zoopla property group plc

Zoopla Property Group PlcAnnual Report 2014

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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:


01Zoopla Property Group Plc zpg.co.uk

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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

29.2mTotal leads (2013: 26.1m)

513.5mTotal site visits (2013: 386.4m)

19,663Members 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%

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80,230

64,498

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Adjusted EBITDA1,3 (£000)

£39,614+35%

39,614

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Operating profit (£000)

£28,467+2%

28,467

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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


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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 statementMike 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.

DividendThe 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 structureThe 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.


Financial performanceAdjusted 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 EvansChairman



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Chief Executive Officer’s statementAlex 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.


Our strategyOur 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 modelConsumers 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 forwardThere 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 ChestermanChief Executive Officer



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Overview

1Grow brand awareness and user audienceThe 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.

2Extend inventoryThe 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:

3Develop 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.

4Increase user engagementThe 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.

5Develop opportunities in related marketsThe 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


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 modelHow we deliver it



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What sets us apart

Our key differentiators.

1Multi-brand strategyBroader consumer audience

2Long-term customer relationshipsBusiness model stability

3Exclusive distribution partnershipsMaximising customer reach

4Proven track record of innovationConsumer and industry champion

5Automated valuation modelMarket transparency and efficiency

6Proprietary property datasetUnique 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


Valuation models


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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.


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



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Technology is changing the way users search for homes and the way that professionals market their listings.

UK residential property marketResidential 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 13Source: Land Registry for England and Wales.

780663

654

656

616

621

1,226

1,2791,027

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


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

312264

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

29.226.1

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

1.11.1

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.

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19,66318,676

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.



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Description Impact Management and mitigationAssessment of risk year-on-year

Macroeconomic conditionsThe 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’ MutualAgents’ 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 landscapeThe 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 recruitmentSuccess 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 systemsThe 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


Description Impact Management and mitigationAssessment of risk year-on-year

Macroeconomic conditionsThe 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’ MutualAgents’ 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 landscapeThe 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 recruitmentSuccess 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 systemsThe 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.



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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 statementThe 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.”


Revenue2014 £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 expensesThe 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 EBITDAThe 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 amortisationDepreciation 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.

£80.2mTotal revenue (2013: £64.5m)

£39.6mAdjusted EBITDA (2013: £29.4m)

£26.7mAdjusted profit (2013: £22.3m)

513.5mNumber of visits (2013: 386.4m)

19,663Number of members (2013: 18,676)

1.1mNumber of listings (2013: 1.1m)



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Adjusted EBITDA continuedShare-based paymentsDuring 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 itemsExceptional items of £5.6 million for 2014 represent one-off IPO costs.

Income tax expenseThe 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 yearAdjusted 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 activitiesThe 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 activitiesThe £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.

DividendsDuring 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


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 visitsThe 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 leadsThe 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 membersAs 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.

2014Number

2013Number

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 listingsThe 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.

ARPAThe 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 operationsDetails 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 MoranaChief Financial Officer



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EmployeesWe 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 activityThe 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 diversityThe 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 diversityZPG Limited as at 30 September 2014

MaleNumber

FemaleNumber

TotalNumber

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


Health and safetyWe 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.

EnvironmentWe 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 emissionsSince 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:

CO2 emissions Emissions per employee

(Tonnes CO2e)

(Tonnes CO2e/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 ChestermanChief Executive Officer24 November 2014



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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 compositionThe 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 CommitteesIn 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 EvansNon-Executive Chairman

Chairman’s introduction to governanceMike 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.


Governance framework

Board Committees

Audit CommitteeThe Audit Committee’s role is to assist the Board with the

discharge of its responsibilities in relation to financial reporting.

Nomination CommitteeThe Nomination Committee

assists the Board in reviewing the structure, size and

composition of the Board.

Remuneration CommitteeThe Remuneration Committee

recommends the Group’s policy on executive remuneration and

determines the levels of remuneration for Executive

Directors, the Chairman and Management.

The BoardThe 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



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Mike EvansNon-Executive ChairmanMike 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 ChestermanFounder and Chief Executive OfficerAlex 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 MoranaChief Financial OfficerStephen 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 IPOThe 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 Femalen Male

Board Executive/Non-Executive split

n Executiven Non-Executive


Stephen DaintithNon-Executive DirectorStephen 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 DuttonNon-Executive DirectorDavid 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 TurnerNon-Executive DirectorGrenville 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 CoutuIndependent Non-Executive DirectorSherry 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-BrownSenior Independent Non-Executive DirectorDuncan 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 KleinIndependent Non-Executive DirectorRobin 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.



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N N NA A AR R R

The role of the BoardThe 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 CommitteesSubject 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: IntroductionThe 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


Role of the Chairman and Chief Executive OfficerThe 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.



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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 independenceAs 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 appointmentsNon-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 attendanceThe 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

AuditCommittee

RemunerationCommittee

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.


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.

DevelopmentIn 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 evaluationGiven 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 DirectorsThe 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 appointmentsThe 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 shareholdersAs 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.



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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-BrownChairman, 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.


CompositionThe 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 responsibilitiesThe 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 CommitteeFollowing 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 statementsThe 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 recognitionThe 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 IPODuring 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



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Audit Committee report continued

Significant issues considered in relation to the financial statements continuedGroup reorganisation and IPO continuedIPO 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 paymentsThe 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 processThe 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 servicesAs 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 safeguardsIn 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 CommitteeBased 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 auditThe 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.


Internal control and risk managementThe 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.

WhistleblowingThe 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 environmentThe 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.

AccountabilityThe 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-BrownChairman, Audit Committee



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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 EvansChairman, 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.


CompositionThe 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 responsibilitiesThe 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 CommitteeThe 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.

DiversityWhilst 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 EvansChairman, Nomination Committee



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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


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 CommitteeThe 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 CoutuChairman, Remuneration Committee

NotesThis 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.



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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 strategyThe 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 policyAs 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


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 PeriodSalary £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.



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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 summaryThe 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.


Remuneration policy


UK Corporate Governance CodeThe 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.

DiscretionThe 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.



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Remuneration policy continued

Differences in policy from the wider employee populationThe 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 tableAll 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.



Differences in policy from the wider employee populationThe 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 tableAll references to a policy level (e.g. median) are in relation to the Company’s comparator group for 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.



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Policy table continued


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.


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.





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 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.


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.



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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.





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.



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Recruitment policyThe 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.


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 terminationNameDate 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 policyThe 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



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Illustrations of the application of the remuneration policy continuedIn 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 officeThe 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 LTIPBonusFixed elements

On-target On-targetMinimum Maximum Minimum Maximum

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-targetMinimum Maximum


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.

DiscretionThe 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.

DiscretionThe 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.



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Change of controlThe 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 CompanyThe 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 viewsThe 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.


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 PeriodSalary £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 — — — 1284

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

Taxablebenefits

£000Total£000

Fees£000

Taxablebenefits

£000Total£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



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Annual report on remuneration continued


Annual fees2014

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.


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 typeBasis 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 officeThere 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

DirectorBeneficially

owned1

Shares notsubject 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.



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115

Valu

e of

£10

0 in

vest

ed

Source: Thomson Reuters DataStream

110

105

100

95

90

85

23 June 2014

30 June2014

31 July2014

29 August2014

30 September2014

Zoopla Property Group Plc FTSE 250 index



Statement of Directors’ shareholdings (audited) continuedThe 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 remunerationThe 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.


Relative importance of the spend on payThe 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 employeesThe 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:

SalaryThere are no changes to salaries for 2015.

Name

Salary2015 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 pensionThere are no proposed changes for the financial year ending 30 September 2015.



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Implementation of the Policy in 2015 continued Annual bonusOperation 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 PlanThe 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 PlanFrom 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.



Non-Executive feesThere 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 meetingThe 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 CoutuChairman, Remuneration Committee



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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 CompanyZoopla 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 dividendsThe 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.

DirectorsThe 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’ interestsInformation 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.

EmployeesAs at year end the Company employed 234 employees (as set out in the gender diversity table on page 22).

Articles of AssociationThe 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.


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 periodNumber

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 Limited4 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 sharesAt 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 sharesAs 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.



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Directors’ report (other disclosures) continued

Major interests in sharesAs 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 managementThe 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 concernThe 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 auditorEach 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 eventsBetween 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 StapleCompany Secretary24 November 2014

Zoopla Property Group Plc Harlequin Building 65 Southwark Street London SE1 0HR Company number: 09005884


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 RulesEach 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.



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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 concernAs 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 reportTo the members of Zoopla Property Group Plc

Our assessment of risks of material misstatementThe 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 – completenessRevenue 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.


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 materialityWe 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 auditOur 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 warrantsThe 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 IPOAccounting 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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Opinion on other matters prescribed by the Companies Act 2006In 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 exceptionAdequacy of explanations received and accounting recordsUnder 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’ remunerationUnder 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 StatementUnder 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 ReportUnder 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 auditorAs 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 statementsAn 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 London24 November 2014

Independent auditor’s report continuedTo the members of Zoopla Property Group Plc


Consolidated statement of comprehensive incomeFor the year ended 30 September 2014

Notes2014£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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Consolidated statement of financial positionAs at 30 September 2014

Notes2014£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 MoranaDirector Director24 November 2014 24 November 2014


Consolidated statement of cash flowsFor the year ended 30 September 2014

2014£000

2013£000

Cash flows from operating activities


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 equityFor 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


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.


Notes to the financial statements

1. Accounting policiesZoopla 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 preparationThe 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 standardsThese 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 StatementsIFRS 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 EntitiesIFRS 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 MeasurementIFRS 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 continued1.3 Basis of consolidationThe 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 concernThe 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 RevenueRevenue 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 costsFinance 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 equipmentItems 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.


1. Accounting policies continued1.9 Business combinationsThe 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 GoodwillGoodwill 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 assetsIntangible 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 developmentThe 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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1. Accounting policies continued1.14 Financial instrumentsFinancial 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 taxCurrent 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 taxDeferred 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 ProvisionsProvisions 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 schemeThe 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.


1. Accounting policies continued1.19 Share-based paymentsThe 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 uncertaintyThe 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 intangiblesThe 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 paymentsThe 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.


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1. Accounting policies continued1.21 Non-GAAP performance measuresIn 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 segmentsThe 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 EBITDAAdjusted 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.


3. Adjusted EBITDA continuedThe 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 profit2014£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 remuneration2014£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 costs2014£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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7. Executive Directors’ remuneration2014£000

2013£000

Salary, benefits and bonus 802 453


851 484

In respect of the highest paid Director:

Salary, benefits and bonus 463 325


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

2014Number

2013Number

Administration 205 163

Management 12 9

217 172

9. Income tax expense2014£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.


9. Income tax expense continuedThe charge for the period can be reconciled to the profit in the statement of comprehensive income as follows:

2014£000

2013£000


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. Dividends2014 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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11. Earnings per share2014£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 equipmentFixtures

and fittings£000

Computer equipment

£000

Leasehold improvements

£000Total£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


13. Investment in subsidiariesDetails 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 incorporationOwnership 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. AcquisitionsThe 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

£000Database

£000Total£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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16. Trade and other receivables2014£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 payables2014£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

£000Total£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.


19. Deferred taxProperty, 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. EquityShare 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 sharesOrdinary SharesThe Ordinary Shares carry one vote per share and rights to dividends.

Share transactionsIn 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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20. Equity continuedShare transactions continuedEach 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 reserveThe 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 reserveThis 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 paymentsThe 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 SchemeThe 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


21. Share-based payments continuedi) Employee Share Option Scheme continuedThe 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 SharesOn 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 SharesAt 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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21. Share-based payments continuediv) WarrantsIn 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 grantedJanuary 2014

Warrants grantedMarch 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).


21. Share-based payments continuedvi) 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 transactionsa) Key management personnelThe 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 companiesDetails 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 partiesOther 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 instrumentsThe Group is exposed to the following risks from financial instruments:

f credit risk;

f liquidity risk; and

f market risk.

Credit riskCredit 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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23. Financial instruments continuedCredit risk continuedThe 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 riskLiquidity 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)


23. Financial instruments continuedMarket riskMarket 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 analysisDue 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 commitmentsAt 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 eventsThere have been no reportable subsequent events between 30 September 2014 and the date of signing of this report.

26. Ultimate controlling partyThe Directors are of the opinion that there was no ultimate controlling party in either period presented.


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Company statement of financial positionAs at 30 September 2014

Notes2014 £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 MoranaDirector Director24 November 2014 24 November 2014


Company statement of cash flowsFor 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 equityFor 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)


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


Notes to the Company financial statements

1. Accounting policies and basis of accountingThe 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 statementThe 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 remunerationThe 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’ remunerationThe 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 subsidiariesThe 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. EquityShare capitalDetails of the Company’s share capital are included in Note 20 to the consolidated financial statements.

Merger reserveThe 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 instrumentsThe 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 partiesa) 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 subsidiariesDuring 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 subsidiariesThe 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 partiesThere were no transactions between the Company and any other related parties.

8. Subsequent eventsThere have been no reportable subsequent events between 30 September 2014 and the date of signing of this report.

9. Ultimate controlling partyThe Directors are of the opinion that there was no ultimate controlling party in either period presented.


Note on forward-looking statementsThis 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 OfficerAlex Chesterman

Chief Financial OfficerStephen Morana

Company SecretaryNed Staple

Head of CommunicationsLawrence Hall

Website:www.zpg.co.uk

Registered OfficeZoopla Property Group Plc Harlequin Building 65 Southwark Street London SE1 0HR

Corporate advisersAuditorDeloitte LLP

Remuneration advisersPricewaterhouseCoopers LLP

BrokersCredit Suisse Securities (Europe) Limited

Jefferies Hoare Govett

SolicitorsFreshfields Bruckhaus Deringer LLP

RegistrarEquiniti 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 enquiriesThe 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:

EquinitiAspect 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 PlcHarlequin 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 their environmental print technology, which minimises the impact of printing on the environment. Vegetable based inks have been used and 99% of all dry waste associated with this production is diverted from landfill. Park Communications is a CarbonNeutral® printer.

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