’ Mutual’s launch may also result in fewer
consumers using the Group’s websites, a loss of
advertisers and a loss of market share for the Group.
f Communicating to members the value proposition of advertising
on Group websites.
f Offering attractive and competitive subscription packages
tomembers.
f Increasing consumer brand awareness through marketing.
f Increasing revenue from channels that are not susceptible
toAgents’ Mutual (new homes, commercial, overseas,
onlineagents, data services).
Changing online property landscape
The Group participates in a competitive market with new technology developments,
whichmay impact its ability to offer the best service to customers and members.
New or existing competitors may develop new methods
of working to provide services and products in the
property market that are more attractive to the Group’s
consumers and members, resulting in fewer consumers
using the Group’s websites or mobile applications, aloss
of members and advertisers and a loss of marketshare.
f Increasing user engagement levels by continuing a consumer-centric
approach to product development to extend value to members.
f Continually monitoring and undertaking regular reviews of
competitor strategies that are built into the regular business
planning cycle.
f Maintaining organisational flexibility, allowing fast responses
tonew business opportunities or threats.
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 essential.
Competition for qualified employees is intense and the
loss of a number of qualified employees to competitors,
new entrants or otherwise, or an inability to attract, retain
and motivate additional highly skilled employees required
for the expansion of the Group’s activities could materially
adversely impact the Group’s business, results of
operations, financial condition or prospects.
f Investing in succession planning and improving learning and
development, giving opportunities for employees to upgrade skills.
f Providing competitive compensation packages to staff, including
a blend of short and long-term incentives for managers.
f Maintaining the culture of the Group, which generates significant
staff loyalty within senior and mid-management.
f Planning a structured approach to recruitment using specialist
teams to increase the recruitment of high-quality employees quickly.
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.
Any failure of the internet and/or mobile network
infrastructure generally, or any failure of existing or future
computer or communication systems or software
systems, or any security breach could impair the
processing and storage of data and the day-to-day
management of the Group’s business.
f Operating extensive disaster recovery and business continuity
contingency plans.
f Regular security testing of the IT systems and platforms.
f Ensuring that all systems that the Group relies on are uptodate
and the most secure version.
Financial statements
17
Zoopla Property Group Plc zpg.co.uk
Corporate governanceStrategic reportOverview
Summary
The 2014 financial year has been one of
continued growth and progression, most
notably with the Group’s Admission to trading
on the London Stock Exchange on 23June
2014. It has also been a year of investment for
the future. The Group has invested significantly in
both marketing and product development in line
withthe long-term plans laid out to shareholders.
The Group has performed strongly in 2014
with significant revenue and adjustedEBITDA
growth of 24% and 35% respectively. The
Group also continues to generate high levels
ofcash, with £31.0 million generated from
operating activities net of tax during the year.
This hasledto the Group being able to return
£35.5million of cash in the form of dividends
to shareholders during theyear. In addition
theDirectors have proposed the payment
ofafinal dividend for 2014 of £4.6 million.
2014 financial performance
Summary income statement
The Group’s summary income statement for the year ended 30 September 2014 is shown below:
2014
£000
2013
£000
Change
%
Revenue 80,230 64,498 +24%
Adjusted EBITDA¹ 39,614 29,433 +35%
Adjusted profit for the year² 26,656 22,330 +19%
Profit for the year 21,077 22,330 -6%
Adjusted basic EPS³
,
4
(pence per share) 6.5 5.4 +20%
Basic EPS (pence per share) 5.1 5.4 -6%
1 Adjusted EBITDA is defined as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items.
2 Adjusted profit for the year is defined as profit for the year after adding back exceptional items. It includes the impact of £3.0 million of one-off accelerated warrant charges
incurred during 2014.
3 Adjusted basic EPS represents adjusted profit for the year divided by the weighted average number of shares in issue for the period.
4 Adjusted basic EPS excluding £3.0 million of one-off accelerated warrant charges incurred during 2014 was 7.2 pence per share, an increase of 33% on the prior year.
Financial review
The Group has invested significantly in both
marketing and product development in line
with long-term plans laid out to shareholders.
“ The Group has performed
strongly in 2014 with
significant revenue
and adjustedEBITDA
growth of 24% and
35%respectively.”
18
Zoopla Property Group Plc Annual Report 2014
Revenue
2014
£000
2013
£000
Change
%
Agency 62,986 51,613 +22%
Developer 8,547 5,719 +49%
Other 8,697 7,166 +21%
Total revenue 80,230 64,498 +24%
The Group’s revenue increased by 24%, from £64.5 million in 2013,
to£80.2 million in 2014. This was principally driven by growth in agent
and developer revenue, which increased by 22% and 49% respectively.
The 49% growth in developer revenue reflects the success of our niche
brand strategy, especially the strong performance of our SmartNewHomes
brand, and our continued focus on improving the value we can offer
toour developer members. The growth in agency and developer
revenue isattributable to both an increase in the number of the Group’s
subscribing members as well as an overall increase in ARPA.
Theincrease in ARPA has been driven by:
f estate agents upgrading their subscription and buying additional
and new innovative products, such as MarketView;
f developers upgrading their subscriptions and increasing spend
ontargeted email campaigns; and
f value generated for the Group’s members through continued
growth in both the number of site visits and leads generated.
Finally, the Group continues to develop its other areas of income with
other revenues increasing by 21%. Other income includes third party
advertising, developing and growing our overseas property offering
and helping customers from the broader property spectrum by
leveraging the largest proprietary property database to offer tailored
data services. Going forward the Group will also look to develop
andgrow its commercial property offering.
Staff costs and other operating expenses
The Group has continued to invest in both its people and brands. Employee
costs increased by £3.1 million to £12.8 million, compared to£9.7 million
in the prior year, as a result of increased headcount to support the
continued growth of the business and the transition to a plc. The Group
also continued its investment in marketing and product development
as it seeks to further build brand awareness, improve theexperience
for both website and mobile users and provide value forits members.
Other operating costs were up 10% on the prior year, driven principally
by the Group’s continued marketing campaign. Total administrative
expenses disclosed within the income statement include certain items
that are excluded for the purposes of calculating the Group’s adjusted
EBITDA. These items are discussed in more detail opposite.
2014
£000
2013
£000
Staff costs 12,759 9,699
Other operating costs 27,857 25,366
Underlying administrative expenses 40,616 35,065
Costs excluded from adjusted EBITDA 11,147 1,471
Total administrative expenses 51,763 36,536
Adjusted EBITDA
The Group considers adjusted EBITDA as a more appropriate measure
of the Group’s underlying business performance. Adjusted EBITDA
isdefined as operating profit after adding back depreciation and
amortisation, share-based payments and exceptional items.
The Group’s adjusted EBITDA grew by 35% from £29.4 million in 2013
to £39.6 million in 2014. This increase was primarily driven by the growth
in revenue during the year as set out above. The Group’s high operational
gearing has led to the increase in adjusted EBITDA exceeding the Group’s
revenue growth and an improvement of c.370bps in the Group’s overall
margins. The increase has been offset slightly by the Group’s continued
investment in both its people and brands.
2014
£000
2013
£000
Operating profit 28,467 27,962
Costs excluded from adjusted EBITDA:
Depreciation and amortisation 1,658 1,373
Share-based payments 3,910 98
Exceptional items 5,579 —
Adjusted EBITDA 39,614 29,433
Adjusted EBITDA margin 49.4% 45.6%
Depreciation and amortisation
Depreciation and amortisation increased by 21% compared with
2013as a result of capital expenditure during the year. The increase
has arisen primarily on depreciation of leasehold improvements
recognised on the Group’s relocation to a new head office during
theyear and afull year’s amortisation of intangible assets arising
ontheacquisition ofTrinity Digital Property Limited in August 2013.
£80.2m
Total revenue (2013: £64.5m)
£39.6m
Adjusted EBITDA (2013: £29.4m)
£26.7m
Adjusted profit(2013:£22.3m)
513.5m
Number of visits (2013: 386.4m)
19,663
Number of members (2013: 18,676)
1.1m
Number of listings(2013:1.1m)
Financial statements
19
Zoopla Property Group Plc zpg.co.uk
Corporate governanceStrategic reportOverview
Adjusted EBITDA continued
Share-based payments
During 2014 the Group continued to operate its Employee Share
Option Scheme and offer warrants for long-term agreements with
certain members. New options and warrants were granted under the
schemes in January 2014. In addition, certain member warrants
became exercisable in full as aresult of the IPO on 23 June 2014,
which led to the recognition of £3.0 million in accelerated share-based
payments charges during the year. Subsequent to the IPO the Group
implemented a number of new Director and employee incentive plans,
full details of which are included within the Directors’ remuneration
report on pages 38 to 61 and Note21 to the financial statements.
Exceptional items
Exceptional items of £5.6 million for 2014 represent one-off IPO costs.
Income tax expense
The Group’s effective income tax rate for 2014 was 26.5% (2013: 21.1%),
which is higher than the average statutory tax rate of 22% for the period
due to non-deductible expenses incurred in relation tothe IPO and the
one-off warrant acceleration discussed above.
Profit for the year
Adjusted profit for the year, which includes £3.0 million of one-off
accelerated warrant charges, has increased by 19% from £22.3 million
in 2013 to £26.7 million in 2014. The increase was driven by the growth
in both revenue and EBITDA. Statutory profit for the year decreased
by6% to £21.1 million due to £5.6 million of IPO expenses incurred
in2014.
Earnings per share (EPS)
The Group has presented its first EPS figures as a listed company.
Comparatives for the 2013 financial year have been stated to reflect
the impact of the Group restructuring prior to Admission. Adjusted basic
EPS, which includes the £3.0 million one-off warrant charge but strips
out the impact of exceptional items, has increased by 20% to 6.5 pence
per share in line with the Group’s increase in revenue and adjusted profit
for the year. Excluding the impact of the £3.0 million one-off warrant
charge, adjusted EPS was 7.2 pence per share, an increase of 33%
on the prior year. The slight decrease in basic earnings per share from
5.4 pence per share to 5.1 pence per share was due to exceptional
expenses incurred on the IPO.
Summary statement of financial position
2014
£000
2013
£000
Goodwill and intangibles 75,194 76,537
PPE 1,457 106
Unpaid share capital — 9,563
Cash and cash equivalents 31,025 28,123
Working capital¹ (5,531) (5,237)
Provisions (634) (551)
Tax assets and liabilities (3,340) (1,254)
Equity 98,171 107,287
1 Current trade and other receivables less trade and other payables.
The Group’s statement of financial position remains strong at
30September 2014 as the business continues to generate high
levelsof cash. Net assets at 30 September 2014 were £98.2 million.
The overall fall in equity compared to the prior year can be attributed
tothe £35.5 million of cash returned to shareholders in the form
ofdividends paid during the year. The Group ended the year with
£31.0million of cash and cash equivalents and net current assets
of£21.7 million.
Summary statement of cash flows
2014
£000
2013
£000
Net cash inflows from operatingactivities 30,981 31,580
Acquisition of subsidiaries, netofcash received (1,497) (4,496)
Acquisition of PPE and intangibles (1,091) (106)
Interest received 202 325
Net cash flows used in investingactivities (2,386) (4,277)
Dividends paid (35,528) (10,158)
Unpaid share capital paid-up 9,563 —
Other financing activities 272 22
Net cash flows used in financingactivities (25,693) (10,136)
Net increase in cash and cashequivalents 2,902 17,167
Cash and cash equivalents at end of period 31,025 28,123
Net cash inflows from operating activities
The Group continues to see high cash generation with net cash inflows
from operating activities of £31.6 million in 2013 and £31.0 million in
2014. The high level of cash generated was primarily driven by the
continued growth in both revenue and adjusted EBITDA.
Cash used in investing activities
The £1.5 million of cash flows used in acquisitions of subsidiaries
during 2014 represents the settlement of deferred consideration
payable from acquisitions made in prior periods. The Group also saw
acash outflow in respect of leasehold improvements during the year
which related to the relocation of the Group to a new head office.
Dividends
During the year the Group paid pre-IPO dividends of £35.5 million.
TheDirectors have proposed a final dividend for 2014 of 1.1 pence
pershare, resulting in a final proposed dividend of £4.6 million.
Thefinal dividend represents 43.5% of the Group’s profits excluding
share-based payments and exceptional items for the period from
1June 2014 to 30 September 2014. The 2014 final dividend will
bepaid on 23 February 2015 to those shareholders on the share
register as at 5 December 2014. The final dividend is subject to
approval at the Group’s AGM on 12 February 2015.
Financial review continued
20
Zoopla Property Group Plc Annual Report 2014
Dividends
2014
£000
2013
£000
Special dividend paid on 13 June 2014 8,986 —
Interim dividend for 2014 paid on 10 April 2014 14,294 —
Final dividend for 2013 paid on 24 October 2013 12,248 —
Interim dividend for 2013 paid on 12 April 2013 — 10,158
Total dividends paid in the year 35,528 10,158
Number of visits
The Group’s number of site visits increased by 33% to 513.5 million
in2014. This increase was primarily due to:
f the Group’s continued focus on brand building – the Group’s core
brand, Zoopla, had 77% prompted brand awareness amongst all
adults nationally in October 2014, up from 26% in November 2010
(source: Harris Interactive); and
f the success of the Group’s mobile applications – the proportion of
visits via a mobile device (smartphones or tablets) increased from
an average of 43% in September 2013 to 57% in September 2014.
Number of leads
The number of leads generated by the Group has increased 12% to
29.2 million in 2014 as the Group continues to grow its audience and
increase the value provided to its members. The Group’s user-centric
approach to product development and track record of continually
improving and developing its websites and mobile applications has led
to enhanced user engagement and therefore higher lead generation.
The number of leads includes over 40,000 individual home sellers
whoused the ZPG valuation tool to contact local agents about selling
their home, equating to around £150 million of potential fees for
ZPGmembers.
Number of members
As at 30 September 2014, the Group had active subscription
contracts with 19,663 members, including 16,373 UK estate and
lettings agency branches and 2,715 new home developers, which
theDirectors believe represents close to 90% of the total number
ofproperty professionals in the UK. The Group also had 575
overseasagents, an increase of 106% from September 2013.
The total of 19,663 members represents a 5% increase from the 18,676
members as at 30 September 2013. This increase was primarily due to
increased activity in the housing market, the Group’s focus on attracting the
remaining UK property professionals that are not currently members and
growth in the number of the Group’s overseas agents.
2014
Number
2013
Number
Change
%
Members – Agents 16,373 15,858 +3%
Members – Developer 2,715 2,539 +7%
Members – Overseas 575 279 +106%
Total members 19,663 18,676 +5%
Number of listings
The Group’s inventory of property listings correlates directly with the
number of members who pay to advertise all of their property listings
across the Group’s platforms, which is in turn affected by the condition
of the UK residential property market and the wider UK economy.
Further, the number of listings featured on the Group’s websites and
mobile applications is influenced by fluctuations caused by seasonality.
The number of listings on the Group’s websites and mobile applications
remained relatively stable at 1.1 million throughout 2014.
ARPA
The Group’s ARPA is calculated as the revenue from member
subscriptions in a given month divided by the total number of
members during the month, measured as a monthly average over
theperiod. Because the Group is committed tomaximising the return
onmarketing investment for members, the Group continues to
innovate with new products and solutions and periodically conducts
ratereviews to ensure that its subscription pricing reflects the value
offered to members. The Group’s average blended ARPA has
increased by 18% from £264 per month in 2013 to £312 in 2014.
ARPA fluctuates across the different businesses within the Group.
2014
£
2013
£
Change
%
Monthly agent ARPA 323 275 +17%
Monthly developer ARPA 270 206 +31%
Monthly overseas agent ARPA 139 143 -3%
Blended ARPA 312 264 +18%
The increase in agent and developer ARPA is driven by the factors
outlined in the revenue section on page 19. Overseas agent ARPA
hasseena small decrease in the year as the Group focused on
growing overseas members and listings.
Factors affecting the Group’s operations
Details of the factors affecting the Group’s results of operations,
including the UK property market, competitors and the Group’s
strategy have been laid out in the remainder of the Strategic report.
Stephen Morana
Chief Financial Ofcer
Financial statements
21
Zoopla Property Group Plc zpg.co.uk
Corporate governanceStrategic reportOverview
Employees
We are committed to investing in our people and providing them with
opportunities to succeed in their career development.
The strong culture of innovation and transparency within the Group has
helped us to attract high-calibre personnel, maintain a strong retention
rate of key staff and create a workforce that is dedicated to delivering
high-quality products and services. We are constantly investing in our
people to ensure that this continues. We achieve this through providing
the appropriate support needed from the very beginning in the form of
a comprehensive induction training programme and we supplement
this with continual training through the “Zoopla Property Group Training
Academy”. This aspect of learning and development is in addition to
the long-term career planning and constant opportunities provided
toemployees to upgrade and transfer their skills in the workplace.
Wedo not have a specific human rights policy, but we respect human
rights and the integrity of individuals (and comply with relevant laws)
inthe way we run the business.
We hold regular Group-wide meetings to drive communication within
the Group and to offer a forum where employees are recognised for
their performance in the workplace. This is an opportunity for employees
to nominate departments and fellow employees for their outstanding
work and for the Group to acknowledge employees’ hard work.
We also offer market competitive benefit packages and carry out regular
internal remuneration benchmarking across the business to ensure that
our staff are rewarded appropriately. Our comprehensive employee
benefits package include more traditional elements such as multiple
bonus schemes, life assurance, private health insurance and a private
pension scheme. We also listen to our employees and continually
adopt innovative suggestions to add to the benefits package, creating
a benefits programme designed for our staff needs, with some examples
being a “move day benefit” where employees are entitled to one day’s
paid leave when they move house, together with John Lewis vouchers,
a “birthday off benefit” where employees are entitled to take their birthday
off work in addition to their holiday entitlement, and a “help-to-buy
scheme” where the Group provides a 12 month interest-free loan
tohelp towards the cost of buying a home.
A recent Best Companies employee survey showed that 91%
ofrespondents felt proud to be part of the Group.
Charitable activity
The Group strives to make a positive difference to charitable causes,
encouraging charitable giving by our employees and contributing
toemployees’ development by supporting their charitable efforts.
Under the Group’s payroll giving scheme, employees can donate
taxefficiently to a charity directly through their pre-tax salary.
TheGroup then matches donations up to a specific amount.
The Group also donates up to £100 to a registered charity linked to
anemployee’s personal fundraising activities. Employees may also
take one day’s paid leave every year to donate their time to a charity.
The Group is a patron supporter of the Prince’s Trust, having been
acorporate member since 2012.
The Group donated atotalof£94,552 to charityduring2014
(2013:£74,265).
Equal opportunity and diversity
The Group is committed to ensuring that there is equal opportunity
and diversity in our employment policies and practices. We believe
thatrecruiting, incentivising and retaining the best talent is key to
theGroup’s success and that this involves treating everyone equally
regardless of their age, sexual orientation, parental responsibilities,
disability, race, nationality, ethnic origin, membership of a trade union,
religion, belief, gender assignment or gender.
Gender diversity
ZPG Limited as at 30 September 2014
Male
Number
Female
Number
Total
Number
Male
%
Female
%
Directors 8 1 9 89% 11%
Senior Management¹ 4 4 8 50% 50%
All other employees 119 98 217 55% 45%
Total 131 103 234 56% 44%
1 Senior Management comprises the Group’s Leadership Team.
We are committed to investing in our people
and providing them with opportunities to
succeed in their career development.
Our people and corporate responsibility
22
Zoopla Property Group Plc Annual Report 2014
Health and safety
We are committed to maintaining a safe workplace for our employees.
It is therefore our policy that all of the Group’s facilities, products and
services comply in all material respects with applicable laws and
regulations governing safety and quality.
Environment
We continue to support energy efficiency throughout our business
activities and remain conscious of preventing any negative impact
wemay have on the environment.
As an online property portal, we naturally operate mostly without
theneed to print out substantial amounts of paper, a practice which
we will continue to maintain. Part of our staff work from two floors
ofan office building and another group of sales staff drive to meet
member clients in designated geographies. We believe that our impact
on the environment is kept to a minimum. We encourage our staff to
take our responsibilities towards protecting the environment seriously
with a commitment to recycling in the office and automated lights in
alloffice areas.
Furthermore, the Group operates a “Bike-to-Work” scheme which
offers our employees an incentive to travel to and from work in an
environmentally friendly way.
Greenhouse gas emissions
Since 1 October 2013 the Companies Act 2006 (Strategic Report
andDirectors’ Report) Regulations 2013 has required all UK quoted
companies to report on their greenhouse gas emissions as part of
theirannual Directors’ report.
A report on our output of greenhouse gas emissions shows that, when
compared with other companies of a comparable size in the same sector,
the Group’s activities produce a very low impact on the environment.
The Group’s scope 1 and 2 emissions for the year to 30 September 2014
are set out below. Scope 1 emissions relate to the Group’s fleet of
vehicles which are used by certain employees for business purposes.
Scope 2 emissions relate to the Group’s electricity usage. This
information is set out below:
CO
²
emissions Emissions per employee
(Tonnes CO
²
e)
(Tonnes CO
²
e/number
of employees)
Scope 1 emissions 368 1.7
Scope 2 emissions 154 0.7
Total 522 2.4
We have measured our greenhouse gas emissions using emissions factors
from the ‘UK Government conversion factors for Company Reporting’.
The period covered is that of the financial year to 30 September 2014.
In order to provide an intensity ratio for our emissions disclosure we
have calculated our greenhouse gas emissions per employee. The
Directors believe that the number of employees is the best indicator
ofthe Company’s size for the purposes of this disclosure. The number
of employees used is the average number of full-time employees over
the measurement period.
This strategic report was approved by the Board of Directors
and was signed on its behalf by:
Alex Chesterman
Chief Executive Ofcer
24 November 2014
Financial statements
23
Zoopla Property Group Plc zpg.co.uk
Corporate governanceStrategic reportOverview
Dear Shareholder
I am pleased to introduce Zoopla Property Group
Plc’s first Corporate governance report since
our successful IPO in June 2014.
The Company listed its Ordinary Shares on the main market of the
London Stock Exchange on 23 June 2014 (Admission). The Listing
Rules of the Financial Conduct Authority, including the UK Corporate
Governance Code (“Governance Code”), have only therefore applied
tothe Company since that date. On listing, the Board committed itself
to the highest standards of corporate governance and undertook to
maintain a sound framework for the control and management of the
Group. In this report we provide details of that framework. Since the
Company listed only recently, ithas not been practicable to fully comply
with the provisions of the Governance Code; however, we shall endeavour
to progress towards full compliance in a reasonable period of time. The key
constituents necessary to deliver a robust structure are in place and,
accordingly, this report includes a description of how the Company has
applied the principles and provisions of the Governance Code since
23June 2014 and how it intends to apply those principles in the future.
Board composition
The Board is currently comprised of a Non-Executive Chairman and
eight other Directors, of whom three are considered to be wholly
independent. The Governance Code recommends that at least half
theboard of directors of a UK listed company, excluding the chairman,
should comprise non-executive directors determined by the board to
be independent in character and judgement and free from relationships
or circumstances which may affect, or could appear to affect, the directors’
judgement. As such, the Company does not currently comply with the
requirements of the Governance Code. On Admission, we stated that
the Company intends to move towards compliance with this requirement
within areasonable period of time and this remains our intention.
Board Committees
In accordance with the Governance Code, the Company has established
Audit, Nomination and Remuneration Committees. AtAdmission, the
Company’s Committees were not compliant in respect of the composition
requirement. However, on 9 July 2014 theBoard passed a resolution
to appoint Robin Klein to the Remuneration Committee and Duncan
Tatton-Brown and SherryCoututo the Nomination Committee and,
bydoing so, havemade the Committees compliant.
I would like to take this opportunity to thank David Dutton for his work
as Chairman prior to the IPO, particularly in respect to the preparation
of the Company for Admission.
Mike Evans
Non-Executive Chairman
Chairman’s introduction to governance
Mike Evans, Non-Executive Chairman
“ The key constituents
necessary to deliver
arobust structure are
inplace.”
We are committed to the highest
standardsof corporate governance.
24
Zoopla Property Group Plc Annual Report 2014
Governance framework
Board Committees
Audit Committee
The Audit Committee’s role is
toassist the Board with the
discharge of its responsibilities
inrelation to financial reporting.
Nomination Committee
The Nomination Committee
assists the Boardin reviewing
thestructure, size and
composition of the Board.
Remuneration Committee
The Remuneration Committee
recommends the Group’s policy
on executive remuneration and
determines the levels of
remuneration for Executive
Directors, the Chairman
andManagement.
The Board
The Board comprises nine Directors. We have two Executive Directors, a Non-Executive Chairman,
three Independent Non-Executive Directors and three further Non-Executive Directors.
Leadership Team
Financial statements
25
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Mike Evans
Non-Executive Chairman
Mike became Chairman of Zoopla Property Group
in 2014. He has been Chairman of Hargreaves
Lansdown Plc since 2009, which he joined as
aNon-Executive Director in 2006. Mike is a
qualified actuary with over 30 years’ experience
inthe financial services industry. He is also a
Non-Executive Director of esure Group Plc and
Chesnara Plc. He is a member of the advisory
board of Spectrum Corporate Finance and is a
Trustee of Wessex Heartbeat. Mike was formerly
Chief Operating Officer at Skandia UK Limited and
he holds a BSc in mathematics from the University
of Bristol.
Alex Chesterman
Founder and Chief Executive Ofcer
Alex founded Zoopla Property Group in 2007 and
remains as the CEO. Previously, Alex co-founded
LOVEFiLM, Europe’s leading online DVD rental
service, which was successfully sold to Amazon.
Alex is recognised as one of the UK’s leading
entrepreneurs, has been a winner of the
Ernst& Young Entrepreneur of the Year Award
and was named by Property Week as oneof the
100 most important people in the UKresidential
property industry. Alex holds anhonours degree in
economics from LondonUniversity.
Stephen Morana
Chief Financial Ofcer
Stephen joined Zoopla Property Group in 2013
and is currently the CFO. He also serves as
a Non-Executive Director of boohoo.com plc.
Previously, Stephen spent over a decade at
BetfairPlc, one of the UK’s most successful
internet businesses. As part of the Betfair
management team since 2002, he became
CFOin 2006 and then served as interim CEO
in2012. Prior to Betfair, he held a number of
senior finance positions, including at Sapient,
theNasdaq-listed technology innovator.
Stephenis a qualified chartered accountant
andamember of the INSEAD alumni.
Board of Directors
Our Board has a diverse
mixof backgrounds, skills
andexperience and its
members are committed
tosetting thestrategic
directionwhilstmaintaining
thehigheststandards of
corporate governance
andinstilling a sound
framework for the control
andmanagement ofthe
Group, driving it to
furthersuccess.
A
Member of the Audit Committee
N
Member of the Nomination Committee
R
Member of the Remuneration Committee
Committee Chairman
Board change as part of the IPO
The Group’s Board of Directors changed at the
IPO to include further independent Directors and
to appoint a Non-Executive Chairman. Prior to
theIPO, the Group’s Board included Simon Kain,
Kevin Beatty and Fred Destin as Directors. These
three Directors stood down from the holding
company of the Group at the IPO.
ZPG is run by an entrepreneurial,
balancedandhighly experienced Board.
N R N
Board gender diversity
n Female
n Male
Board Executive/Non-Executive split
n Executive
n Non-Executive
26
Zoopla Property Group Plc Annual Report 2014
Stephen Daintith
Non-Executive Director
Stephen became a Director of Zoopla Property
Group in 2013. He is currently Finance Director
ofDaily Mail & General Trust Plc, which he joined
in2011. Previously, Stephen was COO and
CFOof Dow Jones, a subsidiary of News Corp.
He has also held several CEO and CFO positions
in various overseas markets for British American
Tobacco. Stephen started his career as an
accountant at Price Waterhouse and holds
adegree from Leeds University.
David Dutton
Non-Executive Director
David became a Director of Zoopla Property Group
in 2012. He serves as Chairman of DMG Information,
a division of Daily Mail & General Trust Plc, as and
is a Non-Executive Director of a number of other
DMGT subsidiaries. David has been an Executive
Director of Daily Mail & General Trust Plc since
1997 and advises the Group on property matters.
He also serves as Chairman of UCL Business Plc.
David is a successful entrepreneur and holds a BA
in economics from Cambridge University and an
MBA from Harvard University.
Grenville Turner
Non-Executive Director
Grenville became a Director of Zoopla
PropertyGroup in 2010. He is currently Group
Non-Executive Chairman of Countrywide Plc,
which he joined in 2006, and is also a
Non-Executive Director of the DCLG, Chairman
ofHamptons International, Chairman of
BellpennyLtd and Chairman of Knightsbridge
Student Housing Limited. He was formerly Chief
Executive, Intelligent Finance and Chief Executive,
Business to Business at HBOS and has previously
served as a Director of St James’s Place Capital Plc,
Sainsbury’s Bank Plc and Rightmove Plc. Grenville
qualified as a chartered banker and holds an MBA
from Cranfield Business School.
Sherry Coutu
Independent Non-Executive Director
Sherry became a Director of Zoopla Property
Group in 2014. She currently serves as a
Non-Executive Director of the London Stock
Exchange Group, Cambridge University Press,
Raspberry Pi and Artfinder. She also serves on the
advisory boards of LinkedIn and Care.com and is
an External Non-Executive Director of Cambridge
University. Previously, she has served as a Director
of New Energy Finance, Jarvis Plc and RM Plc
and formerly she founded Interactive Investor
International Plc. Sherry was awarded a CBE
in2013 for “Services to Entrepreneurship” and
she holds an MBA from Harvard, an MSc from
theLondon School of Economics and a BA
fromthe University of British Columbia.
Duncan Tatton-Brown
Senior Independent Non-Executive Director
Duncan became a Director of Zoopla Property
Group in 2014. He is currently CFO of Ocado
Group Plc, which he joined in 2012. Previously,
Duncan was CFO of Fitness First Plc and prior to
that was Group Finance Director of Kingfisher Plc,
one of the world’s largest home improvement
retailers. He has held senior finance positions at
B&Q Plc, Virgin Entertainment Group and Burton
Group Plc and was also a Non-Executive Director
of Rentokil Initial Plc. Duncan holds a master’s
degree in engineering from King’s College,
Cambridge and is a member of the Chartered
Institute of Management Accountants.
Robin Klein
Independent Non-Executive Director
Robin became a Director of Zoopla Property Group
in 2012. He is currently a venture partner of Index
Ventures, a founding partner of The Accelerator
Group and serves as a Non-Executive Director
ofMoneySupermarket Plc. Robin is a serial
entrepreneur and an angel investor in a number
ofthe UK’s leading high-growth internet businesses.
Companies he has backed at an early stage
include LastMinute.com, Agent Provocateur,
LOVEFiLM, Wonga, Mind Candy (Moshi Monsters),
Fizzback, Tweetdeck, Graze, FreeAgent, Skimlinks
and Moo.
Financial statements
27
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
N N NA A AR R R
The role of the Board
The Board consists of three independent Non-Executive Directors,
fourNon-Executive Directors (including the Non-Executive Chairman)
and two Executive Directors. Biographies of all members of the Board
appear on pages 26 and 27.
The Board is collectively responsible for the long-term success of
theCompany and for leading and controlling the Group and has
overallauthority for the management and conduct of the Group’s
business, strategy and development. The Board is also responsible
forensuring the maintenance of a sound system of internal control
andrisk management (including financial, operational and compliance
controls and for reviewing the overall effectiveness of systems in place)
and for the approval of any changes to the capital, corporate and/or
management structure of the Group.
The CEO and CFO sit on the Board and two levels of management sit
below the Board: the Leadership Team and the Senior Management
Team, each of which are led by the CEO. The CEO and CFO therefore
act as a bridge between Management and the Board. The Board
delegates to Management the day-to-day running of the business
within defined parameters. Board meetings are scheduled to coincide
with key events in the corporate calendar and in future this will include
the interim and final results and the Annual General Meeting (AGM).
The Board has adopted a formal schedule of matters reserved
foritsapproval and has delegated other specific responsibilities
toitsCommittees. This schedule sets out key aspects of the affairs
ofthe Company which the Board does not delegate, including:
f responsibility for the overall management of the Group;
f approval of the Group’s business strategy and objectives,
budgetsand forecasts and any material changes to them;
f monitoring the delivery of the Group’s business strategy and
objectives and responsibility for any necessary corrective action;
f oversight of operations, ensuring adequate systems of internal
controls and risk management are in place, ensuring maintenance
of accounting and other records and ensuring compliance with
statutory andregulatory obligations;
f approval of any extension of the Group’s activities or any decision
to cease to operate any material part of the Group’s business;
f approval of any changes relating to the Group’s capital structure and
material changes to the Group’s management and control structure;
f approval of the financial statements, annual report and accounts,
material contracts and major projects;
f approval of the dividend policy;
f ensuring a sound system of internal control and risk management;
f approval of any major capital project;
f approval of communications with shareholders and the market;
f determining changes to structure, size and composition of the Board;
f determining remuneration policy for the Directors and the Leadership
and Senior Management teams and approval of the remuneration
of the Non-Executive Directors; and
f approval of all major policies within the Group, including the share
dealing, anti-bribery and health and safety policies.
All Directors have access to the advice and services of the Company
Secretary, who has responsibility for ensuring compliance with the
Board’s procedures. All the Directors have the right to have their
opposition to, or concerns over, any Board decision noted in the
minutes. The Board has adopted guidelines by which Directors may
take independent professional advice at the Company’s expense
intheperformance of their duties.
The Chairman and the Non-Executive Directors met informally once
without the Executives present in the period between the listing on
23June 2014 and 30 September 2014 and will continue to hold
suchmeetings periodically.
Board Committees
Subject to those matters reserved for its decision, the Board has
delegated to its Audit, Nomination and Remuneration Committees
certain authorities. There are written terms of reference for each
ofthese Committees, available on the Group’s corporate website,
www.zpg.co.uk, and separate reports for each Committee are
includedin this Annual Report from pages 32 to 61.
Compliance with the UK Corporate Governance Code 2012: Introduction
The Board is committed to maintaining high standards of corporate governance andmaintaininga sound framework
forthecontrol and management of the Group.
The UK Corporate Governance Code 2012 applies to financial years beginning on or after 1October 2012.
A copy of the Governance Code can be found at www.frc.co.uk.
This report, which incorporates reports from the Audit and Nomination Committees onpages 32to 37 together
withtheStrategic report, the Directors’ remuneration report onpages 38 to 61 and the Directors’ report on
pages 62 to 64, describes how the Company hasapplied the relevant principles of the 2012 Governance Code.
A new version of the Governance Code was published in September 2014 and applies to financial years beginning
on or after 1 October 2014. The Company will therefore apply the principles of the new Code going forward.
Corporate governance statement
28
Zoopla Property Group Plc Annual Report 2014
Role of the Chairman and Chief Executive Officer
The Board is chaired by Mike Evans, who was appointed on 1 May 2014. The Chairman is responsible for the effective leadership of the Board,
having regard for the interests of all stakeholders and promoting high standards of corporate governance. Alex Chesterman is the Chief Executive
Officer and is responsible for implementing the Board’s strategy and leading the Senior Management Team. The role is distinct and separate to
that of the Chairman and clear divisions of accountability and responsibility have been agreed by the Board and are set out in writing, including
thefollowing:
Role of Chairman
f To run the Board effectively by ensuring meetings are
held with appropriate frequency.
f To ensure the frequency and depth of evaluation of the
performance of the Board and its Committees is in
compliance with best practice.
f To chair the Nomination Committee to lead the process
for Board appointments and identify and recommend
candidates for the approval of the Board.
f To promote a culture of openness and debate, in
particular by facilitating the effective contribution of
Non-Executive Directors, andensuring constructive
relations between Executive and Non-ExecutiveDirectors.
f To hold meetings with the Non-Executive Directors
without ExecutiveDirectors or Senior
Managementpresent.
f To ensure that shareholders’ views are communicated
to the Boardas a whole so that all Directors develop
an understanding oftheir views.
Role of Chief Executive Officer
f To manage the Group on a day-to-day basis within
theauthority delegated by the Board.
f To ensure, with the Executive team, that Board
decisions are implemented effectively.
f To advise and make recommendations in respect
ofBoard nominations and succession planning.
f To make recommendations on remuneration policies,
Executive remuneration and terms of employment
forsenior employees.
f To keep the Chairman informed of all
importantmatters.
f To develop and propose Group strategy, annual
plansand commercial objectives to the Board.
Financial statements
29
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Corporate governance statement continued
Role of the Senior Independent Director (SID)
The Governance Code recommends that the Board of Directors
ofacompany with a premium listing on the official list of the London
Stock Exchange (“Official List”) should appoint one of the Independent
Non-Executive Directors to be the Senior Independent Director to provide
a sounding board for the Chairman and to serve asan intermediary for
the other Directors when necessary. The Senior Independent Director
should be available to shareholders if they have concerns which the
normal channels through the Chairman, CEO or other Executive Directors
has failed to resolve orfor which isinappropriate. Duncan Tatton-Brown
has been appointed as the Senior Independent Director.
Board balance and independence
As mentioned in the Chairman’s statement, the Company is not
currently compliant with this recommendation but intends to become
compliant within a reasonable period of time.
The Company has a relationship agreement (“the Relationship Agreement”)
in place with its principal shareholder, DMGT. The principal purpose
ofthe Relationship Agreement is to ensure that the Company and its
subsidiaries are capable of carrying on their business independently
ofDMGT, that transactions and relationships with DMGT are at arm’s
length and on normal commercial terms, and that the goodwill,
reputation and commercial interests of the Company are maintained.
Under the terms of the Relationship Agreement, DMGT can appoint
two Directors, providing it holds more than 25% of the votes exercisable
at general meetings of the Company, and one Director, providing it
holds more than 10% of those votes.
The Relationship Agreement will remain in force for so long as (a)the
shares of the Company are listed on the premium listing segment of
the Official List and (b) DMGT or any of its associates together are
entitled to exercise or to control the exercise of 10% ormore of the
votes which are generally exercisable at general meetings of the
Company. The two Directors appointed by DMGT are David Dutton
and Stephen Daintith.
Grenville Turner’s current role at Countrywide plc, a customer and
major shareholder of the Group, means that, at present, we do not
deem him to be independent.
Length of appointments
Non-Executive appointments to the Board are for a period of up
tothree years, extendable by no more than two additional three
yearperiods.
Information, meetings and attendance
The Board met on a number of occasions prior to the listing. Since then the Board has met twice before the financial year end to review operational
performance. The Board has a full programme of Board meetings planned for 2015 and intends to meet six times. At these meetings, the Board
will review the Company’s long-term strategic direction and financial plans and monitor the Company’s performance against an agreed strategy
and business plan. In addition, the Board will agree key objectives for the Chief Executive Officer on an annual basis and will then monitor his
performance against these objectives. At the Board meeting held on 9 July 2014, seven of the nine Directors attended. At the Board meeting
heldon 25 September 2014, eight of the nine Directors attended. Due to the short time period between the IPO and the remaining Board
datesfor 2014, it was not possible to arrange meetings at which all Directors were available to join due to existing commitments.
Date of
appointment to the Plc Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Total meetings 9¹ 4² 2³ 0
Alex Chesterman 23 April 2014 9/9 — 1/1 —
Stephen Morana 23 April 2014 9/9 — — —
Mike Evans (Chairman) 1 May 2014 6/6 — 1/1 —
Duncan Tatton-Brown 1 May 2014 5/6 1/1 1/1 —
Sherry Coutu 1 May 2014 4/6 1/1 0/1 —
Robin Klein 1 May 2014 9/9 1/1 1/1 —
Grenville Turner 21 May 2014 9/9 3/3 — —
David Dutton 21 May 2014 9/9 — 2/2 —
Stephen Daintith 21 May 2014 8/9 4/4 — —
1 In addition to the nine Board meetings referred to in the table, a further two meetings were held, as part of the IPO process, to deal with the incorporation and reorganisation
procedures necessary to set up the Plc entity. Alex Chesterman and Stephen Morana attended both these meetings; Mike Evans attended one of them. The meetings included
in the table include the Board meetings held by ZPG Limited, the Group’s previous parent company.
2 This figure includes the Audit Committee meetings held by ZPG Limited, the Group’s previous parent company.
3 This figure includes the Remuneration Committee meetings held by ZPG Limited, the Group’s previous parent company.
The Chairman is responsible for ensuring that the Directors receive accurate, timely and clear information. Prior to each scheduled Board meeting,
a pack is circulated in respect of the corresponding financial period, which includes an update on key performance targets, trading performance
against budget and includes detailed financial data and analysis. Boardpacks are distributed five working days prior to each meeting inaccordance
with the terms of reference to provide sufficient time forDirectors to review their papers in advance. If Directors are unable to attend a Board
meeting for any reason, they nonetheless receive therelevant papers and are consulted prior to the meeting andtheir views are made known
tothe other Directors.
30
Zoopla Property Group Plc Annual Report 2014
Conflicts of interests
The duties to avoid potential conflicts and to disclose such situations
for authorisation by the Board are the personal responsibility of each
Director. All Directors are required to ensure that they keep these
duties under review and to inform the Company Secretary on an
ongoing basis of any change in their respective positions.
The Company’s conflict of interest procedures are reflected in its Articles
of Association (“Articles”). In line with the Companies Act 2006, the
Articles allow the Directors to authorise conflicts and potential conflicts
of interest, where appropriate. The decision to authorise aconflict can
only be made by non-conflicted Directors. TheBoard considers conflicts
or potential conflicts at each Boardmeeting.
The Articles require the Company to indemnify its officers, including
officers of wholly owned subsidiaries, against liabilities arising from
theconduct of the Group’s business, to the extent permitted by law.
The Group has therefore purchased Directors’ and officers’ liability
insurance during the year.
Development
In preparation for listing, all Directors received an induction briefing
from the Company’s legal advisers on their duties and responsibilities
as Directors of a publicly quoted company. In addition, the new
Non-Executive Directors have met keymembers of Senior Management
in order to familiarise themselves with the Group.
During 2015, the Chairman will review and agree with each
Non-Executive Director their individual training and development
needs. In addition, under the guidance of the Chairman, the
CompanySecretary will establish a formal induction training
processfor new Directors.
Board evaluation
Given that the majority of the Directors were only appointed in the
months immediately preceding the listing in June 2014, the Board
believes that a meaningful evaluation of the Board can only take place
after it has been working together for a reasonable time. An evaluation
policy will be developed and implemented before the end of 2015.
TheSenior Independent Director, Duncan Tatton-Brown, together
withthe Independent Non-Executive Directors, will evaluate the
performance of the Chairman.
Election of Directors
The Board can appoint any person to be a Director, either to fill
avacancy or as an addition to the existing Board. Any Director so
appointed by the Board shall hold office only until the next following
AGM and shall then be eligible for election by the shareholders.
The forthcoming AGM on 12 February 2015 will be the Company’s
firstsince registering as a public company. In accordance with the
Governance Code, all the Directors will be offering themselves for
election at the AGM to be held at the offices of the Company’s
solicitors, Freshfields Bruckhaus Deringer LLP, on 12 February 2015,
full details of which are set out in the notice of meeting accompanying
this Annual Report.
As noted above, the current Board has been in post for only a
shortperiod of time and so a formal evaluation of the performance
ofthe Board, its principal committees and the individual Directors
would be of limited value. However, pending the development and
implementation of a formal evaluation process during 2015, the
Boardis satisfied that each Director remains competent to
dischargehis/her responsibilities as a member of the Board.
External appointments
The Executive Directors may accept outside appointments provided
that such appointments do not in any way prejudice their ability to
perform their duties as Executive Directors of the Company.
At the time of his appointment as Chairman it was noted that
MikeEvans was Chairman of Hargreaves Lansdown Plc but
theviewwas taken that this would not adversely impact his
abilitytocarry out his role.
Alex Chesterman is currently a Director of Devalink Limited, Hoopla Limited
and Barcote Park Management Limited. Stephen Morana is currently
aNon-Executive Director of Boohoo.com plc. These appointments
arenot deemed to adversely impact the Directors’ ability to carry
outtheir roles.
The Non-Executive Directors’ appointment letters anticipate a time
commitment of 10 days per year, recognising that there is always
thepossibility of an additional time commitment and ad hoc matters
arising from time to time, particularly when the Company is undergoing
a period of increased activity. The average time commitment inevitably
increases where a Non-Executive Director assumes additional
responsibilities such as being appointed to a Board Committee.
Relations with shareholders
As part of the IPO “preparation” in 2014, the Board met a large number
of investors. The meetings involved the Chief Executive Officer,
Chief Financial Officer as well as other Senior Management.
As part of its future investor relations programme, the Executive
willaim to maintain an active dialogue with its key stakeholders,
including institutional investors, to discuss issues relating to the
performance of the Group including strategy and new developments.
The Non-Executive Directors are available to discuss any matter
stakeholders might wish to raise.
Investor relations activity and a review of the share register are standing
items on the Board’s agenda. Reports from analysts and brokers are
circulated to the Board. The Chairman and Non-Executive Directors
are available to attend investor relations meetings or to request
meetings with investors or analysts independent of the Group’s
management, if required.
Financial statements
31
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Audit Committee report
Chairman’s introduction
The Audit Committee was established by a
resolution of the Board dated 4 June 2014,
atwhich meeting terms of reference were
considered and adopted.
The Board further resolved to appoint Sherry Coutu and Robin Klein
tothe Committee under my Chairmanship with Stephen Daintith
attending as an observer for DMGT. Under its terms of reference,
theCommittee is required to meet at least three times in each year
atappropriate times in the reporting and auditing cycle.
The 2014 financial year has seen a number of regulatory changes,
which have reinforced the Audit Committee’s role to assist the
Boardtodischarge its duty to ensure that the Annual Report,
thefirstasa public company, taken as a whole, is fair, balanced
andunderstandable. In this report, I explain how the Committee
hasdischarged itsresponsibilities, with specific reference to the
requirement of the UKCorporate Governance Code toaddress
significant reporting issues for the financial statements andto
explainhow the Committee assessed external audit effectiveness
andsafeguards in relation totheprovision by theauditorof
non-auditservices.
Duncan Tatton-Brown
Chairman, Audit Committee
“ The 2014 financial year
has seen a number of
regulatory changes, which
have reinforced the Audit
Committee’s role.”
The Audit Committee’s role
is to assist theBoard in relation
to financial reporting.
32
Zoopla Property Group Plc Annual Report 2014
Composition
The Audit Committee is chaired by Duncan Tatton-Brown and its other
members are Robin Klein and Sherry Coutu. Stephen Daintith attends
as an observer appointed by DMGT. The Governance Code recommends
that all members of the Audit Committee are Non-Executive Directors,
independent in character and judgement and free from any relationship
or circumstance which may, could or would be likely to, orappear to,
affect their judgement and that one such member has recent and relevant
financial experience. The Board considers that, byvirtue of his current
and former Executive and Non-Executive roles, details of which are
set out on page 27, Duncan Tatton-Brown has recent and relevant
financial experience and the Company complies with the requirements
of the Governance Code in this respect. The Company further considers
that the attendance of an observer at Committee meetings will not
prejudice the independence or proper functioning of the Committee.
The Chief Executive Officer and Chief Financial Officer attend meetings
of the Audit Committee by invitation, as do Deloitte LLP and other
members of Management or the Board as appropriate.
Roles and responsibilities
The Audit Committee assists the Board in discharging its responsibilities
with regard to financial reporting, external and internal audits and controls,
including reviewing and monitoring the integrity of the Group’s annual
and interim financial statements, reviewing and monitoring the extent
of the non-audit work undertaken by the external auditor, advising
onthe appointment of the external auditor, overseeing the Group’s
relationship with its external auditor, reviewing the effectiveness of the
external audit process and reviewing the effectiveness of the Group’s
internal controls. The ultimate responsibility for reviewing and approving
the annual report and accounts and the half-yearly reports remains
with the Board. The Audit Committee will give due consideration
tolaws and regulations, the provisions of the UK Corporate
Governance Code and the requirements of the Listing Rules.
The Audit Committee reviews the content of the Annual Report and
Accounts and advises the Board on whether, taken as a whole, they
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company’s performance,
business model and strategy.
The full terms of reference are available on the Company’s corporate
website at www.zpg.co.uk.
Activities of the Audit Committee
Following Admission, the Audit Committee met on 20 October 2014
todiscuss the progress of the audit plan and risk management procedures.
Prior to listing, an Audit Committee of the Group’s previous parent company,
ZPG Limited, met. In November 2013, thisCommittee discussed the full
year results for 2013 and in February 2014 reviewed the Company’s risk
profile. In May 2014, the Committee discussed half year results, risk
and compliance. Prior to the IPO, all of these meetings were chaired
by Stephen Daintith.
On 20 November 2014, the Audit Committee reviewed and approved
for consideration by the Board the financial results for the year ended
30 September 2014. As part of that review process, the members
ofthe Committee reviewed the Annual Report, the adequacy of the
disclosure with respect to going concern and whether the Annual Report
taken as a whole was fair, balanced and understandable.
Thisadditional review by the Audit Committee, supplemented by
advice received from external advisers during the drafting process,
assisted the Board in determining that the report is fair, balanced
andunderstandable at the time that itisapproved. The Committee
considered the appropriateness of preparing the accounts on a going
concern basis, including consideration of forecast plans and supporting
assumptions and concluded that theCompany’s financial position
wassuch that it continued to be appropriate for accounts to be
prepared on a going concern basis.
Significant issues considered in relation to the financial statements
The Committee, together with Management and the Group’s external
auditor, considered the following significant matters in relation to the
financial statements and how these were addressed.
Revenue recognition
The Group’s revenue recognition is limited in complexity. The majority
of revenue relates to recurring subscriptions which are predictable
in nature and invoiced monthly. However, the Group operates a large
volume of agreements, with varying terms, which may include differences
in the timing of the billing of subscription fees and the actual subscription
period. There is a risk that revenues may not be recorded in the correct
accounting period. Management has discussed the composition and
the recognition principles of each revenue stream and the controls
thereon with the Committee during the year. The Committee is satisfied
that no issues have been identified or arisen. Furthermore, revenue
recognition was an area of focus for the Group’s external auditor during
the audit. The external auditor has reviewed the Group’s revenue
streams on amonth-by-month basis for anomalies and has performed
detailed testing over the Group’s revenue.
Group reorganisation and IPO
During the year the Group was admitted to trading on the London Stock
Exchange through an Initial Public Offering (IPO). As detailed inNote 20
to the financial statements, the Group was subject to arestructuring prior
to the IPO which resulted in the insertion of ZooplaProperty Group Plc
as the new parent company of the Group. The accounting for the
transaction has involved the use of merger accounting and the creation
of a non-distributable merger reserve inthe new parent company.
Theaccounting treatment has been reviewed and agreed by the Group’s
external auditor. In order toprovide meaningful and comparable
information to shareholders, certain numbers in the financial statements
for the year ended 30September 2013 have been disclosed as if the
Group restructuring had occurred at the beginning of the prior period.
Both the Committee and the external auditor are comfortable that this
disclosure provides the most relevant and understandable information
for shareholders. Finally, £5.6 million of expenses relating directly to the
Financial statements
33
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Audit Committee report continued
Significant issues considered in relation to the financial
statements continued
Group reorganisation and IPO continued
IPO have been identified by Management as exceptional and disclosed
separately. The Committee is satisfied that these costs fall outside the
recurring operations of the business and therefore their disclosure as
exceptional is considered reasonable.
Share-based payments
The Group operates a number of share-based payment schemes
including both employee share options and warrants issued to certain
members. The valuation methods and the related assumptions for
these schemes are subject to Management judgement. There is a
riskthat these instruments are not valued correctly and therefore an
incorrect charge is recognised in the financial statements. The Group’s
external auditor has independently audited the valuation models used
by Management and the assumptions used in calculating the Group’s
IFRS 2 charge. As a result of Admission, the Group announced a
number of new incentive schemes which will take effect in 2015.
Valuations for grants under these new schemes will be reviewed
bytheGroup’s external auditor.
Assessment of effectiveness of the external audit process
The Audit Committee oversees the relationship with the external
auditor and considers the re-appointment of the Company’s auditor,
Deloitte LLP, before making a recommendation to the Board to be put
to shareholders. As part of this responsibility, the Committee approved
the audit plan for the year ended 30 September 2014 and reviewed
the auditor’s findings and Management representation letters. Prior to
recommending the appointment of Deloitte at the forthcoming AGM
tothe Board, the Audit Committee reviewed the extended audit process,
the performance of the auditor and its ongoing independence, taking
into consideration input from Management, responses to questions
from the Committee and the audit findings reported to the Committee.
Based on this review, the Committee concluded that the external audit
process had been run efficiently and that Deloitte has been effective
inits role as external auditor.
Approach to appointing the external auditor and how objectivity
and independence are safeguarded relative to non-audit services
As noted earlier in this report, the current Audit Committee was constituted
on 4 June 2014 ahead of Admission. In the run up to Admission, the
Board implemented a number of governance measures. The following
Audit Committee policies remain to be developed:
f a policy on the independence of the external auditor consistent with
the ethical standards published by the Audit Practices Board; and
f a policy on the engagement of the external auditor for the provision
ofnon-audit services.
It is the Board’s intention to adopt policies covering both these topics
during 2015.
Independence safeguards
In accordance with best ethical standards, externalauditors are required
to adhere to a rotation policy whereby the audit engagement partner
isrotated after five years. The current audit engagement partner was
appointed in 2012 but, due to his previous role as the audit engagement
partner for certain of the Company’s significant subsidiaries, can serve
as the audit engagement partner for only two years after the Group
became listed. The external auditoris also required periodically to assess
whether, in its professional opinion, it is independent and those views
are shared withthe Audit Committee.
The Committee notes that FTSE 250 companies should put the audit
outto tender at least every 10 years. To avoid significant disruption the
Financial Reporting Council has provided details of transitional arrangements
which would mean that as Deloitte became the auditor after 2000 we
would not need to undertake a tender review until 2020.
The Committee has authority to take independent advice as it deems
appropriate in order to resolve issues on auditor independence.
Nosuch advice has been required to date.
Independence assessment by the Audit Committee
Based on the fact that the audit engagement partner rotation policy has
been complied with, the Committee is satisfied that the independence
of the external auditor is not impaired. Furthermore, the level of fees paid
for non-audit services does not jeopardise its independence. Audit and
non-audit fees are set out in Note 5 to the financial statements.
The Audit Committee noted that the auditor had provided services
onthe IPO transaction that were paid by the previous parent company,
ZPG Limited. The Committee believes sufficient and appropriate safeguards
were in place for this work and the external auditor remained independent
throughout the period.
The Committee has assessed the performance and independence of
the external auditor and recommended to the Board the re-appointment
of Deloitte LLP as auditor until the conclusion of the AGM in 2015.
Internal audit
The Committee has recommended to the Board that it is not currently
necessary to appoint an internal audit function but rather to focus on
specific areas with ad hoc reviews (e.g. cyber security) and review the
need for an internal audit function on an ongoing basis. The Committee
based its decision on several factors including a relatively clear business
model with a simple Group structure and a single country focus, an open
and accountable culture with clear authority limits and the assurance
gained from reports from Management and reports provided by the
external auditor with regard to internal controls and risk management.
34
Zoopla Property Group Plc Annual Report 2014
Internal control and risk management
The Board is responsible for the overall system of internal controls forthe
Group and for reviewing its effectiveness. In accordance with the FRC
Internal Control: Guidance to Directors publication, it carries out such
areview at least annually, covering all material controls including financial,
operational and compliance controls and risk management systems.
The system of internal controls is designed to manage rather than
eliminate the risk of failure to achieve business objectives and can
onlyprovide reasonable and not absolute assurance against material
misstatement or loss.
The Group has operating policies and controls in place covering a range
of issues including financial reporting, capital expenditure, business
continuity and information technology and appropriate employee policies.
These policies are designed to ensure the accuracy and reliability of
financial reporting and govern the preparation of financial statements.
The Board is ultimately responsible for the Group’s system of internal
controls and risk management and discharges or intends to discharge
its duties in this area by:
f holding regular Board meetings to consider the matters reserved
forits consideration;
f receiving regular Management reports which provide an
assessment of key risks and controls;
f scheduling annual Board reviews of strategy including reviews
ofthe material risks and uncertainties facing the business;
f ensuring there is a clear organisational structure with defined
responsibilities and levels of authority;
f ensuring there are documented policies and procedures
inplace;and
f scheduling regular Board reviews of financial budgets, forecasts
and covenants with performance reported to the Board monthly.
In reviewing the effectiveness of the system of internal controls, the
Committee will, going forward:
f review the risk register compiled and maintained by senior managers
within the Group and question and challenge where necessary;
f regularly review the system of financial and accounting controls; and
f report to the Board on the risk and control culture within the Group.
In respect of the Group’s financial reporting, the Finance Department
isresponsible for preparing the Group financial statements using a
well-established consolidation process and ensuring that accounting
policies are in accordance with International Financial Reporting
Standards. All financial information published by the Group is subject
to the approval of the Audit Committee.
There have been no changes in the Company’s internal control during
the financial year under review that have materially affected, or are
reasonably likely to materially affect, the Company’s control over
financial reporting.
The Board, with advice from the Audit Committee, is satisfied that an
effective system of internal controls and risk management is in place
which enable the Company to identify, evaluate and manage key risks
and which accord with the guidance provided by the FRC Internal
Control: Guidance to Directors. These processes have been in place
since the start of the financial year and up to the date of approval of
the accounts. Further details of risk management frameworks and
specific material risks and uncertainties facing the business can be
found on pages 16 to 17.
Whistleblowing
The Group has in place a whistleblowing policy, the “Speak-Up Policy”,
which encourages employees to report any malpractice or illegal acts
or omissions or matters of similar concern by other employees or former
employees, contractors, suppliers or advisers using a prescribed reporting
procedure. The policy facilitates the reporting of any ethical wrongdoing
or malpractice or suspicion which may constitute ethical wrongdoing
or malpractice. Examples include bribery, corruption, fraud, dishonesty
and illegal practices which may endanger employees or third parties.
There have been no instances of whistleblowing during the year
underreview.
Control environment
The Board is committed to business integrity, high ethical and moral
values and professionalism in all its activities. The Group has policies
inplace for:
f anti-bribery;
f dealing with third parties; and
f gifts and entertainment.
Accountability
The Board is required to present a fair, balanced and understandable
assessment of the Company’s financial position and prospects. The
responsibilities of the Directors and external auditor are set out on
pages 65 and 68. As set out in the Directors’ report, the Directors
consider the Company’s business to be a going concern.
Duncan Tatton-Brown
Chairman, Audit Committee
Financial statements
35
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Nomination Committee report
Chairman’s introduction
My role as Chairman of the Nomination
Committee complements that of Chairman
ofthe Board as one of my key responsibilities
is to ensure we have the right people with
theright skills on the Board and in Senior
Management positions. During the forthcoming
year, I am therefore committed to ensuring that
succession planning is a key focus for the
Nomination Committee.
The Nomination Committee is responsible for identifying and nominating
candidates for the approval of the Board to fill Board vacancies and
tokeep under review the balance of skills, knowledge and experience
on the Board to ensure the orderly evolution of the membership of the
Board and to make recommendations to the Board on composition
and balance. The Committee will be proactive in discharging these
responsibilities, cognisant of the importance of succession planning
and the need to align Board and Executive leadership skills to the
Company’s long-term strategy.
Mike Evans
Chairman, Nomination Committee
“ During the forthcoming
year, I am committed to
ensuring that succession
planning is a key focus
for the Nomination
Committee.”
The Nomination Committee’s role
istoensure we have the right people.
36
Zoopla Property Group Plc Annual Report 2014
Composition
The Nomination Committee is chaired by Mike Evans and its other
members are Alex Chesterman, Sherry Coutu, Robin Klein and
DuncanTatton-Brown. David Dutton attends as an observer appointed
by DMGT. The Governance Code recommends that a majority of the
Nomination Committee be non-executive directors, independent in
character and judgement and free from any relationship or circumstance
which may, could or would be likely to, or appear to, affect their judgement.
As such, the Board considers that the Company complies with the
Governance Code. The Company considers that the attendance of an
observer at Committee meetings will not prejudice the independence
orproper functioning of the Committee.
The Nomination Committee will meet as often as it deems necessary
but in any event at least twice a year.
Roles and responsibilities
The Nomination Committee assists the Board in discharging its
responsibilities relating to the composition and make-up of the Board
and any committees of the Board. It is also responsible for periodically
reviewing the Board’s structure and identifying potential candidates to
be appointed as Directors or Committee members as the need may
arise. The Nomination Committee is responsible for evaluating the
balance of skills, knowledge and experience and the size, structure
and composition of the Board and Committees of the Board, retirements
and appointments of additional and replacement Directors and Committee
members and makes appropriate recommendations to the Board on
such matters.
The full terms of reference are available on the Company’s corporate
website at www.zpg.co.uk.
Activities of the Nomination Committee
The Nomination Committee did not meet formally between 23 June 2014
and 30 September 2014. The first meeting of the Nomination Committee
took place on 20 November 2014. Prior to the creation of the Nomination
Committee, as part of the preparation for the IPO, the Board received
a detailed report on the skills and experience of the members of the
Management Team as part of its consideration of succession planning.
Diversity
Whilst the Company pursues diversity, including gender diversity,
throughout the business, and the Board endorses the aspirations of
the Davies Review on Women on Boards, the Board is not committing
to any specific targets. Our Board currently has one female Director
(11% of the Board). We will give due consideration to Board balance
and diversity when making new appointments to the Board. The Board
will engage executive search firms who have signed up to the voluntary
code of conduct setting out the seven key principles of best practice
to abide by throughout the recruitment process and will continue to
follow a policy of appointing talented people at every level to deliver
high performance. The Board will also ensure that its own development
in this area is consistent with its strategic objectives and enhances
Board effectiveness.
Mike Evans
Chairman, Nomination Committee
Financial statements
37
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Directors’ remuneration report
Dear Shareholder
As the Chairman of the Remuneration Committee,
I am pleased to present the report of the Board
covering the Remuneration Policy and practice
for the first time as a listed company. In the
prospectus we set out some of our core
principles for our Remuneration Policy.
These have been further developed and are set out in detail in the
Policy report which will be put to shareholders for a binding vote.
We have continued with the pre-IPO bonus plan for the remainder
ofthis financial year as the targets had been set before IPO and
itwasnot appropriate to change the plan part way through the year.
Allthe other arrangements operated by the Company during the year
were inline with the policy summarised in the prospectus and which
are now set out in full in this report.
During the year the Group delivered strong performance, as summarised
on page 15. Revenue increased by 24.4% compared to the prior year
as the Group continues to grow, supported by our continued marketing
campaign during the year. The Group also saw strong growth in adjusted
EBITDA, increasing by 34.6% from the prior year. This performance
has been reflected in the level of payments under our incentive plans.
The new incentive schemes, established during the year, have been
designed to support the principles of our Remuneration Policy which
are described on pages 42 to 54. These policies have been developed
to align with the Group’s strategy and reward achievement of the
Group’s long-term goals.
I am pleased to take up the role as Remuneration Committee Chairman
and would like to welcome Duncan Tatton-Brown, Robin Klein and
ourGroup Chairman, Mike Evans, to the Committee. David Dutton
also attends as an observer appointed by DMGT. The Company
considers that the attendance of an observer at Committee meetings
will not prejudice the independence or proper functioning of the
Committee. Each member brings his/her own extensive business
knowledge and experience toensure that the Committee has the
levelof competency required tooperate effectively and support the
business as it continues to grow.During theperiod the Committee has
also been advised by PricewaterhouseCoopers LLP (PwC), following
anextensive tender process, to ensure that our Remuneration Policy
isappropriately benchmarked against our peers, is consistent with
market practice and accurately aligns with the Group’s strategy.
“ The Committee’s goal is
to ensure the retention
and incentivisation of
the Management Team
required to deliver the
Group’s mission.”
Introduction from the Chairman of the Remuneration Committee
38
Zoopla Property Group Plc Annual Report 2014
Remuneration highlights for the 2014 financial year
f annual bonuses of 50% of salary for the CEO and 50% for the CFO¹
recognising the strong financial performance of the Group and the
personal performance ofthe Executive Directors over the year;
f the launch of the new ZPG Long Term Incentive Plan with annual
grants of nil-cost options worth up to 150% of salary to the CEO
and 125% of salary for the CFO. Awards will vest at the end of
three years subject to the achievement of the following
performance conditions:
f 50% of pay-out is based on adjusted basic earnings per share²
(EPS) growth of 15% p.a. for 25% of this element of the award to
vest with full vesting occurring for EPS growth of 27.5% p.a.; and
f 50% of pay-out is based on comparative total shareholder
return (TSR) performance of the Company compared to the
FTSE 250 (excluding real estate and equity investment trusts)
– 25% of this element of the award vesting for median TSR
comparative performance with full vesting at upper quartile
andstraight-line vesting between these two points; and
f launch of the new ZPG Share Incentive Plan – this plan provides
thefollowing benefits to all employees:
f an award of £2,500 Free Shares which vest after three years
subject to continued employment;
f the opportunity to buy £1,800 worth of shares out of pre-tax
salary whereby individuals will receive one matching share for
each share purchased. The level of participation amongst eligible
employees was 65% at the launch of the plan with the average
sum committed to the purchase of shares being £1,449; and
f these shares are all provided under an HMRC approved
planwhich provides potential tax benefits to participants
andtheCompany.
1 50% of salary for the nine month period from 1 January 2014 to 30 September 2014.
Prior to 1 January 2014 bonuses were awarded based on performance over the
calendar year. See page 56 for more information on bonus awards.
2 Adjusted basic earnings per share is defined on page 15.
Key activities of the Committee
The Committee’s key activities during the 2014 financial year were:
f agreement of the Committee’s terms of reference;
f formulation of the Company’s first Remuneration Policy
asalistedcompany;
f implementing and making awards under the Company’s new
LongTerm Incentive Plan;
f determining the level of bonus payments in respect of this financial
year; and
f drafting the Company’s first Directors’ remuneration report
asalisted company.
I hope that you find the information in this report helpful and I look
forward to your support at the Company’s AGM.
Sherry Coutu
Chairman, Remuneration Committee
Notes
This report has been prepared in accordance with Schedule 8 to The Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 as
amended in 2013, the provisions of the September 2014 UK Corporate Governance
Code (the “Code”) and the Listing Rules. The report consists of three sections:
f the annual statement by the Remuneration Committee Chairman;
f the Remuneration policy report which sets out the Company’s Remuneration Policy
for Directors and the key factors that were taken into account in setting the policy.
This policy will apply for three years from its date of approval at the 2015 AGM; and
f the Annual report on remuneration which sets out payments made to the Directors
and details the link between Company performance and remuneration forthe 2014
financial year.
The Chairman’s annual statement and the annual report on remuneration will be subject
to an advisory vote at the AGM. The Policy will be subject to a binding vote.
Financial statements
39
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Directors’ remuneration report continued
Introduction
In this section, we summarise the purpose
ofour Remuneration Policy and its linkage
to our corporate strategic objectives and we
highlight the performance and remuneration
outcomes for 2014. More detail can be found
in the Annual report on remuneration.
Our principles of remuneration
f There should be a strong link between an individual’s reward
andthe performance of the Group to align the interests
ofSeniorManagement with those of shareholders.
f Variable remuneration makes up a significant proportion
oftheremuneration package up to 275% of base salary.
f Stretching performance conditions directly aligned with
Groupstrategy.
Our strategy
The Group’s strategy is laid out on page 8. The Group’s goal is to
provide the most useful online resources to UK property consumers
and be the most effective partner to its members. The Group focuses
on the following core strategies in order to deliver on its goal:
1. Grow brand awareness and user audience
2. Extend listings inventory and property data
3. Develop additional products to extend value to members
4. Further innovate and increase user engagement
5. Develop revenue streams in related/adjacent markets
The Directors believe that the Group’s large and engaged user audience,
strong relationships with the vast majority of UK property professionals,
leading brands and powerful technology platform make it well
positioned to capitalise on opportunities in related/adjacent markets.
Remuneration policy
As part of the successful IPO, our Remuneration Policy has been designed to support the strategic objectives of the Company and to allow
thebusiness to recruit, retain and incentivise the quality of Senior Management needed to shape and execute our strategy to deliver sustained
shareholder value over the long term.
The key elements of our Executive Director remuneration are outlined below.
Element Operation of element
Salary The Company provides competitive levels in line with comparator companies in the FTSE 250.
Benefits
Pension
Annual bonus 50% of the bonus earned with respect to performance in the financial year will be paid in cash and 50%
ofbonus earned will be deferred into Company shares which vest after three years based on continued
employment (newly introduced from the 2015 financial year).
Long Term Incentive Plan Awards will vest at the end of three years subject to the achievement of:
f stretching EPS conditions which provide alignment to our core strategic priorities of increasing
brandawareness, property data, product portfolio and the development of revenue streams; and
f TSR performance of the Company compared to the FTSE 250 (excluding real estate and equity
investment trusts) which provides alignment to the success of our business in delivering value to
ourshareholders compared against companies of a similar size and scale to Zoopla Property Group.
At a glance
40
Zoopla Property Group Plc Annual Report 2014
How we have performed
24%
Revenue
35%
Adjusted EBITDA
20%
Adjusted EPS
18%
ARPA
33%
Visits
12%
Leads
5%
Members
No change
Listings
KPI definitions can be found on page 15.
Single total figure of remuneration for Executive Directors for the 2014 financial year
Name Period
Salary
£000
Benefits
£000
Bonus
£000
LTIPs
£000
Pension
£000
SIP
£000
Total
£000
Alex Chesterman 2014 302 3 158 — 33 3 499
2013 203 3 119 — 31 — 356
Stephen Morana 2014 223 3 113 — 14 3 356
2013 83 1 44 — — — 128 ¹
1 Stephen Morana joined the Group on 15 April 2013 and therefore his remuneration reflects only part of the financial year.
Composition and terms of reference of the
RemunerationCommittee
The Board has delegated to the Committee, under agreed terms of
reference, responsibility for the Remuneration Policy and for determining
specific packages for the Executive Directors, the Chairman and other
members of the Executive Team. The Company consults with key
shareholders in respect of the Remuneration Policy and the introduction
of new incentive arrangements. The terms of reference for the Committee
are available on the Company’s corporate website, www.zpg.co.uk.
All members of the Committee are either Independent Non-Executive
Directors or the Group Chairman and were appointed to the Committee
on 4 June 2014, with the exception of Robin Klein, who was appointed
on 9 July 2014. The Committee receives assistance from the HR Director
and Company Secretary, who attend meetings by invitation, except
when issues relating to their own remuneration are being discussed.
The CEO and CFO attend by invitation on occasions. The Committee
met once between the IPO and the end of the 2014 financial year.
Meeting attendance is shown on page 30 of this report.
Advisers to the Remuneration Committee
Following a formal tendering process carried out by the Board
priortothe IPO of the Company, the Committee has engaged the
services of PwC as independent remuneration adviser.
During the financial year, PwC advised the Committee on all aspects
ofthe Remuneration Policy for Executive Directors and members of
theExecutive Team. The Committee is satisfied that advice received
fromPwC during the year was objective and independent.
PwC is a member of the Remuneration Consultants Group and the
voluntary code of conduct of that body is designed to ensure objective
and independent advice is given to remuneration committees. Fees of
£41,500 (2013: £nil) were provided to PwC during the year in respect
of remuneration advice received. PwC have no other connection with
the Group.
Financial statements
41
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Introduction
In accordance with the new regulations, the
Directors’ Remuneration Policy (the “Policy”)
asset out below will become formally effective
at the AGM on 12 February 2015 and will apply
for the period of three years from the date
ofapproval.
Policy summary
The Committee determines the Policy for the Executive Directors,
Chairman and other Senior Management for current and future years
and this is reviewed on an annual basis. The Policy isdesigned to
support the strategic objectives of the Company andtoallow the
business to recruit, retain and incentivise the quality of Senior Management
needed to shape and execute our strategy todeliver sustained
shareholder value over the long term.
The Policy aims to align the interests of the Executive Directors,
SeniorManagement and employees to the long-term interests of
shareholders and aims to support a high performance culture with
appropriate reward for superior performance, without creating incentives
that will encourage excessive risk taking or unsustainable Company
performance. The Committee considers that a successful policy needs
to be sufficiently flexible to take account of future changes in the Company’s
business environment and in remuneration practice.
The Policy is designed around the following key principles:
f ensure a strong link between an individual’s reward and the performance
of the Group to align the interests of Senior Management with those
of shareholders. In achieving this principle the Committee has
ensured that the performance elements of the remuneration are
transparent and stretching;
f maintain a competitive package against businesses of
acomparable size in the FTSE 250 and comparable peer
groupbusinesses in the sector with reference to the breadth
oftherole and experience the role holder brings to the Company;
f operate a consistent reward and performance philosophy
throughout the business;
f encourage a material, personal stake in the business and a
long-term focus on sustained growth through long-term shareholding;
f provide a balanced package with a focus on variable pay; and
f take into account the associated risks of each aspect of remuneration.
The Committee is satisfied that its approach to the Executive
Directors’remuneration is designed to promote the long-term
successof the Company.
The ways in which these principles are reflected in the Policy and
itsapplication are described on pages 55 to 61 of this report.
The Remuneration Committee will review annually the remuneration
arrangements for the Executive Directors and key Senior Management
drawing on trends and adjustments made to all employees across the
Group and taking into consideration:
f business strategy over the period;
f overall corporate performance;
f market conditions affecting the Company;
f the property market;
f changing practice in the markets where the Company competes
fortalent; and
f changing views of institutional shareholders and their
representativebodies.
Directors’ remuneration report continued
Remuneration policy
42
Zoopla Property Group Plc Annual Report 2014
UK Corporate Governance Code
The Committee is comfortable that the proposed Policy is in line with the revised 2014 Code. The following table sets out the key elements
oftherevised Code and how the Policy is in line with the Governance Code:
Code provision Company remuneration policy
Executive Directors’ remuneration should be designed to promote
the long-term success of the Company.
The Company has an LTIP with a three year performance period
and has provision for the Committee to add holding periods
post-vesting. The Policy incorporates bonus arrangements where
part ofthe bonus is deferred in shares for three years with the
facility forthe Committee to add holding periods post-vesting. It is
the Committee’s view that these arrangements provide a holistic
approach to ensuring Executive Directors are focused on the
long-term success of the Company.
Schemes should include provisions that would enable the Company
to recover sums paid or withhold the payment ofanysum, and
specify the circumstances in which it would beappropriate to do so.
Both the bonus plan and the Long Term Incentive Plan include
best practice malus and clawback provisions.
For share-based remuneration, the Remuneration Committee
shouldconsider requiring Directors to hold a minimum number
ofshares and to hold shares for a further period after vesting or
exercise, including for a period after leaving the Company, subject
to the need to finance any costs of acquisition and associated
taxliabilities.
The Policy contains the following relevant features:
f minimum shareholding requirements for Executive Directors
of100% of salary; and
f the provision for the Committee to add holding periods
post-vesting for the bonus plan and the Long Term Incentive Plan.
The Committee does not currently believe that with the shareholding
requirement and the deferral period for part of the annual bonus in
shares that additional holding periods are required. However, the
Committee will consider this position on an annual basis.
Discretion
The Committee has discretion in several areas of policy as set out
inthis report. The Committee may also exercise operational and
administrative discretions under relevant plan rules approved by
shareholders as set out in those rules. In addition, the Committee
hasthe discretion to amend the Policy with regard to minor or
administrative matters where it would be, in the opinion of the
Committee, disproportionate to seek or await shareholder approval.
It is the Committee’s intention that commitments made in line with
itspolicies prior to the date of the 2015 AGM will be honoured, even
ifsatisfaction of such commitments is made following the AGM and
may beinconsistent with the remuneration policies. To the best of the
Company’s knowledge, there are no such commitments.
Financial statements
43
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Remuneration policy continued
Differences in policy from the wider employee population
The Group aims to provide a remuneration package for all employees that is market competitive and operates the same core structure as for
theExecutive Directors. The Group operates employee share and variable pay plans, with pension provisions provided for all Executives and
employees. In addition, any salary increases for Executive Directors are expected to be generally in line with those for UK-based employees.
Policy table
All references to a policy level (e.g. median) are in relation to the Company’s comparator group for remuneration.
Element of
remuneration
How it supports the Company’s short
andlong-term strategic objectives Operation
Opportunity
Salary
Policy: Median Provides a base level of remuneration
tosupport recruitment and retention of
Executive Directors with the necessary
experience and expertise to deliver the
Group’s strategy.
An Executive Director’s basic salary is set on appointment
andreviewed annually or when there is a change in position
orresponsibility.
When determining an appropriate level of salary, the
Committeeconsiders:
f remuneration practices within the Group;
f the performance of the individual Executive Director;
f the individual Executive Director’s experience
andresponsibilities;
f the general performance of the Group;
f salaries within the ranges paid by the companies in the
comparator group used for remuneration benchmarking;
f pay and conditions throughout the Company. The Committee
has access to pay and conditions of other employees within the
Group when determining remuneration for the Executive Directors
and also considers the relationship between general changes to
pay and conditions within the Group as a whole; and
f the economic environment.
Individuals who are recruited or promoted to the Board may,
onoccasion, have their salaries set below the targeted policy
level until they become established in their role. In such cases
subsequent increases in salary may be higher than the average
until the target positioning is achieved.
Whilst there is no maximum salary level or salary increase level,
toreflect the Committee’s wish to ensure that fixed costs are
minimised it is intended that salaries will not exceed the median
level relative to the current comparator group of companies.
The companies in the comparator group are the constituents
ofthe FTSE 250 Index. The Committee intends to review the
listof companies each year and may add or remove companies
from the Group as it considers appropriate. Any changes to
thecomparator group will be disclosed in the part of the report
setting out the operation of the policy for the future year.
In general salary rises to Executive Directors will be in line
withtherise to employees.
The Company will set out, in the section headed “Implementation
of the Policy in the following financial year” the salaries for that
year for each of the Executive Directors (see page 59).
Benefits
Policy: Market Provides a benefits package in line with
standard market practice relative to its
comparator group to enable the Company
to recruit and retain Executive Directors with
the experience and expertise to deliver the
Group’s strategy.
The Executive Directors receive family private health cover and
death in service life assurance. The Committee recognises the
need to maintain suitable flexibility in the determination of benefits
that ensure it is able to support the objective of attracting and
retaining personnel.
Executive Directors shall be reimbursed for all reasonable
expenses and the Group may settle any tax incurred
in relation to these.
The maximum will be set at the cost of providing the
benefitsdescribed.
The cost of the benefits provided.
Pensions
Policy: Median Provides a pension provision in line with the
comparator group to enable the Company
to recruit and retain Executive Directors with
the experience and expertise to deliver the
Group’s strategy.
Employer retirement funding is determined as a percentage of
gross basic salary, up to a maximum limit of 15%. Where this
exceeds the maximum annual pension contribution that can
benefit from tax relief or the Lifetime Allowance, any excess may
be provided in the form of a salary supplement, which would
notitself be pensionable or form part of salary for the purposes
of determining the extent of participation in the Company’s
incentive arrangements.
15% of salary p.a.
Directors’ remuneration report continued
44
Zoopla Property Group Plc Annual Report 2014
Differences in policy from the wider employee population
The Group aims to provide a remuneration package for all employees that is market competitive and operates the same core structure as for
theExecutive Directors. The Group operates employee share and variable pay plans, with pension provisions provided for all Executives and
employees. In addition, any salary increases for Executive Directors are expected to be generally in line with those for UK-based employees.
Policy table
All references to a policy level (e.g. median) are in relation to the Company’s comparator group for remuneration.
Element of
remuneration
How it supports the Company’s short
andlong-term strategic objectives Operation
Opportunity
Salary
Policy: Median Provides a base level of remuneration
tosupport recruitment and retention of
Executive Directors with the necessary
experience and expertise to deliver the
Group’s strategy.
An Executive Director’s basic salary is set on appointment
andreviewed annually or when there is a change in position
orresponsibility.
When determining an appropriate level of salary, the
Committeeconsiders:
f remuneration practices within the Group;
f the performance of the individual Executive Director;
f the individual Executive Director’s experience
andresponsibilities;
f the general performance of the Group;
f salaries within the ranges paid by the companies in the
comparator group used for remuneration benchmarking;
f pay and conditions throughout the Company. The Committee
has access to pay and conditions of other employees within the
Group when determining remuneration for the Executive Directors
and also considers the relationship between general changes to
pay and conditions within the Group as a whole; and
f the economic environment.
Individuals who are recruited or promoted to the Board may,
onoccasion, have their salaries set below the targeted policy
level until they become established in their role. In such cases
subsequent increases in salary may be higher than the average
until the target positioning is achieved.
Whilst there is no maximum salary level or salary increase level,
toreflect the Committee’s wish to ensure that fixed costs are
minimised it is intended that salaries will not exceed the median
level relative to the current comparator group of companies.
The companies in the comparator group are the constituents
ofthe FTSE 250 Index. The Committee intends to review the
listof companies each year and may add or remove companies
from the Group as it considers appropriate. Any changes to
thecomparator group will be disclosed in the part of the report
setting out the operation of the policy for the future year.
In general salary rises to Executive Directors will be in line
withtherise to employees.
The Company will set out, in the section headed “Implementation
of the Policy in the following financial year” the salaries for that
year for each of the Executive Directors (see page 59).
Benefits
Policy: Market Provides a benefits package in line with
standard market practice relative to its
comparator group to enable the Company
to recruit and retain Executive Directors with
the experience and expertise to deliver the
Group’s strategy.
The Executive Directors receive family private health cover and
death in service life assurance. The Committee recognises the
need to maintain suitable flexibility in the determination of benefits
that ensure it is able to support the objective of attracting and
retaining personnel.
Executive Directors shall be reimbursed for all reasonable
expenses and the Group may settle any tax incurred
in relation to these.
The maximum will be set at the cost of providing the
benefitsdescribed.
The cost of the benefits provided.
Pensions
Policy: Median Provides a pension provision in line with the
comparator group to enable the Company
to recruit and retain Executive Directors with
the experience and expertise to deliver the
Group’s strategy.
Employer retirement funding is determined as a percentage of
gross basic salary, up to a maximum limit of 15%. Where this
exceeds the maximum annual pension contribution that can
benefit from tax relief or the Lifetime Allowance, any excess may
be provided in the form of a salary supplement, which would
notitself be pensionable or form part of salary for the purposes
of determining the extent of participation in the Company’s
incentive arrangements.
15% of salary p.a.
Financial statements
45
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Remuneration policy continued
Directors’ remuneration report continued
Policy table continued
Element of
remuneration
How it supports the Company’s short
andlong-term strategic objectives Operation Opportunity Performance metrics
Annual Bonus and Deferred Bonus Plan (DBP)
Policy: Median The DBP provides a significant incentive to
the Executive Directors linked to achievement
in delivering goals that are closely aligned
with the Company’s strategy and the
creation of value for shareholders.
In particular, the DBP supports the Company’s
objectives allowing the setting of annual
targets based on the businesses’ strategic
objectives at that time, meaning that a wider
range of performance metrics can be used
that are relevant and achievable.
The Committee has discretion to defer part
of the annual bonus earned in shares under
the Annual Bonus and Deferred Bonus Plan.
The advantage of deferral is:
f ongoing risk adjustment due to the
linkto the share price over the deferral
period thereby driving long-term strategic
behaviours; and
f amounts deferred in shares are also
forfeitable on an Executive Director’s
voluntary cessation of employment
which provides an effective lock-in.
The Company operates in a rapidly changing sector and therefore
the Committee may change the balance of the measures or use
different measures for subsequent financial years, as appropriate,
to reflect this. This is subject to the condition that at least 50% of
the award is based on financial performance.
The Company will set out in the section headed “Implementation
of the Policy in the following financial year” the nature of the target
measures and their weighting for each year (see page 59).
Details of the performance measurements and their level of
satisfaction for the year being reported on will be set out in the
Annual report on remuneration.
The Committee can determine that part of the bonus earned
under the Annual Bonus Plan is provided in the form of an award
of shares under the DBP. The maximum value of deferred shares
is 50% of the bonus earned.
The main terms of these awards are:
f minimum deferral period of three years; and
f the participants’ continued employment at the end
ofthedeferral period.
The Committee retains the discretion to include holding periods.
The Committee may award dividend equivalents on those shares
to plan participants to the extent that they vest.
The Committee will determine the maximum annual participation
in the Plan for each year, which will not exceed 125% of salary.
Below threshold level of performance 0% of the bonus will be
earned. At threshold level of performance 25% of the bonus
willbe earned. At target level of performance 75% of the bonus
will be earned. At 105% of target performance 100% of the
bonus will be earned (the maximum).
The annual bonus will be paid in cash and deferred shares.
ForExecutive Directors 50% of annual bonus to be paid
immediately in cash and 50% deferred into shares.
The Plan is based on a mix of financial and strategic/operational
conditions and is measured over a period of one financial year.
The financial measures will account for no less than 50% of the
bonus opportunity.
The Committee retains discretion in exceptional circumstances
tochange performance measures and targets and the weightings
attached to performance measures part-way through a performance
year if there is a significant and material event which causes the
Committee to believe the original measures, weightings and targets
are no longer appropriate. Discretion may also be exercised in
cases where the Committee believes that the bonus outcome
isnot a fair and accurate reflection of business performance.
The Remuneration Committee is of the opinion that, given the
commercial sensitivity arising in relation to the detailed financial
targets used for the annual bonus, disclosing precise targets for
the bonus plan in advance would not be in shareholder interests.
This avoids the risk of the Company inadvertently providing
aprofit forecast because profit targets are linked to budgets.
Actual targets, performance achieved and awards made will be
published at the end of the performance periods so shareholders
can fully assess the basis for any pay-outs under the annual bonus.
The DBP contains clawback and malus provisions.
Long Term Incentive Plan (LTIP)
Policy: Median Awards are designed to incentivise the
Executive Directors to maximise total
shareholder returns by successfully
delivering the Company’s objectives
andtoshare in the resulting increase
in total shareholder value.
The use of EPS ensures Executive Directors
are focused on ensuring the annual profit
performance targeted by the Annual Bonus
Plan flows through to long-term sustainable
EPS growth.
The use of comparative TSR measures
thesuccess of the implementation of the
Company’s strategy in delivering an above
market level of return.
Awards are granted annually to Executive Directors. These will
vest at the end of a three year period subject to:
f the Executive Director’s continued employment at the date
ofvesting; and
f satisfaction of the performance conditions.
The Committee may award dividend equivalents on awards
totheextent that these vest.
The Committee retains the discretion to include holding periods.
Plan maximum 200% of salary.
Below threshold level of performance 0% of the award will vest.
25% of the award will vest for threshold performance. 100%
ofthe award will vest for maximum performance. Straight-line
vesting occurs between these points.
The performance conditions for awards are currently EPS growth
and TSR. EPS growth for this purpose is defined as the increase
in adjusted basic EPS¹.
The Company operates in a rapidly changing sector and therefore
the Committee may change the balance of the measures, or use
different measures for subsequent awards, as appropriate. It is the
Committee’s intention that no material change will be made to the
type of performance conditions without prior shareholder consultation.
Details of the performance conditions for grants made in the year
will be set out in the Annual report on remuneration and for future
grants in the statement of implementation of remuneration policy
in the future financial year.
The LTIP contains clawback and malus provisions.
1 Adjusted basic EPS is calculated as basic EPS excluding exceptional items
and anyother material items considered by the Committee to be outside the
control of Management.
46
Zoopla Property Group Plc Annual Report 2014
Policy table continued
Element of
remuneration
How it supports the Company’s short
andlong-term strategic objectives Operation Opportunity Performance metrics
Annual Bonus and Deferred Bonus Plan (DBP)
Policy: Median The DBP provides a significant incentive to
the Executive Directors linked to achievement
in delivering goals that are closely aligned
with the Company’s strategy and the
creation of value for shareholders.
In particular, the DBP supports the Company’s
objectives allowing the setting of annual
targets based on the businesses’ strategic
objectives at that time, meaning that a wider
range of performance metrics can be used
that are relevant and achievable.
The Committee has discretion to defer part
of the annual bonus earned in shares under
the Annual Bonus and Deferred Bonus Plan.
The advantage of deferral is:
f ongoing risk adjustment due to the
linkto the share price over the deferral
period thereby driving long-term strategic
behaviours; and
f amounts deferred in shares are also
forfeitable on an Executive Director’s
voluntary cessation of employment
which provides an effective lock-in.
The Company operates in a rapidly changing sector and therefore
the Committee may change the balance of the measures or use
different measures for subsequent financial years, as appropriate,
to reflect this. This is subject to the condition that at least 50% of
the award is based on financial performance.
The Company will set out in the section headed “Implementation
of the Policy in the following financial year” the nature of the target
measures and their weighting for each year (see page 59).
Details of the performance measurements and their level of
satisfaction for the year being reported on will be set out in the
Annual report on remuneration.
The Committee can determine that part of the bonus earned
under the Annual Bonus Plan is provided in the form of an award
of shares under the DBP. The maximum value of deferred shares
is 50% of the bonus earned.
The main terms of these awards are:
f minimum deferral period of three years; and
f the participants’ continued employment at the end
ofthedeferral period.
The Committee retains the discretion to include holding periods.
The Committee may award dividend equivalents on those shares
to plan participants to the extent that they vest.
The Committee will determine the maximum annual participation
in the Plan for each year, which will not exceed 125% of salary.
Below threshold level of performance 0% of the bonus will be
earned. At threshold level of performance 25% of the bonus
willbe earned. At target level of performance 75% of the bonus
will be earned. At 105% of target performance 100% of the
bonus will be earned (the maximum).
The annual bonus will be paid in cash and deferred shares.
ForExecutive Directors 50% of annual bonus to be paid
immediately in cash and 50% deferred into shares.
The Plan is based on a mix of financial and strategic/operational
conditions and is measured over a period of one financial year.
The financial measures will account for no less than 50% of the
bonus opportunity.
The Committee retains discretion in exceptional circumstances
tochange performance measures and targets and the weightings
attached to performance measures part-way through a performance
year if there is a significant and material event which causes the
Committee to believe the original measures, weightings and targets
are no longer appropriate. Discretion may also be exercised in
cases where the Committee believes that the bonus outcome
isnot a fair and accurate reflection of business performance.
The Remuneration Committee is of the opinion that, given the
commercial sensitivity arising in relation to the detailed financial
targets used for the annual bonus, disclosing precise targets for
the bonus plan in advance would not be in shareholder interests.
This avoids the risk of the Company inadvertently providing
aprofit forecast because profit targets are linked to budgets.
Actual targets, performance achieved and awards made will be
published at the end of the performance periods so shareholders
can fully assess the basis for any pay-outs under the annual bonus.
The DBP contains clawback and malus provisions.
Long Term Incentive Plan (LTIP)
Policy: Median Awards are designed to incentivise the
Executive Directors to maximise total
shareholder returns by successfully
delivering the Company’s objectives
andtoshare in the resulting increase
in total shareholder value.
The use of EPS ensures Executive Directors
are focused on ensuring the annual profit
performance targeted by the Annual Bonus
Plan flows through to long-term sustainable
EPS growth.
The use of comparative TSR measures
thesuccess of the implementation of the
Company’s strategy in delivering an above
market level of return.
Awards are granted annually to Executive Directors. These will
vest at the end of a three year period subject to:
f the Executive Director’s continued employment at the date
ofvesting; and
f satisfaction of the performance conditions.
The Committee may award dividend equivalents on awards
totheextent that these vest.
The Committee retains the discretion to include holding periods.
Plan maximum 200% of salary.
Below threshold level of performance 0% of the award will vest.
25% of the award will vest for threshold performance. 100%
ofthe award will vest for maximum performance. Straight-line
vesting occurs between these points.
The performance conditions for awards are currently EPS growth
and TSR. EPS growth for this purpose is defined as the increase
in adjusted basic EPS¹.
The Company operates in a rapidly changing sector and therefore
the Committee may change the balance of the measures, or use
different measures for subsequent awards, as appropriate. It is the
Committee’s intention that no material change will be made to the
type of performance conditions without prior shareholder consultation.
Details of the performance conditions for grants made in the year
will be set out in the Annual report on remuneration and for future
grants in the statement of implementation of remuneration policy
in the future financial year.
The LTIP contains clawback and malus provisions.
1 Adjusted basic EPS is calculated as basic EPS excluding exceptional items
and anyother material items considered by the Committee to be outside the
control of Management.
Financial statements
47
Zoopla Property Group Plc zpg.co.uk
Strategic report Corporate governanceOverview
Remuneration policy continued
Directors’ remuneration report continued
Policy table continued
Element of
remuneration
How it supports the Company’s short
andlong-term strategic objectives Operation Opportunity Performance metrics
HMRC Share Incentive Plan
Policy: Market To encourage Company-wide employee
share ownership and thereby align
employees’ interests with shareholders.
The Company operates a share incentive plan in which the
Executive Directors are eligible to participate (which is HMRC
approved and is open to all eligible staff).
The Company retains the discretion to introduce additional plans,
and to make Directors eligible for these as appropriate.
UK plan in line with HMRC limits as amended from time to time. There are no performance conditions as this is an
all-employeeplan.
Minimum shareholding requirement
The Remuneration Committee has adopted formal shareholding guidelines that will encourage the Executive Directors to build up, over
afive year period, and then subsequently hold a shareholding equivalent to a percentage of base salary. Adherence to these guidelines
is a condition of continued participation in the equity incentive arrangements. This Policy ensures that the interests of Executive Directors
and those of shareholders are closely aligned.
Chairman and Non-Executive Director fees
Policy: Median Provides a level of fees to support
recruitment and retention of the Chairman
and Non-Executive Directors with the
necessary experience to advise and assist
with establishing and monitoring the Group’s
strategic objectives.
The Board, as a whole, is responsible for setting the remuneration
of the Non-Executive Directors, other than the Chairman whose
remuneration is considered by the Remuneration Committee and
recommended to the Board.
Non-Executive Directors are paid a base fee and additional fees
for Chairmanship of Committees. The Chairman does not receive
any additional fees for membership of Committees.
Fees are reviewed annually based on equivalent roles in the
comparator group used to review salaries paid to the Executive
Directors. Fees are set at broadly the median of the comparator group.
The Chairman and Non-Executives’ fees are set out on page 55.
The Chairman and Non-Executive Directors do not participate
inany variable remuneration or benefit arrangements.
The fees for the Chairman and Non-Executive Directors are
setatbroadly the median of the comparator group.
In general the level of fee increase for the Chairman and
Non-Executive Directors will be set taking account of any
changein responsibility and will take into account the
generalrisein salaries across the UK workforce.
The Company will pay reasonable expenses incurred
bytheChairman and Non-Executive Directors and may
settleanytax incurred in relation to these.
None.
48
Zoopla Property Group Plc Annual Report 2014
Policy table continued
Element of
remuneration
How it supports the Company’s short
andlong-term strategic objectives Operation Opportunity Performance metrics
HMRC Share Incentive Plan
Policy: Market To encourage Company-wide employee
share ownership and thereby align
employees’ interests with shareholders.
The Company operates a share incentive plan in which the
Executive Directors are eligible to participate (which is HMRC
approved and is open to all eligible staff).
The Company retains the discretion to introduce additional plans,
and to make Directors eligible for these as appropriate.
UK plan in line with HMRC limits as amended from time to time. There are no performance conditions as this is an
all-employeeplan.
Minimum shareholding requirement
The Remuneration Committee has adopted formal shareholding guidelines that will encourage the Executive Directors to build up, over
afive year period, and then subsequently hold a shareholding equivalent to a percentage of base salary. Adherence to these guidelines
is a condition of continued participation in the equity incentive arrangements. This Policy ensures that the interests of Executive Directors
and those of shareholders are closely aligned.
Chairman and Non-Executive Director fees
Policy: Median Provides a level of fees to support
recruitment and retention of the Chairman
and Non-Executive Directors with the
necessary experience to advise and assist
with establishing and monitoring the Group’s
strategic objectives.
The Board, as a whole, is responsible for setting the remuneration
of the Non-Executive Directors, other than the Chairman whose
remuneration is considered by the Remuneration Committee and
recommended to the Board.
Non-Executive Directors are paid a base fee and additional fees
for Chairmanship of Committees. The Chairman does not receive
any additional fees for membership of Committees.
Fees are reviewed annually based on equivalent roles in the
comparator group used to review salaries paid to the Executive
Directors. Fees are set at broadly the median of the comparator group.
The Chairman and Non-Executives’ fees are set out on page 55.
The Chairman and Non-Executive Directors do not participate
inany variable remuneration or benefit arrangements.
The fees for the Chairman and Non-Executive Directors are
setatbroadly the median of the comparator group.
In general the level of fee increase for the Chairman and
Non-Executive Directors will be set taking account of any
changein responsibility and will take into account the
generalrisein salaries across the UK workforce.
The Company will pay reasonable expenses incurred
bytheChairman and Non-Executive Directors and may
settleanytax incurred in relation to these.
None.
Financial statements
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Strategic report Corporate governanceOverview
Remuneration policy continued
Directors’ remuneration report continued
Recruitment policy
The Company’s principle is that the remuneration of any new Director will be assessed in line with the same principles as for the Executive Directors,
as set out in the remuneration policy table. The Remuneration Committee’s approach to recruitment remuneration is to pay no more than is
necessary to attract candidates of the appropriate calibre and experience needed for the role from the market in which the Company competes.
The Remuneration Committee is mindful that it wishes to avoid paying more than it considers necessary to secure the preferred candidate and
will have regard to guidelines and shareholder sentiment regarding one-off or enhanced short-term or long-term incentive payments made on
recruitment and the appropriateness of any performance measures associated with an award.
The Company’s detailed policy when setting remuneration for the appointment of new Directors is summarised in the table below:
Remuneration
element Recruitment policy
Salary Salary will be set in line with the policy for existing Executive Directors.
Benefits The standard benefit package for existing Executive Directors will apply.
Pension The maximum employer contribution will be set in line with the Company’s policy for existing Executive Directors.
Annual bonus Maximum annual participation will be set in line with the Company’s policy for existing Executive Directors and
will not exceed 125% of salary.
LTIP Maximum annual participation will be set in line with the Company’s policy for existing Executive Directors and
will not exceed 200% of salary.
Maximum variable
pay (incentive
opportunity)
In the year of recruitment, the maximum variable pay will be 325% of salary (450% if maximum sign-on
compensation is provided).
Sign-on
compensation
The Committee’s policy is not to provide sign-on compensation.
However, in exceptional circumstances, where the Committee decides to provide this type of compensation,
itwill endeavour to provide the compensation in equity, subject to a holding period during which cessation
ofemployment will generally result in forfeiture and subject to the satisfaction of performance targets.
Themaximum value of this one-off compensation will be proportionate to the overall remuneration offered
bytheCompany and in all circumstances is limited to 125% of salary.
Buyout of
incentives
forfeited on
cessation of
employment
The Committee’s policy is not to provide buyouts as a matter of course.
However, should the Committee determine that the individual circumstances of recruitment justified the provision
of a buyout, the equivalent value of any incentives that will be forfeited on cessation of a Director’s previous
employment will be calculated taking into account the following:
f the proportion of the performance period completed on the date of the Director’s cessation of employment;
f the performance conditions attached to the vesting of these incentives and the likelihood of their being
satisfied; and
f any other terms and conditions having a material effect on their value (lapsed value).
The Committee may then grant up to the same value as the lapsed value, where possible, under the Company’s
incentive plans. To the extent that it was not possible or practical to provide the buyout within the terms of the
Company’s existing incentive plans, a bespoke arrangement would be used.
50
Zoopla Property Group Plc Annual Report 2014
Where an existing employee is promoted to the Board, the policy set out on the previous page would apply from the date of promotion but there
would be no retrospective application of the policy in relation to subsisting incentive awards or remuneration arrangements. Accordingly, prevailing
elements ofthe remuneration package for an existing employee would be honoured and form part of the ongoing remuneration of the person
concerned. These would be disclosed to shareholders in the Directors’ remuneration report for the relevant financial year.
The Company’s policy when setting fees for the appointment of a new Chairman or Non-Executive Director is to apply the policy that applies
tothe current Chairman and Non-Executive Directors.
Service agreements and letters of appointment
Notice periods
Compensation
provisions for
early terminationName
Date of service contract/
letter of appointment Nature of contract From Company From Director
Executive Directors
Alex Chesterman 22 April 2014 Rolling 12 months 12 months None
Stephen Morana 22 April 2014 Rolling 12 months 12 months None
Non-Executive Directors
Mike Evans 1 May 2014 3 year contract 3 months 3 months None
David Dutton 4 June 2014 3 year contract None None None
Duncan Tatton-Brown 1 May 2014 3 year contract 1 month 1 month None
Grenville Turner 21 May 2014 3 year contract 1 month 1 month None
Robin Klein 1 May 2014 3 year contract 1 month 1 month None
Sherry Coutu 1 May 2014 3 year contract 1 month 1 month None
Stephen Daintith 4 June 2014 3 year contract None None None
The Committee’s policy for setting notice periods is that a 12 month period will apply for Executive Directors. The Committee may, in exceptional
circumstances arising on recruitment, allow a longer period which would, in any event, reduce to 12 months following the first year of employment.
The Non-Executive Directors of the Company (including the Chairman) do not have service contracts. The Non-Executive Directors are appointed
by letters of appointment. Each Independent Non-Executive Director’s term of office runs for a three year period.
The Company follows the UK Corporate Governance Code’s recommendation that all Directors be subject to annual re-appointment by shareholders.
Illustrations of the application of the remuneration policy
The chart below illustrates the remuneration that would be paid to each of the Executive Directors, based on salaries at the start of financial
year2015, under three different performance scenarios: (i) minimum; (ii) on-target; and (iii) maximum. The elements of remuneration have been
categorised into three components: (i) fixed; (ii) annual bonus (deferred bonus); and (iii) LTIP.
Element Description Minimum On-target Maximum
Fixed Salary, benefits and pension Included Included Included
Annual bonus Annual bonus
(including deferred shares)
0% 75% of the maximum bonus 100% of the maximum bonus
Long Term Incentive Plan Award under the
Long Term Incentive Plan
0% 62.5% of the maximum award 100% of the maximum award
Financial statements
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Remuneration policy continued
Directors’ remuneration report continued
Illustrations of the application of the remuneration policy continued
In accordance with the regulations, share price growth has not been included. For the purposes of this disclosure, dividend equivalents have not
been added to deferred share bonus and LTIP share awards.
Payment for loss of office
The Committee will honour Executive Directors’ contractual entitlements. Service contracts do not contain liquidated damages clauses. If a contract
is to be terminated, the Committee will determine such mitigation as it considers fair and reasonable in each case. There are no contractual
arrangements that would guarantee a pension with limited or no abatement on severance or early retirement. There is no agreement between
theCompany and its Executive Directors or employees providing for compensation for loss of office or employment that occurs because
ofatakeover bid. The Committee reserves the right to make additional payments where such payments are made in good faith in discharge
ofanexisting legal obligation (or by way of damages for breach of such an obligation) or by way of settlement or compromise of any claim
arisingin connection with the termination of an Executive Director’s office or employment.
When determining any loss of office payment for a departing individual, the Remuneration Committee will always seek to minimise cost to the
Company whilst seeking to address the circumstances at the time.
Remuneration
element Treatment on exit
Salary Salary will be paid over the notice period. The Company has discretion to make a lump sum payment on
termination of the salary payable during the notice period. In all cases the Company will seek to mitigate any
payments due.
Benefits Benefits will normally be provided over the notice period. The Company has discretion to make a lump sum
payment on termination equal to the value of the benefits payable during the notice period. In all cases the
Company will seek to mitigate any payments due.
Pension Company pension contributions will normally be provided over the notice period. The Company has discretion
tomake a lump sum payment on termination equal to the value of the Company pension contributions during
thenotice period. In all cases the Company will seek to mitigate any payments due.
Annual Bonus
Plan
Good leaver reason
f Prorated to time and performance for year of cessation.
Other leaver reason
f No bonus payable for year of cessation.
Chief Executive Officer Chief Financial Officer
43%100% 34%
£347,000 28%
29%
29%
37%
£806,375
£1,022,000
£0
£500,000
£1,000,000
£1,500,000
£2,000,000
LTIP
Bonus
Fixed elements
On-target On-targetMinimum Maximum Minimu
mM
aximum
38%100%
£519,800
30%
31%
32%
31%
38%
£1,363,550
£1,757,300
38%100%
£519,800
30%
31%
32%
31%
38%
£1,363,550
£1,757,300
On-targetMinimu
mM
aximum
52
Zoopla Property Group Plc Annual Report 2014
Remuneration
element Treatment on exit
Deferred
Bonus Plan
Good leaver reason
f Retention of each subsisting deferred share award.
Other leaver reason
f Lapse of any unvested deferred share awards.
Discretion
The Committee has the following elements of discretion:
f to determine that an Executive is a good leaver. It is the Committee’s intention to only use this discretion in
circumstances where there is an appropriate business case which will be explained in full to shareholders;
f to allow immediate or deferred vesting;
f to prorate the maximum number of shares to the time from the date of grant to the date of cessation.
TheCommittee’s policy is generally to not prorate to time; and
f to determine whether to prorate based on the circumstances of the Executive’s departure.
LTIP Good leaver reason
f Prorated to time and performance in respect of each subsisting LTIP award.
Other leaver reason
f Lapse of any unvested LTIP awards.
Discretion
The Committee has the following elements of discretion:
f to determine that an Executive is a good leaver. It is the Committee’s intention to only use this discretion
incircumstances where there is an appropriate business case which will be explained in full to shareholders;
f to measure performance over the original performance period or at the date of cessation. The Committee
willmakethis determination depending on the type of good leaver reason resulting in the cessation; and
f to prorate the maximum number of shares to the time from the date of grant to the date of cessation.
TheCommittee’s policy is generally to prorate to time. It is the Committee’s intention to only use this discretion
incircumstances where there is an appropriate business case which will be explained in full to shareholders.
Other contractual
obligations
There are no other contractual provisions, other than those set out above, agreed prior to 27 June 2012.
A good leaver reason is defined as cessation in the following circumstances:
f death;
f ill health;
f injury or disability;
f redundancy;
f retirement with agreement of employer;
f employing company ceasing to be a Group company;
f transfer of employment to a company that is not a Group company; and
f at the discretion of the Remuneration Committee (as described above).
Cessation of employment in circumstances other than those set out above is cessation for other leaver reasons.
Financial statements
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Remuneration policy continued
Directors’ remuneration report continued
Change of control
The Committee’s policy on the vesting of incentives on a change of control is summarised on page 52 and below:
Name of
incentive plan Change of control Discretion
Annual Bonus
Plan
Prorated to time and performance to the date of the
change of control.
The Committee has discretion to continue the
operation of the Plan to the end of the bonus year.
Deferred
Bonus Plan
The number of shares subject to subsisting deferred
share awards on a change of control may be prorated
to time.
The Committee will take into account the circumstances
of the change of control in determining whether to
apply prorating.
LTIP The number of shares subject to subsisting deferred
LTIP awards on a change of control will be prorated
to time and performance.
There is a presumption that the Committee will prorate
to time. The Committee will only waive prorating in
exceptional circumstances where it views the change
of control as an event which has provided a material
enhanced value to shareholders which will be fully
explained to shareholders.
Statement of conditions elsewhere in the Company
The remuneration policy for all employees is determined in terms of best practice and ensuring that the Company is able to attract and retain the
best people. This principle is followed in the development of our Policy. However, employee views are not specifically sought in determining this policy.
The Company does not currently use any remuneration comparison metrics.
Salary and benefit packages are linked to both individual and business performance. All employees participate in bonus schemes which, together
with salary reviews linked to business performance, enable all employees to share in the success of the Group. All employees are eligible to participate
in the SIP.
Consideration of shareholder views
The Committee takes the views of the shareholders seriously and these views are taken into account in shaping remuneration policy and practice.
Shareholder views are considered when evaluating and setting remuneration strategy and the Committee commits to consulting with key shareholders
prior to any significant changes to its Policy.
54
Zoopla Property Group Plc Annual Report 2014
Annual report on remuneration
Introduction
The following report outlines how the Policy was implemented in 2014 and how the
Committeeintends to apply the Policy in 2015.
Single total figure of remuneration (audited)
Executive Directors (audited)
The table below sets out the single total figure of remuneration and breakdown for each Executive Director in respect of the 2014 financial year.
Comparative figures for the 2013 financial year have also been provided. Figures provided have been calculated in accordance with the new
UKdisclosure requirements: the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013
(Schedule 8 to the Regulations).
Single total figure of remuneration for Executive Directors for the 2014 financial year (audited)
Name Period
Salary
£000
Benefits¹
£000
Bonus
£000
LTIPs
£000
Pension²
£000
SIP
£000
Total
£000
Alex Chesterman 2014 302 3 158 — 33 3 499
2013 203 3 119 — 31 — 356
Stephen Morana 2014 223 ³ 3 113 — 16 3 358
2013 83 1 44 — — — 128
4
1 The types of benefits provided are set out in the Remuneration Policy section of this report.
2 Pension contribution was 5% of the respective salaries prior to the IPO and 15% thereafter.
3 Stephen Morana became a Non-Executive Director of boohoo.com plc in April 2014. Stephen receives and retains £40,000 per annum in respect of this role. This amount
has not been included in the single remuneration figure presented in the table.
4 Stephen Morana joined the Group on 15 April 2013 and therefore his remuneration reflects only part of the financial year.
Non-Executive Directors (audited)
The table below sets out the single total figure of remuneration and breakdown for each Non-Executive Director for the year from the date
oftheirappointment.
2014 2013
Fees
£000
Taxable
benefits
£000
Total
£000
Fees
£000
Taxable
benefits
£000
Total
£000 Roles
Mike Evans (Chairman) 63 — 63 — — — Chairman,
Nomination Committee Chairman
David Dutton — — — — — — Non-Executive Director
Duncan Tatton-Brown 21 — 21 — — — Senior Independent Director,
Audit Committee Chairman
Grenville Turner 11 — 11 — — — Non-Executive Director
Robin Klein 17 — 17 — — — Non-Executive Director
Sherry Coutu 21 — 21 — — — Remuneration Committee Chairman
Stephen Daintith — — — — — — Non-Executive Director
Financial statements
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Annual report on remuneration continued
Directors’ remuneration report continued
Annual fees
2014
annual fee
£000
2013
annual fee
£000
Chairman 150 —
Board fee 40 —
Chairman of Remuneration Committee 10 —
Chairman of Audit Committee 10 —
Additional information regarding single figure table (audited)
The Committee considers that performance conditions for all incentives are suitably demanding, having regard to the business strategy,
shareholder expectations, cyclicality of the markets in which the Group operates and external advice. To the extent that any performance
condition is not met, the relevant part of the award will lapse. There is no retesting of performance.
Bonus awards (audited)
In respect of the 2014 financial year, the bonus awards payable to Executive Directors were agreed by the Committee having reviewed the Company’s
revenue and adjusted EBITDA performance and each Executive Director’s performance against their personal objectives. This bonus was applied
tothe weighted average salary of each Director over the nine month period to 30 September 2014. Prior to this, bonuses had been paid based
on a performance period aligned with the calendar year. The total bonus figure for the 2014 financial year therefore contains a three month
allocation of the bonus paid in respect of the 2013 calendar year. Going forward bonuses will be assessed over a performance period aligned
with the financial year using the criteria outlined in the Policy on pages 46 and 47.
The 2014 bonus will be paid in cash. For the 2015 financial year, a portion of the bonus will be deferred in shares as set out in the “Remuneration
Policy” and “Implementation of the Policy in financial year 2015”.
Name Performance criteria Weighting
Actual
performance
against target
Annual bonus
value achieved
(% salary)
Annual bonus
value achieved
£000
Alex Chesterman Revenue 33% >100%
Adjusted EBITDA 33% >100% 50% 158
Personal objectives 33% 100%
Stephen Morana Revenue 33% >100%
Adjusted EBITDA 33% >100% 50% 113
Personal objectives 33% 100%
The Committee has not exercised any discretion in relation to the bonus outcomes. It is the Committee’s view that the personal performance
conditions are commercially sensitive and therefore details cannot be disclosed. It should be noted that the bonus plan for 2015 has been
designed to allow the Committee to provide full retrospective disclosure of the level of financial performance achieved against targets set
at thebeginning of the financial year.
56
Zoopla Property Group Plc Annual Report 2014
Long-term incentives awarded in 2014 (audited)
The table below sets out the details of the long-term incentive awards granted in the 2014 financial year where vesting will be determined
according to the achievement of performance conditions that will be tested in future reporting periods.
Name Award type
Basis on which
award made
Face value
of award
£000
Percentage of
award vesting
at threshold
performance
%
Maximum
percentage
of face value
that could vest
% Performance conditions
Alex Chesterman LTIP Annual 675 25% 100% Relative TSR and EPS equally weighted
Stephen Morana LTIP Annual 375 25% 100% Relative TSR and EPS equally weighted
The awards were granted on 1 August 2014 in the form of nil-cost options. The face value is calculated using the IPO price of 220 pence.
Theperformance conditions are set out in the Remuneration Committee Chairman’s annual statement. The awards will vest, subject to
achievingthe threshold performance level, over the period to30 September 2017.
HMRC Share Incentive Plan (audited)
This section sets out the details of the Share Incentive Plan awards granted in the 2014 year. This plan was available to all employees, including
the Executive Directors. There are no performance conditions attached to the grants. However, the award of Free Shares is subject to the Director’s
continued employment for a period of three years from the grant date. Each Executive Director received 1,137 Free Shares on 23 June 2014 with
a face value of £2,500. The face value of the Free Shares was calculated using the IPO price of 220 pence.
During the year each Executive Director also contributed £600 from pre-tax income to the Partnership Share element of the Plan. Shares purchased
by employees under the plan are subject to one-for-one matching by the Company.
Payments to past Directors/payments for loss of office
There were no payments in the financial year.
Statement of Directors’ shareholdings (audited)
Shareholding requirements in operation at the Company are currently 100% of base salary for both the CEO and CFO. Executive Directors
arerequired to build up their shareholdings over a reasonable amount of time which would normally be five years. The number of shares
oftheCompany in which current Directors had a beneficial interest and details of long-term incentive interests as at 30 September 2014
aresetout inthe table below.
Shares held directly Other shares held
Director
Beneficially
owned¹
Shares not
subject to
performance
conditions²
Total number
of ordinary and
deferred shares
Current
shareholding
(% salary)³
LTIP interests
subject to
performance
conditions
Alex Chesterman 17,300,445 1,137 17,301,582 >100% 306,818
Stephen Morana 1,005,000 1,137 1,006,137 >100% 170,454
1 No shares were held by any connected parties. There has been no change in the number of shares held between 30 September 2014 and 9 December 2014.
2 The number of matching shares to be awarded under the SIP is not yet certain as the accumulation period for the purchase of Partnership Shares extends beyond the financial
year end. The number of shares will be determined at the end of the accumulation period in March 2015.
3 The closing share price of 236.60 pence as at 30 September 2014 has been taken for the purpose of calculating the current shareholding as a percentage of salary. Unvested
LTIP shares and options do not count towards satisfaction of the shareholding guidelines. Shares awarded under the DBP and matching shares under the Share Incentive Plan
will not count towards the shareholding requirement.
Financial statements
57
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Strategic report Corporate governanceOverview
115
Value of £100 invested
Source: Thomson Reuters DataStream
110
105
100
95
90
85
23 June
2014
30 June
2014
31 July
2014
29 August
2014
30 Septembe
r
2014
Zoopla Property Group Plc FTSE 250 index
Annual report on remuneration continued
Directors’ remuneration report continued
Statement of Directors’ shareholdings (audited) continued
The Chairman and the Non-Executive Directors are not subject to a shareholding requirement. Details of their interests in shares are set out below:
Director
Shares held
30 September 2014 ¹
Mike Evans (Chairman) 34,494
David Dutton —
Duncan Tatton-Brown 22,727
Grenville Turner —
Robin Klein 653,246
Sherry Coutu 588,790
Stephen Daintith —
1 Shares held include any shares held by connected parties. There has been no movement in the number of shares held between 30 September 2014 and 9 December 2014.
Comparison of overall performance and pay (TSR graph)
The graph below shows the value of £100 invested in the Company’s shares since listing compared to the FTSE 250 index. The graph shows
thetotal shareholder return generated by both the movement in share value and the reinvestment over the same period of dividend income.
TheCommittee considers that the FTSE 250 is the appropriate index because the Company has been a member of this since listing. This graph
has been calculated in accordance with Regulations. It should be noted that the Company listed on 23 June 2014 and therefore only has a listed
share price for the period of 23 June 2014 to date of publication.
This graph shows the value by 30 September 2014 of £100 invested in Zoopla Property Group Plc on 23 June 2014 compared
withthevalueof£100 invested in the FTSE 250 index.
Chief Executive Officer historic remuneration
The table below sets out the total remuneration delivered to the Chief Executive Officer over the last two years valued using the methodology
applied to the single total figure of remuneration. The Company has expanded quickly from a start-up company and the Committee does not
believe that the remuneration payable in its earlier years bares any comparative value to that paid in its later years and therefore the Committee
has chosen to disclose remuneration only for the two most recent financial years:
Chief Executive Officer 2014 2013
Total single figure (£000) 499 356
Annual bonus payment level achieved (% of maximum opportunity) 100% 100%
It should be noted that the Company did not introduce a long term incentive plan until it listed. Therefore, there were no awards capable
ofvesting in 2013 and 2014.
58
Zoopla Property Group Plc Annual Report 2014
Relative importance of the spend on pay
The table below sets out the relative importance of the spend on pay in the 2014 financial year and 2013 financial year compared with other
disbursements. All figures provided are taken from the relevant Company accounts.
Disbursements from
profit in 2014
financial year
£000
Disbursements from
profit in 2013
financial year
£000 % change
Profit distributed by way of dividend¹ 27,879 22,406 24.4%
Overall spend on pay including Executive Directors 13,565 9,774 38.8%
Total tax contributions² 16,812 11,821 42.2%
1 Includes dividends paid and proposed in respect of the financial year.
2 Total tax contributions include tax for period in respect of corporation tax, PAYE, national insurance contributions and VAT.
Change in Chief Executive Officer’s remuneration compared with employees
The following table sets out the change in the remuneration paid to the Chief Executive Officer from 2013 to 2014 compared with the average
percentage change for employees.
% increase in remuneration in 2014
compared with remuneration in 2013
CEO Employees
Salary 48.8% 6.5%
Annual bonus 32.8% 14.0%
Taxable benefits 0.0% 0.0%
The increase in salary for the CEO in 2014 reflects the fact that salaries for Executive Directors were benchmarked against a FTSE 250 comparative
Group at the IPO and were implemented with effect from 23 June 2014. The percentage increases for employees are based on the number of
employees across the Group who were in full-time employment at both 30 September 2013 and 30 September 2014.
Implementation of the Policy in 2015
The Remuneration Committee proposes to implement the Policy for 2015, subject to shareholder approval, as set out below:
Salary
There are no changes to salaries for 2015.
Name
Salary
2015 ¹
£000
Alex Chesterman 450
Stephen Morana 300
1 Salaries for Executive Directors were benchmarked against a FTSE 250 comparative Group at the IPO and were implemented with effect from 23 June 2014. These salaries
are unadjusted for the 2015 financial year.
Benefits and pension
There are no proposed changes for the financial year ending 30 September 2015.
Financial statements
59
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Annual report on remuneration continued
Implementation of the Policy in 2015 continued
Annual bonus
Operation of element Potential value Performance metrics used, weightings and time period applicable
Introduction of Deferred Bonus Plan
which means that for the 2015
financial year:
f 50% of any bonus earned will
bepaid in cash; and
f 50% of any bonus earned will
bepaid in shares which vest
aftera further three years subject
to the Executive Director’s
continued employment.
Maximum bonus opportunity
as disclosed inthe prospectus:
f CEO 125% of salary; and
f CFO 100% of salary.
Performance conditions for the 2015 financial year and
their weighting:
f EBITDA (50%);
f revenue (30%); and
f personal strategic objectives (20%).
The details of the targets applicable to the bonus for the
coming year are considered by the Committee to be
commercially sensitive as they are the key metrics that
arecritical to the operation of the Company, so they have
not been disclosed as the Committee feels it would be
detrimental to the interests of the Company to do so.
The Committee will provide full retrospective disclosure of
the performance targets for the financial measures to allow
shareholders to judge the bonus earned in the context of
the performance delivered. The Committee believes that
some of the personal objectives may continue to remain
commercially sensitive.
Long Term Incentive Plan
The August 2014 LTIP grant was made in respect of the 2015 financial year. Therefore, there are no proposed changes for the 2015 financial year.
Operation of element Potential value Performance metrics used, weightings and time period applicable
f No change. Maximum award value as disclosed
in the prospectus:
f CEO 150% of salary; and
f CFO 125% of salary.
Awards will vest at the end of three years subject to the
achievement of the following performance conditions:
f 50% EPS – EPS growth of 15% p.a. for 25% of this
element of the award to vest with full vesting occurring
for EPS growth of 27.5% p.a.; and
f 50% comparative TSR performance of the Company
compared to the FTSE 250 (excluding real estate and
equity investment trusts) – 25% vesting of this element
of the award for median TSR comparative performance
with full vesting at the upper quartile.
HMRC Share Incentive Plan
From 6 April 2015 the scheme will be amended so that Matching Partnership Shares are granted on a monthly basis for each Partnership Share
purchased by an eligible employee.
Directors’ remuneration report continued
60
Zoopla Property Group Plc Annual Report 2014
Non-Executive fees
There are no changes to the Chairman’s and Non-Executive Directors’ fees for 2015.
Name
Fees
2015 ¹
£000
Mike Evans 150
Duncan Tatton-Brown 50
Grenville Turner 40
Robin Klein 40
Sherry Coutu 50
1 Fees for the Chairman and Non-Executive Directors were benchmarked against a FTSE 250 comparative group at the IPO and were implemented with effect from 1 July 2014.
These fees are unadjusted for the 2015 financial year.
Shareholder voting at general meeting
The Policy will be put to a binding vote at the AGM on 12 February 2015. The Chairman’s annual statement and the Annual report on remuneration
will be subject to an advisory vote. This is the Company’s first year as a public company and therefore the 2015 AGM will be the first. This means
that there is no historic voting to disclose on the Company’s Executive remuneration.
Sherry Coutu
Chairman, Remuneration Committee
Financial statements
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Strategic report Corporate governanceOverview
Directors’ report (other disclosures)
Introduction
The Directors present their Annual Report and
audited financial statements for the year ended
30 September 2014, in accordance with
section 415 of the Companies Act 2006.
Certain disclosure requirements for inclusion in this report have been
incorporated by way of cross reference to the Strategic report and
theDirectors’ remuneration report, and should be read in conjunction
withthis report. The following also form part of this report:
f greenhouse gas emissions, which can be found on page 23;
f employees, which can be found on page 22;
f the Corporate governance statement, set out on pages 28 to 31; and
f our strategy and objectives, set out on page 8.
Information regarding the Company’s charitable donations can be found
in the Our people and corporate responsibility report on pages 22 to 23.
No political donations were made in 2014 (2013: £nil).
The Company
Zoopla Property Group Plc (the “Company”) is a company incorporated
and domiciled in the UK, with registration number 09005884. The
Company was incorporated on 22 April 2014, prior to the initial public
offering of the Company, as a wholly owned subsidiary of DMG Media
Investments Limited.
On 16 May 2014, the Company re-registered as a public limited
company and changed its name from “Project ZigZag Limited” to
“Zoopla Property Group Plc”. On 18 June 2014 conditional dealings
ofthe Company’s shares began on the London Stock Exchange and
on 23 June 2014 the Company was admitted to trading on the main
market of the London Stock Exchange. The Company has no
overseas subsidiaries.
Results and dividends
The Group’s results for the year are set out in the consolidated financial
statements on pages 69 to 91.
The Company only results of Zoopla Property Group Plc are set out on
pages 92 to 96.
The Directors have proposed a final dividend of 1.1 pence per share
tobe paid in respect of the year ended 30 September 2014. This will
be paid on 23 February 2015 to all shareholders on the register on
5December 2014.
Directors
The Directors of the Company who held office up to the date of signing
the financial statements can be found on page 51.
The Directors’ biographical details setting out their key strengths and
experiences are laid out on pages 26 to 27. Following recommendations
from the Nomination Committee, the Board considers that all Directors
continue to be effective, committed to their roles and able to devote
sufficient time to discharge their responsibilities. All of the Directors will
seek election at the Company’s AGM on 12 February 2015 in accordance
with the Company’s Articles of Association, which require newly
appointed Directors to stand for election at the next AGM.
Directors’ interests
Information about the Directors’ interests in the Ordinary Shares of
theCompany at 30 September 2014 or date of appointment if later,
andthe9 December 2014 is set out in the Directors’ remuneration
report on pages 57 and 58.
Directors’ indemnities and insurance
In accordance with the Companies Act 2006 and the Company’s
Articles, the Company has purchased and maintains Directors’ and
officers’ liability insurance cover which remains in place as at the date
of this report. A review will be carried out on an annual basis to ensure
that the Board remains satisfied that an appropriate level of cover is
inplace.
The Company also purchased prospectus liability insurance to provide
cover for liabilities incurred by the Directors in the performance of their
duties or powers in connection with the issue of the Prospectus in relation
to the listing of the Company’s shares on the London Stock Exchange.
Employees
As at year end the Company employed 234 employees (as set out
in the gender diversity table on page 22).
Articles of Association
The Articles of Association of the Company can only be amended
byspecial resolution at a general meeting of the shareholders.
Noamendments are proposed at the 2015 AGM.
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Zoopla Property Group Plc Annual Report 2014
Annual General Meeting (AGM)
The Company’s first AGM since listing will take place on 12 February 2015
at the offices of the Company’s solicitors, Freshfields Bruckhaus Deringer LLP
at 65 Fleet Street, London EC4Y1HT at10.00am, and the Chairmen
of each of the Board’s Committees will be present to answer questions
put to them by shareholders. The Annual Report and Accounts and Notice
of the AGM, including the resolutions to be proposed, will be sent to
shareholders at least 20 working days prior to the date of the meeting.
To encourage shareholders to participate in the AGM process, the
Company proposes to offer electronic proxy voting through the CREST
service and all resolutions will be proposed and voted on at the meeting
on an individual basis by shareholders or their proxies. Voting results
will be announced through the Regulatory News Service and made
available on the Company’s website.
Share capital
Details of the Company’s share capital are set out in Note 20 to the
consolidated financial statements. Following the Company’s IPO it has
one class of Ordinary Shares. As at 24 November 2014 the Company
had an issued share capital of 418,092,702 Ordinary Shares of £0.001.
The rights and obligations attached to these shares are governed
byUK law and the Company’s Articles of Association.
Holders of Ordinary Shares of the Company are entitled to receive
notice and to attend and speak at general meetings. On a show
ofhands, every shareholder present in person or by proxy (or duly
authorised corporate representatives) shall have one vote and, on
apoll, every member who is present in person or by proxy shall
haveone vote for every share held.
Other than the general provisions of the Articles of Association and
prevailing legislation, there are no specific restrictions on the size
ofaholding or on the transfer of the Ordinary Shares.
The Directors are not aware of any agreements between holders of
theCompany’s shares that may result inthe restriction of the transfer
of securities or on voting rights except forthe lock-ins agreed at the
time of Admission by certain significant corporate and individual
shareholders, as detailed opposite. No shareholder holds securities
carrying any special rights or control over the Company’s share capital.
Shareholder Lock-up period
Number
of shares
1. Alex Chesterman¹ 365 days from Admission 17,300,445
2. Simon Kain 365 days from Admission 4,148,039
3. DMGT Media
InvestmentsLimited
180 days from Admission 132,788,961
4. Atlas Venture Fund VII LP 180 days from Admission 19,901,869
5. Octopus Investments
Nominees Limited
180 days from Admission 822,022
6. Octopus Zenith LP 180 days from Admission 7,031,765
7. Countrywide² 180 days from Admission 16,923,813
8. Connells Limited 180 days from Admission 16,372,745
9. LSL Property Services Plc 180 days from Admission 10,863,818
10. Chesham Holdings Limited³ 365 days from Admission 588,790
11. Local Globe III Limited
4
365 days from Admission 1,303,884
12. Stephen Morana 365 days from Admission 1,005,000
13. Duncan Tatton-Brown 365 days from Admission 22,727
14. Jon Notley 365 days from Admission 79,429
1 Alex Chesterman’s shareholding at Admission was disclosed in the IPO prospectus
as 4.5%. The over allotment sale took place in the month following the IPO and
reduced his shareholding to 4.1%.
2 Countrywide’s shares are held by two entities: Countrywide Plc and Countrywide
Estate Agents.
3 Shares held by Chesham Holdings Limited are held on behalf of Sherry Coutu.
4 50.1% of the shares held by Local Globe III Limited are held on behalf of Robin Klein.
Authority to purchase own shares
At a general meeting of the Company on 4 June 2014, the Company
was authorised to purchase a maximum of 10% of the Company’s
issued share capital immediately following Admission to the London
Stock Exchange. This authority will expire at the close of the 2015
AGM or 18 months from the date of the resolution if earlier.
Authority to allot shares
As part of the IPO, the Company was granted a general authority
byitsshareholders to allot shares up to an aggregate nominal amount
of £139,214.15 and in connection with a rights issue or other pre-emptive
offer to allot shares up to an aggregate nominal amount of£278,428.31.
As at the date of this Annual Report shares have been issued under
these authorities. These authorities will expire at the conclusion of the
2015 AGM unless revoked, varied or renewed prior to that meeting.
Resolutions will be proposed at the 2015 AGM to renew these authorities.
Financial statements
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Directors’ report (other disclosures) continued
Major interests in shares
As at 30 September 2014 and 9 December 2014, the Company had been advised of the following notifiable interests in the Company’s voting rights:
Number of
voting rights at
9 December
2014
% voting
rights at
9 December
2014
Number of
voting rights at
30 September
2014
% voting
rights at
30 September
2014
DMG Media Investments 132,788,961 31.76 132,788,961 31.76
Lansdowne Partners 29,547,280 7.07 21,808,000 5.22
Standard Life Investments 25,891,479 6.19 26,100,171 6.24
Capital Research & Management 21,611,820 5.17 11,000,000 2.63
Atlas Venture 19,901,869 4.76 19,901,869 4.76
Alex Chesterman 17,300,445 4.14 17,300,445 4.14
Countrywide plc 16,923,813 4.05 16,923,813 4.05
Caledonia Investments, Australia 16,384,139 3.92 18,742,766 4.48
Connells Limited 16,372,745 3.92 16,372,745 3.92
Fidelity Management & Research 9,200,973 2.20 13,309,416 3.18
Financial risk management
The Company’s objectives and policies on financial risk management,
including information on credit, liquidity and market risks can be found
in Note 23 to the financial statements.
Going concern
The financial position of the Group shows a positive net and current
asset position with significant cash resources. 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.
Auditor and disclosure of information to auditor
Each of the Directors at the date of this report confirms that:
f so far as he or she is aware, there is no relevant audit information
ofwhich the Company’s auditor is unaware; and
f he/she has taken all the reasonable steps that he/she ought to
have taken as a Director to make himself/herself aware of any
relevant audit information and to establish that the Company’s
auditor is aware of the information.
The confirmation is given and should be interpreted in accordance
withthe provisions of section 418 of the Companies Act 2006.
Deloitte LLP has expressed its willingness to continue in office as
auditor and a resolution to re-appoint it as the Company’s auditor
willbe proposed at the forthcoming AGM.
Subsequent events
Between 30 September 2014 and the date of signing of this report
there have been no reportable subsequent events.
This report has been approved by the Board of Directors and has been
signed on its behalf by:
Ned Staple
Company Secretary
24 November 2014
Zoopla Property Group Plc
Harlequin Building
65 Southwark Street
London SE1 0HR
Company number: 09005884
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Zoopla Property Group Plc Annual Report 2014
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and
theGroup and parent company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and parent
company financial statements for each financial year.
Under that law they are required to prepare the Group financial
statements in accordance with IFRSs as adopted by the European
Union and applicable law and have elected to prepare the parent
company financial statements on the same basis.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and parent company and of their
profit or loss for that period.
In preparing each of the Group and parent company financial
statements, the Directors are required to:
f select suitable accounting policies and then apply them consistently;
f make judgements and estimates that are reasonable and prudent;
f state whether they have been prepared in accordance with IFRSs
as adopted by the European Union; and
f prepare the financial statements on the going concern basis
unlessit is inappropriate to presume that the Group and the
parentcompany will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the parent company and enable them to ensure
that its financial statements comply with the Companies Act 2006.
They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent
anddetect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible
for preparing a Strategic report, Directors’ report, Directors’ remuneration
report and Corporate governance statement that comply with that law
and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Having taken advice from the Audit Committee, the Directors
considerthat the Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company’s performance, business
modeland strategy.
Directors’ statement pursuant to the Disclosure
andTransparency Rules
Each of the Directors, whose names and functions are listed within
theCorporate governance statement, confirm that, to the best of
theirknowledge:
f the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and
fairview of the assets, liabilities, financial position and profit
oftheGroup; and
f the Strategic report contained in the Annual Report includes a fair
review of the development and performance of the business and
the position of the Group, together with a description of the
principal risks and uncertainties that it faces.
Financial statements
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Strategic report Corporate governanceOverview
Opinion on financial statements of Zoopla Property Group plc
In our opinion:
f the financial statements give a true and fair view of the state of the
group’s and of the parent company’s affairs as at 30 September 2014
andof the group’s profit for the year then ended;
f the group financial statements have been properly prepared in
accordance with International Financial Reporting Standards
(IFRSs) asadopted by the European Union;
f the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European
Union andasapplied in accordance with the provisions of the
Companies Act 2006; and
f the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006 and, as regards the group
financial statements, Article 4 of the IAS Regulation.
The financial statements comprise of the consolidated statement of
comprehensive income, the consolidated and parent company statement
of financial position, the consolidated and parent company statement
of cash flows, the consolidated and parent company statement of
changes in equity and the related Notes 1 to 26 to the consolidated
financial statements and Notes 1 to 9 to the parent company financial
statements. The financial reporting framework that has been applied
intheir preparation is applicable law and IFRSs asadopted by the
European Union and, as regards the parent company financial
statements, as applied in accordance with the provisions of
theCompanies Act 2006.
Going concern
As required by the Listing Rules we have reviewed the directors’
statement contained on page 64 that the group is a going concern.
We confirm that:
f we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements
isappropriate; and
f we have not identified any material uncertainties that may cast significant
doubt on the group’s ability to continue as a going concern.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the group’s ability to continue
as a going concern.
Independent auditor’s report
To the members of Zoopla Property Group Plc
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources
inthe audit and directing the efforts of the engagement team:
Risk How the scope of our audit responded to the risk
Revenue Recognition – completeness
Revenue primarily consists of recurring subscription payments inreturn
for property listings on the Group’s websites. Individual contracts exist
with each customer with a range of different terms and conditions, and
as a result there are a significant number of agreements. Consequently
there is a risk that customer subscription agreements may not be
appropriately captured and accounted for inline with underlying
contractual terms and hence the revenue population may not be complete.
In order to address the risk of revenue completeness we have:
i) understood Management’s processes and controls in respect
ofthe appropriate recognition of revenue, including testing the
design and implementation of those controls. Our work focused,
inparticular on the arrangements put in place by Management
toensure billing of customers in line with contractual terms;
ii) identified and investigated anomalies in billing patterns for specific
customers to check that billing runs (and hence revenue) are
complete; and
iii) checked that for a sample of customer contracts, that revenue
hasbeen appropriately recognised in line with the contractual
terms and IAS 18.
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Zoopla Property Group Plc Annual Report 2014
The Audit Committee’s consideration of these risks is set out on
pages33 and 34.
Our audit procedures relating to these matters were designed in the
context of our audit of the financial statements as a whole, and not to
express an opinion on individual accounts or disclosures. Our opinion
on the financial statements is not modified with respect to any of the
risks described above, and we do not express an opinion on these
individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced.
We use materiality both in planning the scope of our audit work and
inevaluating the results of our work.
We determined materiality for the group to be £1.5 million, which is 5%
of pre-tax profit, and below 2% of equity.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £30,000, as well as
differences below that threshold that, in our view, warranted reporting
on qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall
presentation of the financial statements.
An overview of the scope of our audit
Our group audit was scoped by obtaining an understanding of the
group and its environment, including group-wide controls, and assessing
the risks of material misstatement at the group level. Our audit scope
covers 100% of the group’s net assets, revenue and profit before tax.
At the parent entity level we also tested the consolidation process and
carried out analytical procedures to confirm our conclusion that there
were no significant risks of material misstatement of the aggregated
financial information of the remaining components not subject to audit
or audit of specified account balances.
Risk How the scope of our audit responded to the risk
Accounting for share-based payment arrangements
includingwarrants
The Group has a number of share-based payment arrangements,
which include warrants issued to certain estate agents and share
incentive plans for management and employees. The warrant
instruments are complex and involve a commitment to list properties
inreturn for commercially agreed subscription fees. The fair value
ofthe warrant is based on the fair value at the time of grant and
thisinvolves Management judgement. For the share incentive plans,
Management judgement is also required for the inputs to the
valuationmodel and the underlying assumptions.
There is a risk that these complex instruments may not be valued
correctly, and subsequently not accounted for appropriately in
accordance with IFRS 2.
We have assessed the accounting treatment for both warrants and
employee share option schemes to ensure that they are in line with
IFRS 2, involving consideration of the appropriate vesting period for
each scheme (pre and post IPO).
We have critically assessed and evaluated Management’s assumptions
and valuation methodology, using specialists where necessary for
themore complex schemes. We have agreed key inputs used within
valuation models to internal and external sources, benchmarked
these underlying assumptions against external data and internal
historical trends to check that they are reasonable and supportable.
We obtained the share-based payment calculations and performed
audit procedures to determine the accuracy of the IFRS 2 charge,
aswell as considering whether the disclosure in Note 21 meets
therequirements of IFRS 2.
Group reorganisation and IPO
Accounting for group reorganisation prior to the IPO and costs directly
incurred in relation to the IPO were significant matters that required
management judgement.
The accounting for the Group reorganisation, in the absence of any
prescribed accounting treatment for common control transactions
under IFRS, required management to adopt the principles of FRS 6 and
involved the use of merger relief and the creation of a non-distributable
merger reserve in the new parent company. This item leads to material
accounting entries, particularly in the parent company financial statements
and, therefore, there is a risk that incorrect application of the accounting
principles leads to a misleading presentation of the reserves available
for distribution.
Directly attributable IPO costs totalling £5.6 million have been
separately disclosed as “exceptional items”, which is a non-GAAP
measure. This item is a material disclosure in the financial statements
and, therefore, there is a risk of inappropriate classification distorting
the performance shown in the Income statement.
For the Group reorganisation we reviewed the accounting entries
prepared by management, involved technical experts, and tested
theaccounting entries to supporting documentation.
For the IPO costs, we confirmed by reference to invoices and other
supporting documentation, that the costs classified as exceptional
directly related to the IPO.
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Strategic report Corporate governance Financial statementsOverview
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
f the part of the Directors’ remuneration report to be audited
hasbeen properly prepared in accordance with the Companies
Act2006; and
f the information given in the Strategic Report and the Directors’
Report for the financial year for which the financial statements
areprepared is consistent with the financial statements.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if,
inour opinion:
f we have not received all the information and explanations we
require for our audit; or
f adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
f the parent company financial statements are not in agreement
withthe accounting records and returns.
We have nothing to report in respect of these matters.
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our
opinion certain disclosures of directors’ remuneration have not been
made or the part of the Directors’ remuneration report to be audited
isnot in agreement with the accounting records and returns. We have
nothing to report arising from these matters.
Corporate Governance Statement
Under the Listing Rules we are also required to review the part of the
Corporate Governance Statement relating to the company’s compliance
with nine provisions of the UK Corporate Governance Code. We have
nothing to report arising from our review.
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland), we are
required to report to you if, in our opinion, information in the annual
report is:
f materially inconsistent with the information in the audited financial
statements; or
f apparently materially incorrect based on, or materially inconsistent
with, our knowledge of the group acquired in the course of performing
our audit; or
f otherwise misleading.
In particular, we are required to consider whether we have identified
any inconsistencies between our knowledge acquired during the audit
and the directors’ statement that they consider the annual report is fair,
balanced and understandable and whether the annual report appropriately
discloses those matters that we communicated to the audit committee
which we consider should have been disclosed. We confirm that we
have not identified any such inconsistencies or misleading statements.
Respective responsibilities of Directors and auditor
As explained more fully in the Statement of Directors’ responsibilities,
thedirectors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board’s Ethical Standards for Auditors.
Wealso comply with International Standard on Quality Control (UK
andIreland). Our audit methodology and tools aim to ensure that
ourquality control procedures are effective, understood and applied.
Our quality controls and systems include our dedicated professional
standards review team and independent partner reviews.
This report is made solely to the company’s members, as a body,
inaccordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them
inan auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to thegroup’s and the parent company’s
circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates
made by the directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial
information in the annual report to identify material inconsistencies with
the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with,
the knowledge acquired by us in the course of performing the audit.
Ifwe become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Mark Lee-Amies (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London
24 November 2014
Independent auditor’s report continued
To the members of Zoopla Property Group Plc
68
Zoopla Property Group Plc Annual Report 2014
Consolidated statement of comprehensive income
For the year ended 30 September 2014
Notes
2014
£000
2013
£000
Revenue 80,230 64,498
Administrative expenses (51,763) (36,536)
Adjusted EBITDA 3 39,614 29,433
Share-based payments 21 (3,910) (98)
Depreciation and amortisation (1,658) (1,373)
Exceptional items 3 (5,579) —
Operating profit 4 28,467 27,962
Finance income 202 325
Profit before tax 28,669 28,287
Income tax expense 9 (7,592) (5,957)
Profit for the year being total comprehensive income 21,077 22,330
Attributable to:
Owners of the parent 21,077 22,330
Earnings per share
Basic (pence per share) 11 5.1 5.4
Diluted (pence per share) 11 5.1 5.4
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Strategic report Corporate governance Financial statementsOverview
Consolidated statement of financial position
As at 30 September 2014
Notes
2014
£000
2013
£000
Assets
Non-current assets
Property, plant and equipment 12 1,457 106
Intangible assets 15 75,194 76,537
Trade and other receivables 16 — 9,563
Deferred tax assets 19 437 —
77,088 86,206
Current assets
Trade and other receivables 16 5,887 4,903
Cash and cash equivalents 31,025 28,123
36,912 33,026
Total assets 114,000 119,232
Liabilities
Current liabilities
Trade and other payables 17 11,418 10,140
Current tax liabilities 3,777 720
Provisions 18 — 492
Non-current liabilities
Deferred tax liability 19 — 534
Provisions 18 634 59
Total liabilities 15,829 11,945
Net assets 98,171 107,287
Equity attributable to owners of the parent
Share capital 20 418 4
Share premium reserve 50 18,577
Other reserves 20 87,537 70,187
Retained earnings 10,166 18,519
Total equity 98,171 107,287
The consolidated financial statements of Zoopla Property Group Plc were approved by the Board of Directors and were signed on its behalf by:
A Chesterman S Morana
Director Director
24 November 2014 24 November 2014
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Zoopla Property Group Plc Annual Report 2014
Consolidated statement of cash flows
For the year ended 30 September 2014
2014
£000
2013
£000
Cash flows from operating activities
Profit before tax 28,669 28,287
Adjustments for:
Depreciation of property, plant and equipment 153 132
Amortisation of intangible assets 1,505 1,241
Loss on disposal of property, plant and equipment — 23
Financial income (202) (325)
Share-based payments 3,910 98
Operating cash flow before changes in working capital 34,035 29,456
(Increase)/decrease in trade and other receivables (984) 2,577
Increase in trade and other payables 2,747 1,271
(Decrease)/increase in provisions (492) 492
Cash generated from operating activities 35,306 33,796
Income tax paid (4,325) (2,216)
Net cash inflows from operating activities 30,981 31,580
Cash flows (used in)/from investing activities
Acquisition of subsidiaries, net of cash acquired (1,497) (4,496)
Interest received 202 325
Acquisition of property, plant and equipment (929) (85)
Acquisition of intangible assets (162) (21)
Net cash flows used in investing activities (2,386) (4,277)
Cash flows from/(used in) financing activities
Proceeds on issue of shares 72 22
Unpaid share capital paid-up 9,563 —
Shares released from trust 150 —
Equity contributions received 50 —
Dividends paid (35,528) (10,158)
Net cash flows used in financing activities (25,693) (10,136)
Net increase in cash and cash equivalents 2,902 17,167
Cash and cash equivalents at beginning of period 28,123 10,956
Cash and cash equivalents at end of period 31,025 28,123
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Consolidated statement of changes in equity
For the year ended 30 September 2014
Share
premium
reserve
£000
Other reserves
Share
capital
£000
EBT share
reserve
£000
Merger
reserve
£000
Retained
earnings
£000
Total
equity
£000
At 1 October 2013 4 18,577 — 70,187 18,519 107,287
Profit and total comprehensive income
for the period — — — — 21,077 21,077
Transactions with owners recorded
directly in equity:
Share-based payments — — — — 3,882 3,882
Current tax on share-based payments — — — — 459 459
Deferred tax on share-based payments — — — — 722 722
Issue of share capital — 1,788 — — — 1,788
Group restructuring¹ 414 (20,315) — 19,901 — —
Equity contributions — — — — 50 50
Shares purchased by EBT — — (1,716) — — (1,716)
Shares released from EBT — — 150 — — 150
Transfer between reserves² — — — (985) 985 —
Dividends paid — — — — (35,528) (35,528)
At 30 September 2014 418 50 (1,566) 89,103 10,166 98,171
Share
premium
reserve
£000
Other reserves
Share
capital
£000
EBT share
reserve
£000
Merger
reserve
£000
Retained
earnings
£000
Total
equity
£000
At 1 October 2012 4 13,492 — 71,172 5,264 89,932
Profit and total comprehensive income
for the year — — — — 22,330 22,330
Transactions with owners recorded
directly in equity:
Share-based payments — — — — 98 98
Issue of share capital — 5,085 — — — 5,085
Transfer between reserves² — — — (985) 985 —
Dividends paid — — — — (10,158) (10,158)
At 30 September 2013 4 18,577 — 70,187 18,519 107,287
1 During the year the Group was subject to restructuring prior to Admission on the London Stock Exchange. Zoopla Property Group Plc was inserted at the top of the Group
asthe new parent company, with the former parent, ZPG Limited (formerly Zoopla Property Group Limited), becoming a direct subsidiary of Zoopla Property Group Plc
througha share-for-share exchange. Note 1.3 provides further details on the basis of consolidation. 2013 balances are stated as though the transactions occurred within
ZooplaProperty Group Plc. In addition, the 2014 issue of share capital balance of £1,788,000 represents £1,738,000 of shares issued by the previous parent company,
ZPGLimited. It is presented as though the shares were issued by Zoopla Property Group Plc.
2 The transfer from merger reserve to retained earnings in 2014 and 2013 represents an equalisation adjustment in respect of the amortisation charge on intangibles which
aroseon acquisition of The Digital Property Group Limited on 31 May 2012.
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Zoopla Property Group Plc Annual Report 2014
Notes to the financial statements
1. Accounting policies
Zoopla Property Group Plc is a company domiciled and incorporated in the United Kingdom. The address of the registered office is the
HarlequinBuilding, 65 Southwark Street, London SE1 0HR.
The Company was incorporated on 22 April 2014 as Project ZigZag Limited, to act as the holding company for ZPG Limited (formerly known
asZoopla Property Group Limited) and its subsidiaries. On 16 May 2014 the Company registered as a public limited company and changed
itsname to Zoopla Property Group Plc.
1.1 Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below for the years ended 30 September 2014
and 30 September 2013. The policies have been consistently applied to all the periods presented, unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards
and IFRIC Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union
(“adopted IFRSs”). They are prepared on the historical cost basis.
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires
Management to exercise judgement in applying the Group’s accounting policies. Note 1.20 gives further details relating to the Group’s critical
accounting estimates.
At the date of approval, the following standards and interpretations which have not been applied in these financial statements were in issue but
not yet effective for financial years beginning on or after 1 January 2014:
f IFRS 9 – Financial Instruments – classification of financial assets and financial liabilities
f Amendments to IFRS 11 – accounting for acquisition of Interests in Joint Operations
f Amendments to IAS 16 and IAS 38 – clarification of acceptable methods of depreciation and amortisation
f IFRS 15 – revenue from contracts with customers
f Amendments to IAS 27 – equity method in separate financial statements
f Amendments to IFRS 10/IAS 28 – sale or contribution of assets between an investor and its associate or joint venture
f Improvements 2014 – annual improvements to IFRSs: 2012–2014
These standards are not expected to have a material impact on the financial statements.
1.2 Adoption of new and revised standards
These financial statements have been prepared in accordance with the policies set out in the statutory financial statements of Zoopla Property
Group Limited for the year ended 30 September 2013, with the exception of the application of certain new and revised accounting standards
inthe period. The new and revised standards and interpretations that have been adopted and a description of their impact on the amounts
reported in the financial statements is provided below.
IFRS 10 – Consolidated Financial Statements
IFRS 10 replaces the parts of IAS 27 – Consolidated and Separate Financial Statements that deal with consolidated financial statements and
SIC-12 Consolidation – Special Purpose Entities. IFRS 10 changes the definition of control such that an investor has control over an investee
when (i) it has power over the investee; (ii) it is exposed, or has rights, to variable returns from its involvement with the investee; and (iii) has the
ability to use its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously,
control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The adoption of IFRS 10 has had no material impact on the financial statements.
IFRS 12 – Disclosure of Interests in Other Entities
IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or
unconsolidated structured entities.
In general, the application of IFRS 12 has resulted in slightly more disclosures in the financial statements.
IFRS 13 – Fair Value Measurement
IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of IFRS
13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for
which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment
transactions that are within the scope of IFRS 2 – Share-based Payment, leasing transactions that are within the scope of IAS 17 – Leases, and
measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories
orvalue in use for impairment assessment purposes).
IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal
(or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless
ofwhether that price is directly observable or estimated using another valuation technique.
The adoption of IFRS 13 has had no material impact on the financial statements.
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Notes to the financial statements continued
1. Accounting policies continued
1.3 Basis of consolidation
The Consolidated financial statements incorporate the accounts of Zoopla Property Group Plc (“the Company”) and entities controlled by the
Company (its “subsidiaries”) (together, “the Group”). Control is achieved where the Company:
f has the power over the investee;
f is exposed, or has rights, to variable return from its involvement with the investee; and
f has the ability to use its power to affect its returns.
The results of subsidiaries acquired are included from the effective date of acquisition. The results of subsidiaries sold are included up to the
effective date of disposal.
During the year the Group was subject to restructuring prior to Admission on the London Stock Exchange. Zoopla Property Group Plc was inserted
atthe top of the Group as the new parent company, with the former parent, ZPG Limited (formerly Zoopla Property Group Limited), becoming a wholly
owned direct subsidiary of Zoopla Property Group Plc through a share-for-share exchange. Such Group reorganisations areoutside the scope of IFRS 3.
Therefore, in accordance with IAS 8, Management has used its judgement to develop a relevant and reliable accounting treatment, applying the principles
of merger accounting under the Companies Act 2006. Under this method the share capital and share premium reflect that of Zoopla Property Group Plc.
The 2013 comparatives have been disclosed on the basis that Zoopla Property Group Plc was in existence from the beginning of the prior year. 2013
comparatives are based on those of the previously existing Group as presented in the consolidated financial statements of Zoopla Property Group Limited
(now ZPG Limited) for the year ended 30 September 2013. The difference between the net assets of ZPG Limited recognised as an investment
by Zoopla Property Group Plc at the date of restructuring and the value of the shares issued within share capital has been recognised within
equity as amerger reserve. The brought forward merger reserve and retained earnings represent those of the previously existing Group.
1.4 Going concern
The financial position of the Group shows a positive net and current asset position with significant cash resources and high cash generation.
Furthermore, the Group continues to generate both positive adjusted EBITDA and profit after tax. As a consequence, the Directors believe
thatthe Group is well placed to manage its business and financial risks successfully.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of accounting in preparing the historical financial information.
1.5 Revenue
Revenue represents amounts due for services provided during the period, net of value added tax (VAT), with the VAT liability being recognised
atthe date of invoice.
The main sources of revenue are subscriptions from estate agents (“agency revenue”) and developers (“developer revenue”), in respect
of properties advertised on Group websites. They are recognised over the period of the subscription.
Revenue from other services (“other revenue”) is recognised in the month in which the service is provided.
1.6 Operating leases
Leases are classified as operating leases as substantially all of the risks and rewards incidental to ownership are not transferred to the Group.
Thetotal rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over
thelease term.
1.7 Finance income and costs
Finance income represents interest receivable on cash and deposit balances. Interest income is recognised on an accruals basis using
theeffective interest method.
Finance costs represent interest charged on bank loans and overdraft balances. Finance costs are recognised on an accruals basis using
theeffective interest method.
1.8 Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs
andthe estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised
within provisions in accordance with IAS 37.
Subsequent costs to repair or service a previously recognised item of property, plant and equipment are expensed when incurred as they
donotprovide future economic benefit to the organisation.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful economic lives, using the straight-line
method, on the following bases:
Fixtures and fittings – over 3–5 years
Computer equipment – over 2–5 years
Leasehold improvements – over the lease term
The Directors review the residual values and useful economic lives of assets on an annual basis. In 2014 the Group purchased fixtures and fittings
and computer equipment as part of the business’ relocation to a new head office. The Directors believe that the economic life of these assets is
five years. This has been reflected in the policy above.
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Zoopla Property Group Plc Annual Report 2014
1. Accounting policies continued
1.9 Business combinations
The acquisition of subsidiaries and businesses is accounted for using the acquisition method in accordance with IFRS 3. The consideration
foreach acquisition is measured at the aggregate of fair values of assets given, liabilities incurred or assumed, and equity instruments issued
bythe Group in exchange for control of the acquiree. Acquisition related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair value on the acquisition date except
deferred tax assets and liabilities which are measured in accordance with IAS 12 – Income Taxes.
1.10 Goodwill
Goodwill represents the difference between consideration paid and fair value of assets and liabilities acquired in a business combination. Goodwill
is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income.
Goodwill is not subject to amortisation but is tested for impairment annually and whenever the Directors have an indication that it might be
impaired. For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the combination.
Goodwill is tested for impairment by comparing the carrying amount of the cash-generating unit with its recoverable amount, which represents the
higher of estimated fair value and value in use. An impairment loss is recognised when the carrying value of the asset exceeds its recoverable amount.
The recoverable amounts of intangible assets and goodwill are based on the value in use, which is determined using cash flow projections
derived from financial plans approved by Management covering a five year period. They reflect Management’s expectations of revenue, EBITDA
growth, capital expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance.
Cash flows beyond the five year period have been extrapolated using perpetuity growth rates.
A growth rate of 3% has been applied to extrapolate the cash flows into perpetuity. The growth rate has been determined using long-term
historical growth rates of the goodwill and intangible assets and Management‘s expectation of future growth.
The pre-tax discount rate used is 12%.
1.11 Intangible assets
Intangible assets with finite lives are stated at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged
tothe consolidated statement of comprehensive income on a straight-line basis over the estimated useful lives of the intangible assets as follows:
Domain names – 5 years
Databases – 5–10 years
Customer relationships – 5 years
Computer software – 3 years
1.12 Research and development
The Group incurs expenditure on research and development in order to develop and improve new and existing property websites and products.
Expenditure includes the staff costs of the technical team.
Research expenditure on planning new websites or products and obtaining new technical knowledge is expensed in the period in which it is incurred.
Development costs are expensed when incurred unless they meet certain criteria for capitalisation. Development costs whereby research findings
are applied to creating a substantially enhanced website or new product are only capitalised once the technical feasibility and the commercial
viability of the project has been demonstrated and they can be reliably measured. Capitalised development costs are amortised on a straight-line
basis over their expected useful economic life.
Once the new website or product is available for use, subsequent expenditure to maintain the website or product, or on small enhancements
tothe website or product, is recognised as an expense when it is incurred.
1.13 Impairment of tangible and intangible assets excluding goodwill
At each statement of financial position date, the Directors review the carrying amounts of tangible and intangible assets to determine whether
there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated to determine
the extent of any impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the recoverable
amount of the cash-generating unit to which the asset belongs is estimated.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset
(or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate
of its recoverable amount, but so that this increased carrying amount does not exceed the carrying amount that would have been determined
had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
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Strategic report Corporate governance Financial statementsOverview
Notes to the financial statements continued
1. Accounting policies continued
1.14 Financial instruments
Financial assets and financial liabilities are recognised on the statement of financial position when the Group becomes a party to the contractual
provisions of the instrument.
Trade and other receivables are not interest bearing and are designated as loans and receivables. They are recognised at amortised cost, which
is net of any allowance for impairment in relation to irrecoverable amounts. This is deemed to be a reasonable approximation of their fair value.
An impairment allowance is made for trade receivables. This provision is reviewed regularly in conjunction with a detailed analysis of historic
payment profiles and past default experience. When a trade receivable is deemed uncollectible, it is written off against the allowance account.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
Trade and other payables are not interest bearing and are designated as other financial liabilities. They are recognised at their carrying amount
which is deemed to be a reasonable approximation of their fair value.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The Group’s
Ordinary Shares are classified as equity instruments and are recognised at the proceeds received, net of any direct issue costs. Repurchase
ofthe Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the
purchase, sale, issue or cancellation of the Company’s own equity instruments.
Financial instruments are not used for speculative purposes.
1.15 Current tax
Current income tax, including UK income tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have
been enacted or substantively enacted by the statement of financial position date.
1.16 Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial
position differs from its tax base, except for differences arising on:
f the initial recognition of goodwill;
f the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects
neither accounting or taxable profit; and
f investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference
anditisprobable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which
thedifference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date
andareexpected to apply when the deferred tax assets are recovered.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities
andthedeferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
f the same taxable Group company; or
f different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
1.17 Provisions
Provisions are recognised when the Group has a present obligation, legal or constructive, as a result of a past event, it is probable that the Group
will be required to settle that obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are measured at the Directors’
best estimate of the expenditure required to settle the obligation at the period end date, and are discounted to present value where the impact
ismaterial. The unwinding of any discount is recognised in finance costs.
Dilapidation provisions are recognised based on Management’s best estimation of costs to make good the Group’s leasehold properties at the
end of the lease term.
The Group recognises a restructuring provision when there is a detailed formal plan in place and when it has raised a valid expectation in those
affected that it will carry out the restructuring, either by starting to implement the plan or by announcing its main features to those affected. The
provision includes only the direct expenditures arising from the restructuring and not those associated with the ongoing activities of the Group.
1.18 Employee benefits: defined contribution benefit scheme
The Group operates a defined contribution pension scheme which is a post-employment benefit plan under which the Group pays fixed contributions
into a fund. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all
employees the benefits relating to employee service in the current and prior periods. The pension charge represents the amounts payable by
theGroup to the fund in respect of the period.
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Zoopla Property Group Plc Annual Report 2014
1. Accounting policies continued
1.19 Share-based payments
The Group provides equity-settled share-based incentive plans whereby Zoopla Property Group Plc allows certain employees of its subsidiary
ZPG Limited to acquire its shares via an employee benefit trust. The Group also issues warrants over shares in Zoopla Property Group Plc to
anumber of the Company’s estate agent members, allowing them to acquire shares in exchange for the estate agent members making their
property listings available for inclusion on the Company’s websites.
Equity-settled share-based payments to employees and members are measured at the fair value of the equity instruments at the grant date.
Thefair value excludes the effect of non-market-based vesting conditions and includes the impact of non-vesting conditions. Details regarding
the determination of the fair value of equity-settled share-based payment transactions are set out in Note 21.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting
period, based on the Company’s estimate of the number of equity instruments that will eventually vest.
At each statement of financial position date, the Company revises its estimate of the number of equity instruments expected to vest as a result
ofthe effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss
suchthat the cumulative expense reflects the revised estimate.
The fair value is measured using a suitable valuation model, including the Black-Scholes valuation model where appropriate. The measurement
inputs for each scheme include the share price on the measurement date, exercise price of the instrument, expected volatility (based on a statistical
analysis of daily share prices), weighted average expected life of the instruments (based on historical experience and general option behaviour),
expected dividend yield, and risk-free interest rates based on government-backed securities. Details of the inputs used under each scheme are
set out in Note 21.
Prior to the Group’s Admission to the London Stock Exchange the Group granted rights over shares of ZPG Limited. Following Admission on
23June 2014 Zoopla Property Group Plc grants rights over its equity instruments to employees and estate agent members of ZPG Limited.
These are accounted for as equity-settled transactions by the Group, recognising the expense within profit and loss for the year and a corresponding
credit to equity. Within the Company accounts of Zoopla Property Group Plc equity-settled share options granted directly toasubsidiary are
treated as a capital contribution to the subsidiary. The capital contribution is measured by reference to the fair value of the share-based payments
charge for the period and is recognised as an increase in the cost of investment with a corresponding credit to equity.
A number of shares are held in Trust in order to settle future exercises of the Group’s share incentive schemes. Details of the trusts are included
inNote 21. Shares held in trust are treated as a deduction from equity.
Employer’s national insurance contributions are accrued, where applicable, at a rate of 13.8%. The amount accrued is based on the market value
of the shares at 30 September 2014 after deducting the exercise price of the share option.
1.20 Critical accounting judgements and key sources of estimation uncertainty
The Group’s Management makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated
based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the current
circumstances. Actual results may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk
ofcausing a material adjustment to the carrying amounts of assets and liabilities within future periods are discussed below.
Impairment of goodwill and intangibles
The Group holds goodwill and intangibles on the statement of financial position in respect of business acquisitions made. Acquired intangibles
include acquired domain names and customer relationships. The Group is required to review these assets for impairment. Determining whether
goodwill and intangible assets are impaired or whether a reversal of impairment of intangible assets should be recorded requires an estimation of
the recoverable value, which represents the higher of fair value and value in use, of the relevant cash-generating unit. The value in use calculation
requires Management to estimate the future cash flows expected to arise from the cash-generating unit, discounted using a suitable discount
rate to determine if any impairment has occurred. A key area of judgement is deciding the long-term growth rate of the applicable businesses
andthe discount rate applied to those cash flows.
Share-based payments
The Group operates a number of different share-based payment schemes. These are measured at their estimated fair value at the date of grant,
calculated using an appropriate option pricing model. The fair value determined at the grant date is expensed on a straight-line basis over the
vesting period, based on the estimate of the number of shares that willeventually vest. The key estimates used in calculating the fair value of the
options are the fair value of Company’s shares at the grant date, thediscount rate, expected share price volatility, risk-free interest rate, expected
dividends, and expected option lives.
In respect of share options granted to employees, the number of options that are expected to vest is based upon estimates of the number
ofemployees that will forfeit their awards through leaving the Group and the likelihood of any non-market-based performance conditions being
satisfied. Management regularly performs atrue-up of the estimate of the number of shares that are expected to vest; this is dependent on the
anticipated number of leavers. Management is also required to make a judgement on the number of warrants expected to vest based on whether
or not the estate agent member is expected to meet their contracted requirements over the vesting period.
77
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Strategic report Corporate governance Financial statementsOverview
Notes to the financial statements continued
1. Accounting policies continued
1.21 Non-GAAP performance measures
In the analysis of the Group’s financial performance certain information disclosed in the financial statements may be prepared on a non-GAAP basis
or has been derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. These measures
are reported in line with how financial information is analysed by Management. The Directors’ believe that these non-GAAP measures provide
amore appropriate measure of the Group’s underlying business performance. The non-GAAP measures are designed to increase comparability
of the Group’s financial performance year-on-year. However, these measures may not be comparable with non-GAAP measures adopted by
other companies. The key non-GAAP measures presented by the Group are:
f Adjusted EBITDA – which is defined as operating profit after adding back depreciation and amortisation, share-based payments and
exceptional items (Note 3).
f Adjusted basic EPS – which is defined as profit for the year excluding exceptional items divided by the weighted average number of shares
inissue for the period (Note 11).
2. Business and geographical segments
The Board of Directors has been identified as the Group’s chief operating decision maker. The monthly reporting pack provided to the Board
toenable assessment of the performance of the business has been used as the basis for determining the Group’s operating segments.
Whilst the chief operating decision maker monitors the performance of the business at a revenue stream level; administrative expenses, finance
income and costs, and income tax are all monitored on a centralised basis. Accordingly, there is no profitability information below the Group level
and thus there is a single operating segment.
The Group focuses its internal management reporting on the following activities:
f agency revenue, which represents property advertising services to estate agents and lettings agents on the Group’s websites;
f developer revenue, which represents property advertising services to new home developers on the Group’s websites; and
f other revenue, which predominantly represents overseas property advertising services, display advertising on the Group’s websites and
dataservices.
Assets and liabilities are also managed on a centralised basis and are not reported to the chief operating decision maker in a disaggregated format.
All material revenues are generated from within the UK.
The following table analyses the Group’s revenues as described above:
2014
£000
2013
£000
Agency 62,986 51,613
Developer 8,547 5,719
Other 8,697 7,166
Total revenue 80,230 64,498
3. Adjusted EBITDA
Adjusted EBITDA is used by Management as a key measure to monitor the Group’s business and the Directors believe it should be disclosed
onthe face of the income statement to assist in the understanding of the Group’s underlying financial performance.
The Group defines EBITDA as profit or loss for the period before income tax expense or income, finance income, finance costs, and depreciation
and amortisation. Adjusted EBITDA is arrived at by making adjustments for costs and profits which Management believe to be exceptional in nature
by virtue of their size or incidence. Such items would include costs associated with business combinations, one-off gains and losses on disposal,
and similar items of a non-recurring nature together with reorganisation costs and similar charges. This is further adjusted for share-based payment
expenses which are comprised of charges relating to (i) warrants issued to certain of the Group’s members in order to establish a critical mass
ofproperty listings on the Group’s platform; and (ii) employee incentive plans which are aimed at retaining staff and aligning employee objectives
with those of the Group. The Directors consider that excluding these non-cash charges in arriving at adjusted EBITDA gives a more appropriate
measure of the Group’s underlying financial performance.
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Zoopla Property Group Plc Annual Report 2014
3. Adjusted EBITDA continued
The table below presents a reconciliation of profit for the period to adjusted EBITDA for the periods shown:
2014
£000
2013
£000
Profit for the year 21,077 22,330
Income tax expense 7,592 5,957
Finance income (202) (325)
Depreciation and amortisation 1,658 1,373
Share-based payments (Note 21) 3,910 98
Exceptional items (IPO costs) 5,579 —
Adjusted EBITDA 39,614 29,433
4. Operating profit
2014
£000
2013
£000
Operating profit is stated after charging:
Depreciation of property, plant and equipment 153 132
Amortisation of intangible assets 1,505 1,241
Loss on disposal of property, plant and equipment — 23
Operating lease rentals:
– Land and buildings 428 324
– Other 304 89
Share-based payments (Note 21) 3,910 98
Amortisation charges on the Group’s intangible assets are recognised within the administrative expenses line item in the consolidated statement
of comprehensive income.
5. Auditor’s remuneration
2014
£000
2013
£000
Fees payable to the Group’s auditor and its associates:
– for the audit of Zoopla Property Group Plc and the consolidated financial statements 30 —
– for the audit of subsidiaries of Zoopla Property Group Plc¹ 85 59
Total audit fees 115 59
Fees payable to the Group’s auditor and its associates for other services to the Group:
– Services related to corporate finance transactions (including IPO services in 2014) 678 —
Total non-audit fees 678 —
1 The prior year audit fee of £59,000 includes fees associated with the audit of the consolidated financial statements of the previously existing Group.
6. Employee costs
2014
£000
2013
£000
Staff costs (including Directors) comprise:
Wages and salaries 11,210 8,640
Social security costs 1,371 975
Defined contribution pension cost 178 84
Share-based payments (Note 21) 806 75
13,565 9,774
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Notes to the financial statements continued
7. Executive Directors’ remuneration
2014
£000
2013
£000
Salary, benefits and bonus 802 453
Defined contribution pension cost 49 31
851 484
In respect of the highest paid Director:
Salary, benefits and bonus 463 325
Defined contribution pension cost 33 31
496 356
Both Executive Directors are members of the Group’s defined contribution pension plan (2013: both).
Further information about the remuneration of individual Directors is provided in the audited part of the Directors’ remuneration report
onpages38 to 61.
8. Director and employee numbers
The average monthly number of Directors, and employees in administration and Management, during the period was:
2014
Number
2013
Number
Administration 205 163
Management 12 9
217 172
9. Income tax expense
2014
£000
2013
£000
Current tax
Current period 8,076 2,132
Adjustment in respect of prior periods (235) (215)
Total current tax 7,841 1,917
Deferred tax
Origination and reversal of temporary differences (280) 4,023
Adjustment in respect of prior periods 4 (60)
Effect of change in UK corporation tax rate 27 77
Total deferred tax (249) 4,040
Total income tax expense 7,592 5,957
Corporation tax is calculated at 22.0% (2013: 23.5%) of the taxable profit for the year.
A reduction in the standard rate of corporation tax from 24% to 23% was effective from 1 April 2013. The Finance Act 2013 provides for a further
reduction in the standard rate of tax from 23% to 21% effective from 1 April 2014 and to 20% effective from 1 April 2015. This change was substantively
enacted on 2 July 2013, which was before the statement of financial position date. These reduced rates have been reflected in the calculation of
deferred tax as they were substantively enacted at the statement of financial position date.
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Zoopla Property Group Plc Annual Report 2014
9. Income tax expense continued
The charge for the period can be reconciled to the profit in the statement of comprehensive income as follows:
2014
£000
2013
£000
Profit before tax 28,669 28,287
Current corporation tax rate of 22.0% (2013: 23.5%) 6,307 6,647
Non-deductible expenses 1,584 43
Adjustments in respect of prior periods (231) (275)
Utilisation of tax losses not previously recognised (63) (405)
Tax credit on exercise of share options (32) —
Effect of change in UK corporation tax rate 27 77
Recognition of deferred tax assets not previously recognised — (130)
Total income tax expense 7,592 5,957
In addition to the amount charged to profit and loss, the following amounts relating to tax have been recognised directly in equity:
2014
£000
2013
£000
Current tax
Tax credit on exercise of share options 459 —
Deferred tax
Deferred tax asset arising on share options 722 —
Total income tax recognised directly in equity 1,181 —
10. Dividends
2014 ¹
£000
2013 ¹
£000
Special dividend of 2.2 pence per Ordinary Share paid on 13 June 2014 8,986 —
Interim dividend for 2014 of 3.5 pence per Ordinary Share paid on 10 April 2014 14,294 —
Final dividend for 2013 of 3.0 pence per Ordinary Share paid on 24 October 2013 12,248 —
Interim dividend for 2013 of 2.5 pence per Ordinary Share paid on 12 April 2013 — 10,158
Total dividends paid in the year 35,528 10,158
1 Dividends paid were declared on shares over the Group’s previous parent ZPG Limited. The dividend per share amounts disclosed above have been stated as if the 10 for one
share exchange set out in Note 20 occurred at the beginning of the comparative period.
During the year the Group paid £35.5 million in dividends to shareholders. Additionally, the Directors propose a final dividend for 2014 of 1.1 pence
per share (2013: 2.5 pence per share) resulting in a final proposed dividend of £4,599,000 (2013: £10,158,000). The dividend is subject to
approval at the Group’s AGM on 12 February 2015. The final dividend proposed has not been included as a liability at the statement of financial
position date.
There are no tax consequences of future dividend payments.
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Notes to the financial statements continued
11. Earnings per share
2014
£000
2013
£000
Earnings for the purposes of basic and diluted earnings per share, being profit for the year
21,077
22,330
Exceptional items (Note 3)
5,579
—
Adjusted earnings for the year 26,656 22,330
Number of shares
Weighted average number of Ordinary Shares 410,953,217 410,694,460
Dilutive effect of share options and warrants 5,011,672 2,420,350
Dilutive earnings per share denominator 415,964,889 413,114,810
Basic and diluted earnings per share
Basic earnings per share (pence per share) 5.1 5.4
Diluted (earnings per share (pence per share) 5.1 5.4
Adjusted earnings per share
Adjusted basic earnings per share (pence per share) 6.5 5.4
Adjusted diluted earnings per share (pence per share) 6.4 5.4
The nil-cost options granted under the Group’s Long Term Incentive Plan, as disclosed in Note 21, are not considered dilutive for 2014. The2013weighted
average number of shares has been stated as if the Group reorganisation set out in Note 20 had occurred at the beginningofthe comparative period.
12. Property, plant and equipment
Fixtures
and fittings
£000
Computer
equipment
£000
Leasehold
improvements
£000
Total
£000
Cost
At 1 October 2013 109 184 33 326
Additions 185 212 1,107 1,504
Disposals (85) (37) (33) (155)
At 30 September 2014 209 359 1,107 1,675
At 1 October 2012 102 206 33 341
Additions 7 78 — 85
Disposals — (100) — (100)
At 30 September 2013 109 184 33 326
Accumulated depreciation
At 1 October 2013 91 96 33 220
Charge for the year 29 67 57 153
Disposals (85) (37) (33) (155)
At 30 September 2014 35 126 57 218
At 1 October 2012 80 54 31 165
Charge for the year 11 119 2 132
Disposals — (77) — (77)
At 30 September 2013 91 96 33 220
Net book value
At 30 September 2014 174 233 1,050 1,457
At 30 September 2013 18 88 — 106
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Zoopla Property Group Plc Annual Report 2014
13. Investment in subsidiaries
Details of the Group’s subsidiaries at 30 September 2014 are shown below. Other than ZPG Limited all subsidiaries were dormant as at
30September 2014. ZPG Limited is the only direct subsidiary of Zoopla Property Group Plc. All other entities are wholly owned subsidiaries
ofZPG Limited.
Name Country of incorporation
Ownership and voting interest
at 30 September 2014
ZPG Limited (formerly Zoopla Property Group Limited) United Kingdom 100%
Propertyfinder Group Limited United Kingdom 100%
Propertyfinder Publications Limited United Kingdom 100%
Sherlock Publications Limited United Kingdom 100%
Propertyfinder.co.uk Limited United Kingdom 100%
Propertyfinder Holdings Limited United Kingdom 100%
Internet Property Finder Limited United Kingdom 100%
Vizzihome Limited United Kingdom 100%
Active (during accounting year)
Trinity Mirror Digital Property Limited¹ United Kingdom 100%
1 On 31 December 2013, the assets of Trinity Mirror Digital Property Limited were transferred to ZPG Limited and the business ceased to trade.
14. Acquisitions
The following table provides a reconciliation of the amounts included in the consolidated statement of cash flows:
2014
£000
2013
£000
Cash consideration — (4,025)
Deferred consideration paid (1,497) (672)
Cash and cash equivalents acquired with subsidiaries — 201
Cash outflow on acquisition of subsidiaries (1,497) 4,496
As at 30 September 2014 all deferred consideration relating to prior period acquisitions had been paid in full.
15. Intangible assets
Goodwill
£000
Customer
relationships
£000
Domain
names
£000
Computer
software
£000
Database
£000
Total
£000
Cost
At 1 October 2013 70,793 6,091 1,451 — 229 78,564
Additions — — — 162 — 162
At 30 September 2014 70,793 6,091 1,451 162 229 78,726
Amortisation
At 1 October 2013 — 1,260 573 — 194 2,027
Charge for the year — 1,218 274 — 13 1,505
At 30 September 2014 — 2,478 847 — 207 3,532
Net book value
At 30 September 2014 70,793 3,613 604 162 22 75,194
At 30 September 2013 70,793 3,829 780 — 35 73,040
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Notes to the financial statements continued
16. Trade and other receivables
2014
£000
2013
£000
Trade receivables 2,839 2,127
Prepayments 2,077 1,912
Accrued income 525 742
Unpaid premium on share capital¹ — 9,563
Other receivables 446 122
5,887 14,466
Current 5,887 4,903
Non-current — 9,563
5,887 14,466
1 The decrease in unpaid premium on share capital represents the paying up of all amounts outstanding on the Group’s A Ordinary Shares prior to the IPO.
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.
Details of the Group’s exposure to credit risk are given in Note 23.
17. Trade and other payables
2014
£000
2013
£000
Trade payables 4,676 3,043
Other payables 281 2,599
Accruals 3,406 2,666
Deferred income 155 17
Other taxation and social security payments 2,900 1,815
11,418 10,140
The Directors consider that the carrying value of trade and other payables is approximate to their fair value.
Details of the Group’s exposure to liquidity risk are given in Note 23.
18. Provisions
The movement in provisions can be analysed as follows:
Dilapidation
provisions
£000
Redundancy
provisions
£000
Total
£000
At 1 October 2013 201 350 551
Charged in the period 575 — 575
Utilised in the period (142) (350) (492)
At 30 September 2014 634 — 634
Current — — —
Non-current 634 — 634
At 1 October 2012 59 — 59
Charged in the period 142 350 551
At 30 September 2013 201 350 551
Current 142 350 492
Non-current 59 — 59
The dilapidation provisions relate to Management’s best estimation of costs to make good the Group’s leasehold properties at the end of the
lease term. The charge in the period represents expected exit costs in 2024 on completion of the Company’s new property lease.
The redundancy provisions related to post-acquisition restructuring costs in respect of the acquisition of Trinity Mirror Digital Property Limited.
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Zoopla Property Group Plc Annual Report 2014
19. Deferred tax
Property, plant
and equipment
and computer
software
£000
Share-based
payments
£000
Other
intangible
assets
£000
Total
£000
Deferred tax asset/(liability) at 1 October 2013 514 — (1,048) (534)
(Charge)/credit to profit or loss (188) 173 264 249
Credit to equity — 722 — 722
Deferred tax asset/(liability) at 30 September 2014 326 895 (784) 437
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so.
The following is an analysis of the deferred tax balances (after offset) for financial reporting purposes:
2014
£000
2013
£000
Deferred tax liabilities (784) (1,048)
Deferred tax assets 1,221 514
437 (534)
20. Equity
Share capital
2014
£000
2013
£000
Shares classified as capital
Authorised
418,092,702 (2013: 41,886,900) shares of £0.001 (2013: £0.0001) each 418 4
Called up share capital – allotted and fully paid
418,092,702 (2013: 38,267,250) Ordinary Shares of £0.001 (2013: £0.0001) each 418 4
The share capital of the Group is represented by the share capital of the parent company, Zoopla Property Group Plc. This company was incorporated
on 22 April 2014 to act as the holding company of the Group. Prior to this the share capital of the Group was represented by theshare capital of
the previous parent, ZPG Limited. ZPG Limited had 38,267,250 Ordinary Shares, 2,550,000 A Ordinary Shares and 65,876 Bdeferred shares in
issue at 30 September 2013. The A Ordinary Shares and B deferred shares were re-designated/cancelled in advance oftheGroup restructuring
as set out below.
Rights and restrictions attaching to shares
Ordinary Shares
The Ordinary Shares carry one vote per share and rights to dividends.
Share transactions
In October 2013 the Group’s previous parent, ZPG Limited, cancelled its B deferred shares with £nil value.
On 22 April 2014 Zoopla Property Group Plc was incorporated under its previous name, Project ZigZag Limited, through the issue of 50,000
redeemable preference shares to its ultimate controlling party, DMG Media Investments Limited. On 16 May 2014 the Company registered
asapublic limited company and changed its name to Zoopla Property Group Plc.
On 23 June 2014 in accordance with the pre-IPO reorganisation deed the following steps took place:
ZPG Limited issued 694,800 Ordinary Shares of £0.0001 each for cash consideration of £1.7 million to the Appleby Employee Benefit Trust
inorder to meet any future exercises of the Employee Share Options Scheme (Note 21).
The Company issued 2,273 Ordinary Shares of £0.0001 to DMG Media Investments Limited at nominal value. The consideration was left
outstanding pursuant to the terms of an undertaking to pay.
All of the A Ordinary Shares in issue were re-designated on a like for like basis as Ordinary Shares.
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Notes to the financial statements continued
20. Equity continued
Share transactions continued
Each of the shareholders of the Group’s previous parent, ZPG Limited, took part in a share-for-share exchange whereby they were issued 10 new
shares in Zoopla Property Group Plc in exchange for one ZPG Limited share. At the date of restructuring there were 41,764,246 ZPG Limited shares
in issue. This resulted in the issue of 417,642,460 shares in Zoopla Property Group Plc and the insertion of Zoopla Property Group Plc atthe top
of the Group as the new parent company. The redeemable preference shares were redeemed by Zoopla Property Group Plc in advance of the
share-for-share exchange.
During the period after the IPO Zoopla Property Group Plc issued 427,515 Ordinary Shares of £0.001 each in relation to the grant of employee
share options under the Savings Incentive Plan (SIP). These shares are held in the Yorkshire Building Society Share Incentive Plan Trust.
Furthermore, 22,727 Ordinary Shares of £0.001 each were issued for consideration of £50,000 to one of the Directors.
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 period reflects the impact of the Group’s reorganisation prior to the IPO.
Other reserves – EBT share reserve
This represents shares in issue that are held by within the Employee Benefit Trust for the purpose of settling the Group’s obligations under
theEmployee Share Option Scheme.
21. 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 £3.9 million for 2014 (2013: £0.1 million) as set out below. The charge included a one-off, accelerated
charge of £3.0 million in respect of warrants exercised on the Group’s Admission to the London Stock Exchange.
2014
£000
2013
£000
Employee Share Option Scheme (i) 587 74
Long Term Incentive Plan (ii) 86 —
Share Incentive Plan (iii) 105 —
One-off warrant charge on IPO (iv) 2,985 —
Other warrant charges (iv) 119 24
National insurance contributions payable in respect of eligible share-based payment schemes (v) 28 —
Total share-based payments charge 3,910 98
As set out in Note 20 share-based payment schemes were settled in shares of the Group’s previous parent, ZPG Limited, prior to the IPO. Subsequent
tothe IPO all share-based payment schemes are settled in shares of the Group’s ultimate parent at 30 September 2014, Zoopla Property Group Plc.
The information disclosed in this note has been presented as though the options were exercisable over shares in Zoopla Property Group Plc
throughout all periods presented.
i) Employee Share Option Scheme
The Group operates a share-based incentive scheme for all employees under an approved plan until 31 May 2012 and an unapproved plan thereafter.
Options are exercisable at a price determined by the Board on the date of each grant. The options vest in instalments over four years. Options
remain valid for 10 years from the date of grant, after which the options lapse. Options are forfeited if the employee leaves the Group before the
options vest.
The Group recognised a charge of £587,000 (2013: £74,000) in respect of options under this scheme. Of these, £nil (2013: £nil) were cash settled.
Details of options under the scheme outstanding at 30 September 2014 are set out below:
2014 2013
Number
’000
Weighted average
exercise price
£
Number
’000
Weighted average
exercise price
£
Outstanding options at the beginning of the year 5,198 0.19 3,212 0.06
Granted during the year 2,550 0.35 2,393 0.35
Exercised during the year (1,338) 0.13 (352) 0.06
Forfeited during the year (717) 0.32 (55) 0.06
Outstanding options at the end of the year 5,693 0.26 5,198 0.19
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Zoopla Property Group Plc Annual Report 2014
21. Share-based payments continued
i) Employee Share Option Scheme continued
The options outstanding at 30 September 2014 had a weighted average exercise price of £0.26 (2013: £0.19) and a weighted average remaining
contractual life of 8.1 years (2013: 6.9 years). The range of exercise prices for outstanding options was £0.06 to £0.35 (2013: £0.06 to £0.35).
The number of options exercisable as at 30 September 2014 was 1,458,000 (2013:117,000).
The following information is relevant in the determination of the fair value of options granted and shares issued during the year under the
equity-settled share-based payment arrangements operated by the Group:
Options granted
January 2014
Options granted
October 2012
and April 2013
Weighted average share price at grant date £1.75 £0.35
Exercise price £0.35 £0.35
Expected volatility 31.3% 30.3%
Expected life 4 years 4 years
Expected dividend yield 3.1% nil%
Risk-free interest rate 1.9% 0.5%
The Employee Share Option Scheme will continue to operate until all shares vest or lapse, or the scheme is otherwise cancelled. There will be no
future grants under this scheme. 5,908,116 shares are held in trust in order to meet any future obligation.
ii) Long Term Incentive Plan
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 TSR performance criteria is measured from the date of IPO; however, the EPS performance period commences
on 1October 2014 and the options will vest, subject to meeting the performance criteria, on 1 October 2017. A full valuation of the scheme will
be completed by the Group in the first half of the 2015 financial year. Valuation assumptions will be disclosed in the March 2015 interim accounts.
Acharge of £86,000 has been recognised in 2014 (2013: £nil). Of these, £nil (2013: £nil) were cash settled.
iii) Share Incentive Plan (SIP)
The SIP is an all-employee share ownership plan which has been designed to meet the requirements of Schedule 2 of the Income Tax (Earnings
and Pensions) Act 2003 so that shares can be provided to UK employees under the SIP in a tax-efficient manner. Under the scheme employees
may be awarded Free Shares and/or offered the opportunity to purchase Partnership Shares with one Free Matching Share for each Partnership
Share purchased.
Free Shares
On Admission employees were each issued Free Shares to the value of £2,500 determined by reference to the offer price of £2.20. There are
noperformance conditions attached to the issue; however, the shares are subject to forfeiture should the employee terminate their employment
within three years of the issue. The charge is therefore recognised on a straight-line basis over the three year period.
246,729 shares were issued to the Share Incentive Plan Trust in order to meet the future obligation. At 30 September 2014 17,055 shares had
lapsed due to leavers. The number of options outstanding at 30 September 2014 was therefore 229,674.
The charge under this scheme for the year ended 30 September 2014 was £36,000 (2013: £nil). Of these, £nil (2013: £nil) were cash settled.
Partnership Shares and Partnership Matching Shares
At Admission, employees were given the option to purchase up to £1,800 of shares in the period ending 5 April 2015 paid for through pre-tax
payroll deductions from the date of Admission. On the purchase of each Partnership Share at the end of the tax period eligible employees are
entitled to a Free Matching Share on a one-for-one ratio. The Free Matching Shares have no performance or service conditions. A charge equal
tothe fair value of the Matching Shares will be recognised in the income statement over the nine month vesting period.
180,786 shares were issued to the Share Incentive Plan Trust in order to meet the future obligation.
The charge under this scheme for the year ended 30 September 2014 was £69,000 (2013: £nil). Of these, £nil (2013: £nil) were cash settled.
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Notes to the financial statements continued
21. Share-based payments continued
iv) Warrants
In January 2014 the Group’s previous parent, ZPG Limited, entered into agreements with a number of estate agent members. Pursuant to these
agreements, which had an initial term of five years, the estate agents agreed to pay annual fees for advertising on the Group’s websites and committed
to making their property listings available on the Group’s websites. In exchange ZPG Limited agreed to issue a fixed number of warrants over
Ordinary Shares. The warrants are issued annually over the five year term of the agreements upon payment of the final instalment of each year’s
annual fees. The warrants are exercisable at a price equal to the nominal value of each share (£0.001) and vest in instalments over five years.
Warrants expire five years after the date of issue. Some or all of the warrants are forfeited if service agreements are terminated before the end of
theterm and the vesting for certain agreements is accelerated in the event of an exit event. Similar agreements were entered into in March 2011.
The March 2011 warrants vest after five years and expire 90 days after the exercise date. Warrants over shares in ZPG Limited converted to
warrants over shares in Zoopla Property Group Plc as part of the Group restructuring set out in Note 20.
The total charge recognised for the year ended 30 September 2014 in respect of warrants was £3,104,000 (2013: £24,000). Of these, £nil
(2013:£nil) were cash settled. The warrant charge for 2014 related to warrants granted in January 2014 and March 2011 (2013: March 2011)
and included an accelerated charge of £3.0 million in respect of certain warrants exercised as a result of the Group’s Admission to the London
Stock Exchange.
2014 2013
Number
’000
Weighted
average
exercise price
£
Number
’000
Weighted
average
exercise price
£
Outstanding warrants at the beginning of the year 343 0.001 343 0.001
Granted during the year 1,859 0.001 — 0.001
Exercised during the year (2,202) 0.001 — 0.001
Outstanding warrants at the end of the year — — 343 0.001
The number of warrants outstanding at 30 September 2014 was nil (2013: 343,000). All outstanding warrants were excised prior to the IPO
andnowarrants have been issued since that date. The warrants outstanding at 30 September 2013 had a weighted average exercise price
of£0.001, and a weighted average remaining contractual life of 2.4 years.
The number of warrants issuable over shares in Zoopla Property Group Plc under existing member contracts is 1,427,000. The warrants will be
issued at an exercise price of £0.001 over the lives of the contracts.
The following information is relevant in the determination of the fair value of the warrants granted:
Warrants granted
January 2014
Warrants granted
March 2011
Share price at grant date £1.75 £0.35
Exercise price £0.001 £0.001
Expected volatility 34.8% 46.9%
Expected life 5 years 5 years
Expected dividend yield 3.1% nil%
Risk-free interest rate 1.9% 1.4%
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of daily share
pricesover the last five years for a Group of comparable companies.
v) National insurance contributions (NIC)
National insurance contributions are payable in respect of certain share-based payment schemes. These contributions are treated as cash-settled
transactions and are accrued at a rate of 13.8%. The total NIC charge relating to share-based payment schemes was £28,000 (2013: £nil).
88
Zoopla Property Group Plc Annual Report 2014
21. Share-based payments continued
vi) The Employee Benefit Trust (EBT) and Share Incentive Plan Trust (SIP Trust)
Employee Benefit Trust (EBT)
The Group has established an Employee Benefit Trust which is constituted by a trust deed entered into between the Company and Appleby Trust
(Jersey) Limited. The Trust held 5,908,116 Ordinary Shares in Zoopla Property Group Plc at 30 September 2014 (2013: nil). These shares are
held to satisfy future exercises under the Employee Share Option Scheme. Shares are allocated by the Trust when the awards are exercised.
The Trust waives its right to any dividends. The market value of the shares held in the Trust at 30 September 2014 was £13,978,602 (2013: £nil).
The cost of the shares has been deducted from equity.
Share Incentive Plan Trust (SIP Trust)
The Group has established a Share Incentive Plan Trust which is constituted by a trust deed which was entered into between Zoopla Property
Group Plc and Yorkshire Building Society. The Trust owns 427,515 Ordinary Shares in Zoopla Property Group Plc at 30 September 2014 (2013:nil).
These shares are held to satisfy future Free Share and Partnership Share exercises. Shares are allocated by the Trust when the awards are exercised.
Dividends paid on shares held in the Trust are passed to the employees when the shares are allocated. The market value of the shares held in the
Trust at 30 September 2014 was £1,011,500 (2013: £nil). The cost of the shares has been deducted from equity.
22. Related party transactions
a) Key management personnel
The Chairman and the Directors are considered to be the key management personnel of the Group. Details of Executive Directors’ remuneration
are given in Note 7. Details of the Chairman’s and Non-Executive Directors’ remuneration can be found in the Directors’ remuneration report on
pages 38 to 61.
b) Other Group companies
Details of transactions with subsidiaries are outlined in the Company’s financial statements on page 96. Transactions with other Group companies
have been eliminated on consolidation.
c) Other related parties
Other related party transactions are as follows:
Daily Mail and General Trust plc (DMGT) owned 52% of the share capital of ZPG Limited at the beginning of the period. The shares in ZPG Limited
converted to shares in Zoopla Property Group Plc on a 10 for one basis as part of the Group restructuring. At 30 September 2014 DMGT owned
31.8% of the share capital of Zoopla Property Group Plc.
A&N Media Finance Services Limited (ANMFS), a subsidiary of DMGT, supplied various shared services to ZPG Limited for which the fee was
£89,000 for the year (2013: £115,000). The balance outstanding at 30 September 2014 was £nil (2013: £25,000).
Northcliffe Media Limited, a subsidiary of DMGT, previously provided advertising services and estate agency listing fees to ZPG Limited. The fee
earned for these services was £nil for the year (2013: £142,000). The balance outstanding at 30 September 2014 was £nil (2013: £nil).
Local World Limited, an associate of DMGT, provided advertising and estate agency listing services to ZPG Limited. Fees paid for these services
amounted to £61,000 for the year to 30 September 2014 (2013: £530,000). The balance outstanding at 30 September 2014 was £nil (2013: £nil).
23. Financial instruments
The Group is exposed to the following risks from financial instruments:
f credit risk;
f liquidity risk; and
f market risk.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or bank (“counterparty”) fails to meet its contractual obligations, resulting
infinancial loss to the Group. The exposure to credit risk is influenced by the individual characteristics of each counterparty.
The Group’s most significant customer accounts for £598,000 (2013: £279,000) of the trade receivables carrying amount. The Group’s customer
base is large, so there is no significant concentration of credit risk. There were only three customers at 30 September 2014 with individual debtors
balances in excess of 5% of the total gross trade receivables balance (2013: one). The Directors therefore consider the credit risk from trade
receivables tobe low.
Standard credit terms range from 15 to 30 days from the date of invoice. The Group reserves the right to charge interest on overdue receivables,
although it does not hold collateral over any trade receivable balances. The Group’s trade receivables are stated net of an impairment allowance.
This provision is reviewed regularly in conjunction with a detailed analysis of historic payment profiles and past default experience.
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Notes to the financial statements continued
23. Financial instruments continued
Credit risk continued
The ageing of trade receivables at the period end was as follows:
2014 2013
Gross
£000
Impairment
£000
Gross
£000
Impairment
£000
0–30 days 2,033 — 1,274 —
31–60 days 927 (191) 749 (114)
61–90 days 125 (104) 208 (102)
91+ days 299 (250) 403 (291)
Total 3,384 (545) 2,634 (507)
Movement in the allowance for impairment of trade receivables:
2014
£000
2013
£000
At the beginning of the period (507) (475)
Movement in the allowance in the period (38) (32)
Balance at end of the period (545) (507)
Impairment losses recognised (358) (444)
In determining the recoverability of a trade receivable, Management considers any change in the credit quality of the trade receivable from the
date credit was granted up to the period end date.
The credit risk associated with bank and deposit balances is mitigated by the use of banks with good credit ratings.
The Group’s maximum exposure to credit risk at the period end was equal to the carrying amount of financial assets recorded in the financial statements.
Liquidity risk
Liquidity risk refers to the ability of the Group to meet the obligations associated with its financial liabilities that are settled in cash as they fall due.
Management regularly reviews performance against budgets and forecasts to ensure sufficient cash funds are available to meet its contractual obligations.
The Group’s revenue streams are largely subscription based, which results in a regular level of cash conversion, allowing it to effectively service
working capital requirements. Furthermore, the Group is debt free and cash generative and therefore it has adequate funds in place for any
unforeseen events.
The following tables detail the Group’s remaining contractual maturities for undiscounted financial liabilities, including interest:
At 30 September 2014
Carrying
amount
£000
Contractual
cash flows
£000
Less than
3 months
£000
Trade payables (4,676) (4,676) (4,599)
(4,676) (4,676) (4,599)
At 30 September 2013
Carrying
amount
£000
Contractual
cash flows
£000
Less than
3 months
£000
Trade payables (3,043) (3,043) (3,043)
(3,043) (3,043) (3,043)
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23. Financial instruments continued
Market risk
Market risk is the risk that changes in foreign exchange and interest rates will affect the income and financial management of the Group.
Theobjective of Management is to ascertain and optimise the return on risk. The Group is not exposed to any significant currency risk.
Thereareno interest bearing financial liabilities and there is a minimal interest rate risk on cash and bank balances.
At 30 September 2014 the Group held total cash and bank balances of £31.0 million (30 September 2013: £28.1 million).
Sensitivity analysis
Due to the Group’s limited exposure to interest rate and exchange rate risks, the Directors are comfortable that any sensitivity to fluctuations
ininterest or exchange rates would not have a material impact on the results of the Group.
24. Operating lease commitments
At the statement of financial position date, the Group had outstanding commitments for future minimumleasepayments under non-cancellable
operating leases, which fall due as follows:
2014
£000
2013
£000
Within one year 258 339
In the second to fifth year inclusive 2,757 129
After five years 3,059 —
6,074 468
25. Subsequent events
There have been no reportable subsequent events between 30 September 2014 and the date of signing of this report.
26. Ultimate controlling party
The Directors are of the opinion that there was no ultimate controlling party in either period presented.
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Company statement of financial position
As at 30 September 2014
Notes
2014
£000
Assets
Non-current assets
Investment in subsidiary 4 91,332
Current assets
Prepayments 12
Other receivables 55
Cash and cash equivalents 100
167
Total assets 91,499
Liabilities
Current liabilities
Accruals 37
Amounts payable to other Group companies 348
Total liabilities 385
Net assets 91,114
Equity
Share capital 5 418
Share premium reserve 50
Merger reserve 5 90,495
Retained earnings 151
Total equity 91,114
The financial statements of Zoopla Property Group Plc (company number 09005884) were approved and authorised for issue by the Board
ofDirectors and were signed on its behalf by:
A Chesterman S Morana
Director Director
24 November 2014 24 November 2014
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Zoopla Property Group Plc Annual Report 2014
Company statement of cash flows
For the period from incorporation on 22 April 2014 to 30 September 2014
2014
£000
Cash flows from operating activities
Operating loss (318)
Operating cash flow before changes in working capital (318)
Increase in trade and other receivables (67)
Increase in trade and other payables 385
Net cash inflows from operating activities —
Net cash from investing activities —
Cash flows from financing activities
Proceeds on issue of shares 50
Equity contributions received 50
Net cash flows from financing activities 100
Net increase in cash and cash equivalents 100
Cash and cash equivalents at beginning of period —
Cash and cash equivalents at end of period 100
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Company statement of changes in equity
For the period from incorporation on 22 April 2014 to 30 September 2014
Share
capital
£000
Share
premium
reserve
£000
Merger
reserve
£000
Retained
earnings
£000
Total
equity
£000
Profit and total comprehensive income for the period — — — (318) (318)
Transactions with owners recorded directly in equity:
Issue of Ordinary Shares 418 50 90,495 — 90,963
Issue of preference shares 50 — — — 50
Equity contributions received — — — 50 50
Redemption of preference shares (50) — — — (50)
Share-based payments — — — 419 419
30 September 2014 418 50 90,495 151 91,114
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Zoopla Property Group Plc Annual Report 2014
Notes to the Company financial statements
1. Accounting policies and basis of accounting
The Directors have applied International Financial Reporting Standards (IFRS) as adopted by the European Union.
The accounting policies and the financial risk management policies, where relevant to the Company, are consistent with those of the consolidated
Group as set out in Notes 1 and 23 to the consolidated financial statements respectively.
Income statement
The Company has taken advantage of the exemption available under section 408 of the Companies Act 2006 and has not presented an income
statement. The loss for the period ended 30 September 2014 was £318,000.
2. Auditor’s remuneration
The Company incurred a cost of £30,000 for statutory audit services for the period ended 30 September 2014. This cost was paid on behalf
ofthe Zoopla Property Group Plc by the Company’s subsidiary, ZPG Limited.
3. Employee costs and Directors’ remuneration
The Company has no employees other than the Directors of the Company. Remuneration paid to the Directors was accounted for and paid
bythe Group’s trading entity, ZPG Limited. Details of Directors’ remuneration are set out in the Directors’ remuneration report on pages 38 to 61
ofthe Annual Report.
4. Investments in subsidiaries
The investment in subsidiaries balance of £91,332,000 represents the Company’s 100% shareholding in ZPG Limited, acquired as part of the restructuring
prior to Admission on 23 June 2014. On restructuring the Company recognised an investment of £90,913,000 in ZPG Limited, being the value of
ZPG Limited’s net assets at the restructuring date. The Company has applied merger accounting in line with the Companies Act 2006 to record
the restructuring. A merger reserve of £90,495,000 was created on acquisition. The balance of £418,000 represents the nominal value of the
shares issued on Admission.
Subsequent to the restructuring the Company recognised an increase in the investment in respect of the Group’s share schemes. Consistent
withtheGroup accounting policies outlined in Note 1.19 to the consolidated financial statements, equity-settled share options granted directly
toasubsidiary are treated as a capital contribution to the subsidiary. The capital contribution is measured by reference to the consolidated
share-based payments charge and is recognised as an increase in the cost of investment with a corresponding credit toretainedearnings.
Thecredit to retained earnings does not make up part of distributable reserves.
2014
£000
Initial investment in ZPG Limited at restructuring 90,913
Share-based payments – capital contribution 419
Balance as at 30 September 2014 91,332
5. Equity
Share capital
Details of the Company’s share capital are included in Note 20 to the consolidated financial statements.
Merger reserve
The merger reserve represents the difference between the investment recognised on restructuring in ZPG Limited of £90.9 million and the value
oftheshares issued of £0.4 million.
6. Financial instruments
The IFRS 7 Financial Instruments disclosures, where relevant to the Company, are consistent with those of the Group as set out inNote 23
totheconsolidated financial statements. The Company has an intercompany payable to its subsidiary, ZPG Limited, of £348,000 onthe
statement of financial position at 30 September 2014. The carrying value of the balance is considered approximate to its fair value.
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Notes to the Company financial statements continued
7. Related parties
a) Key management personnel
There are no employees of the Company. The Directors are employed and/or remunerated by ZPG Limited. There were no transactions during
the year between the Directors and the Company other than the issue of shares and share options as outlined in the Directors’ remuneration
report on pages 38 to 61.
b) Subsidiaries
In June 2014 the Group was restructured on Admission to the London Stock exchange. Each of the shareholders of ZPG Limited took part
inashare-for-share exchange whereby they were issued with 10 new shares in Zoopla Property Group Plc with a nominal value of £0.001
inexchange for one ZPG Limited share. This resulted in the insertion of Zoopla Property Group Plc at the top of the Group as the new parent
company. For the year ended 30 September 2014 the Company entered into transactions with its subsidiary as set out below.
Transactions with subsidiaries
During the year ZPG Limited settled bills to the value of £348,000 (2013: £nil) on behalf of Zoopla Property Group Plc in order to settle costs
incurred on restructuring and the Company’s audit fee. Other than the transaction outlined above, the Company issues shares to employees
and estate agent members of its subsidiary as part of the Group’s share-based payment schemes as set out in Note 21 to the consolidated
financial statements. There have been noother transactions with theCompany’s subsidiary during the year.
Year end balances with subsidiaries
The balance of £348,000 transferred from ZPG Limited during the year is still outstanding at 30 September 2014. This amount will be
settledonreceipt of any dividend from ZPG Limited. No interest is payable on the balance.
There were no other related party transactions in the period.
c) Other related parties
There were no transactions between the Company and any other related parties.
8. Subsequent events
There have been no reportable subsequent events between 30 September 2014 and the date of signing of this report.
9. Ultimate controlling party
The Directors are of the opinion that there was no ultimate controlling party in either period presented.
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Zoopla Property Group Plc Annual Report 2014
Note on forward-looking statements
This report includes statements related to our future business, financial
performance and future events or developments that may constitute
forward-looking statements. These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
‘believes’, ‘estimates’, ‘anticipates’, ‘plans’, ‘projects’, ‘expects’, ‘intends’,
‘may’, ‘will’ or ‘should’ or, in each case, their negative, or other variations
or comparable terminology. These forward-looking statements include
matters that are not historical facts. They appear throughout this report
and include statements relating to our beliefs, intentions or current
expectations concerning a number of matters including our results of
liquidity, the effect of our financial performance on our share price, financial
condition, prospects, growth and expansion, strategies and the industry
in which we operate. All forward-looking statements are based upon
information available to us on the date of this Annual Report. While we
believe that the forward-looking statements are reasonable, we caution
that it is very difficult to predict the impact of known or unknown
factors or toanticipate all factors that could affect our actual results.
As such, forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause actual results,
performance or developments to differ materially from those expressed
or implied by such forward-looking statements. These factors include,
but are not limited to:
f a change in the competition within the industry in which we operate;
f a change, due to various factors which may include the
macroeconomic conditions in which we operate, in the level
oftransactions in the UK residential property market;
f a change in technological developments;
f the loss of any of our important commercial relationships; and
f any increase in litigation or disputes
We caution that the foregoing list of factors may not contain all of the
material factors that are important to you and you should not place
undue reliance on these forward-looking statements, which speak only
as of the date of this Annual Report. We undertake no obligation, and
are not under any obligation, to update or keep current the information
contained in this Annual Report, whether as a result of new information,
futureevents or otherwise.
Shareholder information
Contacts
Chief Executive Officer
Alex Chesterman
Chief Financial Officer
Stephen Morana
Company Secretary
Ned Staple
Head of Communications
Lawrence Hall
Website:
www.zpg.co.uk
Registered Office
Zoopla Property Group Plc
Harlequin Building
65 Southwark Street
London SE1 0HR
Corporate advisers
Auditor
Deloitte LLP
Remuneration advisers
PricewaterhouseCoopers LLP
Brokers
Credit Suisse Securities (Europe) Limited
Jefferies Hoare Govett
Solicitors
Freshfields Bruckhaus Deringer LLP
Registrar
Equiniti Limited
Financial Calendar 2014
2014 full year results 25 November 2014
Record date for final dividend 5 December 2014
Interim Management statement 12 February 2015
Annual General Meeting 12 February 2015
Payment date for final dividend 23 February 2015
Half year results May 2015
Payment date for interim dividend July 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 House
Spencer Road
Lancing
West 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.
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Zoopla Property Group Plc Annual Report 2014
Zoopla Property Group Plc
Harlequin Building
65 Southwark Street
London SE1 0HR
www.zpg.co.uk
Zoopla Property Group Plc’s commitment to environmental issues is reflected
in this Annual Report which has been printed on Core silk which is an FSC®
certified paper. This document was printed by Park Communications using
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