Full Year Results

ZPG DELIVERS RECORD REVENUES AND PROFITS

Full year results for the twelve months ended 30 September 2016

Zoopla Property Group Plc (LSE:ZPLA) ("ZPG" or the "Group"), owner of some of the UK's most trusted home-related digital platforms including Zoopla, uSwitch, PrimeLocation and Property Software Group, today announces its full year results for the twelve months ended 30 September 2016 (the "Period").

Summary Results

Business highlights

· Revenue increase of 84% to £197.7 million and Adjusted EBITDA increase of 58% to £77.1 million

· Acquisition of Property Software Group creates UK's only end-to-end solution for property professionals

· Continued UK Agency partner growth up 5% (ex-Property Software Group) and listings inventory up 10%

· Total number of unique Property partners including Property Software Group at 23,101 at the end of the Period

· Outperformance in Comparison Services division with record levels of switching activity across every vertical

· Strong traffic with over 600m visits to the Group's websites and mobile apps, of which 68% via mobile

· Over 23m leads generated during the Period for Property partners including 350,000 property appraisal leads

· Comparison leads up 22% over same period last year to 30.3m, helping consumers save over £320m

· Invested in and partnered with a number of leading and innovative sector relevant tech start-ups

· Developed market-leading new products for consumers and partners such as Running Costs and MoveIT

· Relocated into our new Group headquarters bringing all our London-based teams together under one roof

· Proposed final dividend of 3.7p per share, bringing total dividend for the Period to 5.2 pence per share

· Since the end of the Period the Group has:

o Acquired leading cloud-based estate agency website design business, Technicweb

o Invested in and signed partnership with connected home insurance provider, Neos

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

"The Group has had another very successful year and we are stronger and more diversified than ever. We delivered record revenues and Adjusted EBITDA of £197.7million and £77.1million respectively and continued to grow our huge and highly engaged consumer audience with over 600m visits to our websites and apps during the year. We continue to lead innovation in the property and comparison markets as we work towards fulfilling our mission of providing the most useful resources for consumers when finding, moving and managing their home and being the most effective partner for related businesses.

"Our Property Services division has traded in line with management expectations with ARPA3 growth across every vertical and we have now seen 18 consecutive months of UK Agency partner growth. The acquisition of Property Software Group has been transformational, allowing us to offer the UK's only end-to-end solution for property professionals including software, workflow, CRM and marketing tools. As a Group, we now have significant cross-sell opportunities with over 23,000 unique Property partners taking at least of one of our services.

"Our Comparison Services division has performed very strongly with record levels of switching activity and leads in every vertical helping consumers find the best deals and save over £320m off their energy bills alone during the Period.

"We generated over 53m leads across the Group for our partners during the year, helping them to win more business and operate more efficiently. We have launched a number of new market-leading products as well as investing and partnering with some of the most innovative and relevant technology startups to further enhance and differentiate our proposition.

We are also pleased to announce today the acquisition of Technicweb, one of the UK's leading estate agency website design and hosting businesses as well as our investment in and strategic partnership with Neos, the UK's first connected home insurance provider."

Outlook

ZPG has had a good start to the new financial year across both divisions.

In our Property Services division, the Group's compelling and unique proposition which helps property professionals to manage, market and maximise their business, continues to resonate. Management is encouraged by the continued trend in UK Agency partner growth, with over 600 branches having now returned over the past 18 months.

The Comparison Services division has performed well, as expected, since the end of the Period as consumers increasingly become aware of the benefits of switching.

The Group will continue to invest across the business and develop further products in line with our vision to be the consumer champion at the heart of the home. Although it is early in the year, Management remains comfortable with market expectations4 for the 2017 financial year. Our next trading update will be on 2 February 2017, the day of our AGM.

-ENDS-

For further information, please contact:

Lawrence Hall, Head of Communications - [email protected] / 07890 078 945

Rachael Malcolm, Head of Investor Relations - [email protected] / 0203 8725 648

James Isola, Maitland 020 7379 5151

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

A webcast of the management team presentation to analysts and investors will be made available at www.zpg.co.uk at 09.00am this morning and registration can be accessed here. An audio dial-in will also be made available:UK Toll Number: 0203 003 2666UK Toll-Free Number: 0808 109 0700United States Toll-Free Number: 1866 966 5335United States Toll Number: 1 646 843 4608

Participant pin: 76156743#

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

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

3. ARPA (Average revenue per advertiser) represents revenue from property portal advertising services from the Group's Property partners in a given month divided by the total number of Property partners during the month, measured as a monthly average over the period.

4. As at 29 November 2016, market expectations for Group FY17 Revenue and EBITDA were £219.2m and £85.8m, respectively (Source: Bloomberg).

Cautionary Statement

This document contains forward-looking statements. These forward-looking statements include matters that are not historical facts. Statements containing the words "believe", "expect", "intend", "may", "estimate" or, in each case, their negative and words of similar meaning are forward-looking. By their nature, forward-looking statements involve risks and uncertainties because they relate to events that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that the Group's actual financial condition, results of operations and cash flows, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if the Group's financial condition, results of operations and cash flows, and the development of the industry in which we operate are consistent with the forward-looking statements in this document, those results or developments may not be indicative of results or developments in subsequent periods. Important facts that could cause the Group's actual results of operations, financial condition or cash flows, or the development of the industry in which we operate, to differ from current expectations include those principal risks and uncertainties disclosed below. As a consequence, the Group's future financial condition, results of operations and cash flows, as well as the development of the industry in which we operate, may differ from those expressed in any forward-looking statements made by us or on the Group's behalf.

About Zoopla Property Group (www.zpg.co.uk)

Zoopla Property Group Plc (LSE:ZPLA) (ZPG) owns and operates some of the UK's most trusted and effective home-related digital platforms including Zoopla, uSwitch, PrimeLocation and Property Software Group. Our mission is to provide the most useful resources for consumers when finding, moving or managing their home and be the most effective partner for related businesses.

We help consumers understand the property and home services comparison markets and make smarter decisions, whilst helping professionals to win more business and operate more effectively. The Group benefits from its multi-brand, multi-channel approach and each of our brands has a distinct market position with an unrivalled proposition. Our websites and mobile apps attract over 50 million visits per month.

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

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

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

Property Software Group is the UK's largest supplier of software and workflow solutions to the property industry with a portfolio of brands including Alto, Jupix, CFP, Vebra, Core, Encore, MyPropertyFile and MoveIT.

Zoopla Property Group Plc was founded in 2007 and has a highly experienced management team, led by Founder & CEO, Alex Chesterman OBE.

Business Review

2016 has been another very successful year for ZPG as we remain focused on being the consumer champion at the heart of the home. We continued to lead innovation in the digital property and comparison markets and the Group is now stronger and more diversified than ever, delivering Revenue and Adjusted EBITDA of £197.7 million and £77.1 million respectively during the Period.

Executing on our strategy & vision

At the time of both the uSwitch and Property Software Group acquisitions we talked about being on a multi-year journey to create the best fully-integrated products in the market by refining and enhancing the experience for both our consumers and partners. Doing so allows us to maximise the opportunity we have to fulfil our mission of providing the most useful resources for consumers when finding, moving or managing their home and being the most effective partner for related businesses.

This year we continued to invest in marketing our brands and developing our products. We created a series of new national advertising campaigns for each of our consumer brands - Zoopla, uSwitch and PrimeLocation - resulting in record levels of brand awareness. We launched our innovative 'Running Costs' tool on the Zoopla website, giving consumers an idea of the total occupancy costs for any property including likely mortgage or rental payments, energy costs, water bills, insurance and council tax charges. We saw strong take-up of the Group's award-winning AdReach product, which helps partners engage directly with their target audience and win more business.

We have grown our huge and highly engaged consumer audience, with over 600 million visits to our websites and apps during the Period, delivering incredible value to our partners by generating over 53 million leads for them during the year. And we have seen strong mobile growth, having relaunched both the Zoopla and uSwitch apps, with 68% of our traffic during the year coming via a mobile device as consumers engaged with our platforms at home, at work and on the move.

The Group also made investments and developed exclusive strategic partnerships with some of the UK's most-promising and innovative technology start-ups - PropertyDetective, Landbay and Trussle - to further differentiate and enhance our consumer and partner propositions. As a result, we have now launched individual 'Property Reports' for every home in the UK, a unique feature where prospective buyers can get a 'Mortgage in Principle' in under 5 minutes and a new 'Invest' channel where anyone can now invest from as little as £100 into the UK residential property market.

Acquisition of Property Software Group

In April, we acquired Property Software Group, the UK's market-leading provider of software and workflow solutions to property professionals, used in over 8,000 offices. This acquisition is a core part of ZPG's mission and enables the Group to now provide the UK property industry's first end-to-end solution including software and CRM, digital marketing and market insight tools as well as further revenue opportunities for our Property partners. It is a key step for the Group and ensures that we remain the most-valued partner for UK property professionals to help them market their inventory, manage their business and maximise their revenues.

Capital Markets Day

We held our first Capital Markets Day in September, which allowed us to provide deeper insight into our vision and strategy and the scale of the opportunity that exists throughout the property journey. As part of the day, we unveiled our updated key performance indicators ('KPIs') to reflect the evolution of the business following our recent acquisitions and our bundled property proposition. Full KPIs under the updated methodology for the Group including pro forma comparators for the same period last year can be found at the end of this release.

Property Services

Revenues in our Property Services division were £86.7 million for the year, including £7.3 million of revenue from five months of trading from Property Software Group. Our audience remains highly engaged with over 45 million visits per month to our property platform, up 2% year-on-year (YoY), delivering over 23 million leads to our Property partners over the Period.

On a like for like basis the total number of unique Property partners increased by 6% over the past year to 23,101. We saw the number of UK Agency partners advertising on our portals grow during every month of financial year 2016, ending the Period up 5% at 13,373 in addition to 2,610 New Homes developments, 1,074 Overseas agents, 415 Commercial agents and 5,003 software only partners. The remaining 626 arise as a result of aligning the calculation method for hybrids with our peers. Our inventory grew 10% to over 927,000 listings at the end of the Period.

On a like for like basis including Property Software Group, combined ARPP was £328, up 1% on the same Period last year. Excluding Property Software Group, ARPA increased across every vertical as the Group's Property partners continued to advertise their brands and market their inventory on our platform. UK Agency ARPA grew by 2% to £365, reflecting the Group's pragmatic approach to pricing during the Period. ARPA in New Homes grew by 13% to £377, as demand from New Homes Developers for the Group's targeted email campaigns continued. Overseas and Commercial ARPA grew by 1% to £150 and 21% to £129 respectively as we focused on growing the number of partners and inventory.

As outlined at the Capital Markets Day, the Group will report its total number of unique Property partners and Average Revenue Per Partner (ARPP) from financial year 2017 onwards. For reference under the updated KPI structure, the Group had a total of 23,101 unique Property partners and blended ARPP was £328 as at the end of the Period, reflecting the mix effect from five months of ownership of Property Software Group.

Comparison Services

Our Comparison Services division outperformed expectations this year with consumer adoption of comparison websites continuing to grow as the benefits of switching become increasingly clear. We experienced record levels of switching across every vertical with revenues in the division at £111.0 million, up 38% compared to the same twelve-month period last year, whilst helping consumers switch and save over £320 million off their energy bills alone.

As outlined in our half year results, the Comparison Services division had an exceptionally strong first six months with record switching volumes in both the Energy and Communications verticals as a result of our market-leading collective switch, energy supplier price cuts and a highly-competitive environment for broadband deals. We have seen these tailwinds continue in the second half driving further outperformance as outlined below.

The performance in the Energy vertical was exceptionally strong during the Period, driven by competitive supplier pricing, our market-leading collective and exclusive deals and continued regulatory support for comparison websites. In June 2016, the CMA concluded its energy market investigation setting out a wide range of reforms to modernise the market which specifically enable comparison websites to play a more active role in helping consumers to find the best deals and to save money off their household bills.

The Communications vertical also performed strongly, driven by highly competitive deals and consumer demand to switch to the best broadband and TV packages. We continued to develop our Financial Services offering with good progress in areas such as credit cards and banking as a result of the Group's targeted approach to launching into new verticals.

The number of Comparison Services leads generated during the year increased to over 30 million, up 22% compared to the same twelve-month period last year. The increase in ARPL to £3.67, compared to £3.23 for the same twelve-month period last year, was driven by the significant outperformance in the Energy vertical.

Looking Ahead

Since the end of the Period, the Group has announced further progress in differentiating its proposition for both consumers and partners with the acquisition of Technicweb, one of the UK's leading cloud-based estate agency website design and hosting businesses as well as an investment in and an exclusive strategic partnership with Neos, a leading smart home-insurance provider.

We are incredibly excited by the scale of the opportunity to help both consumers and partners throughout the property lifecycle and will continue to invest, integrate and innovate in product development and audience engagement to make the most of this opportunity across the different divisions of our business.

Finally, we will continue to work hard to attract and retain the passion and talent we have within the business as we grow. We have grown to 735 team members and have now moved all our London-based staff into one Group headquarters, providing them with a world-class working environment. I would like to welcome Andy Botha and Mark Goddard and the whole Property Software Group team to ZPG. I would also like to thank the Executive Management team and their respective team members for their ongoing hard work, dedication and commitment to our mission.

Alex Chesterman OBE

Founder & Chief Executive Officer

Finance Review

Revenue increased by 84% to £197.7 million and Adjusted EBITDA increased by 58% to £77.1 million compared to the same period last year. The increase was partly a result of the inclusion of twelve months of trading in the Comparison Services division and five months of trading from Property Software Group, which we acquired in April 2016. The Comparison Services division performed ahead of expectations with record switching levels across every vertical and the Property Services division performed in line with expectations, with continued growth in the number of UK Agency partners over the Period.

Statutory profit for the year and statutory basic EPS also increased significantly by 44% to £36.7 million and 44% to 8.9p, respectively. When reviewing performance the Directors use a number of adjusted measures, including Adjusted EBITDA and Adjusted basic EPS, as they believe these give a more relevant indicator of the Group's underlying performance. These measures are reconciled in the Summary Income Statement below.

During the Period, the Group secured a £50 million extension to its revolving credit facility, which was used to help fund the acquisition of Property Software Group. As at 30 September 2016, the Group had net debt of £146.3 million and substantial headroom against its covenants.

The Group maintains a target dividend pay-out ratio of 35-45% of profits excluding share-based payments and exceptional items and the Directors have proposed a final dividend of 3.7 pence per share. This, together with the interim dividend of 1.5 pence per share, brings the total dividend to 5.2 pence per share for the Period.

Summary Income Statement

Revenue

The Property Services division generated £86.7 million of revenue, up 9% on the same period last year. UK Agency revenue, which includes £7.3 million of revenue from five months of trading from Property Software Group, was up 10% at £64.3 million. Excluding Property Software Group, UK Agency revenue generated £57.0 million of revenue (FY15: £58.3 million) against tough comparators from the same period last year, when the Group experienced significant UK Agency churn related to Agents' Mutual part way through the period. After adjusting for both the contribution from Property Software Group and for revenue generated from agents who churned part way through 2015, underlying UK Agency revenue was up c.5%. New Homes revenue increased 6%, driven by demand for targeted email campaigns with Other revenue, which includes revenue from advertising, marketing services, data sales, overseas and commercial property, continuing to perform in line with expectations.

The Comparison Services division generated £111.0 million of revenue and performed ahead of expectations across every vertical. As a reminder, the prior year comparator includes four months of Comparison Services trading as the business was acquired part way through 2015.

Operating costs

Operating costs increased by 105% to £120.6 million, largely attributable to the incorporation of twelve months of trading from the Comparison Services division and five months of trading from Property Software Group.

Property Services costs were £48.2 million, comprising Staff costs of £22.6 million and Other Costs of £25.6 million. The increase in both Staff and Other costs arose from the incorporation of five months of costs from Property Software Group and our ongoing investment in people, technology and marketing. In the second half of the year, the Group strategically stepped up its investment in above-the-line brand building activities, which resulted in Zoopla achieving a record level of national awareness and becoming the leading UK property portal with prompted brand awareness of 90%. (Source: Harris Interactive, September 2016).

Comparison Services costs were £72.4 million, comprising Staff costs of £12.6 million and Other costs of £59.8 million. The Group invests in helping consumers find the best deals by constantly optimising consumer experience, which in turn drives conversion and generates greater exposure for our Comparison partners. On a like-for-like basis, Other costs trended upwards in line with revenue growth as a result of Group's strength in performance-based marketing. The Group also increased its above-the-line marketing of the uSwitch brand to help educate consumers about the benefits of switching and to further grow our brand awareness.

Adjusted EBITDA

Adjusted EBITDA increased by 58% from £48.7 million to £77.1 million compared to the prior year. Property Services Adjusted EBITDA decreased slightly to £38.5 million reflecting the Group's additional strategic investment in marketing in H2 2016 and tough comparators against the same period last year as outlined above. Property Services delivered a margin of 44% for the Period, lower than the previous year due to the mix effect of incorporating five months of Property Software Group. The Comparison Services division generated £38.6 million of Adjusted EBITDA, at an increased margin of 35%, as a result of the exceptionally strong performance in the Energy vertical. Group margins reduced to 39% due to the mix effect from incorporating a full year's trading from the Comparison Services division and five months of trading from Property Software Group.

Share-based payments

The share-based payments charge increased from £1.9 million to £4.8 million as a result of providing for financial year 2016 grants under the Group's LTIP and deferred bonus schemes and the first year of the VCP scheme for the CEO. As expected this charge will increase in financial year 2017, in line with 2017 grants for the LTIP and deferred bonus schemes.

Depreciation

Depreciation increased to £1.7 million due to a write-down of leasehold improvements recognised as part of the Group's relocation to a new headquarters. Underlying depreciation will increase in financial year 2017 as we see a full year of depreciation charge on costs associated with the Group's new headquarters.

Amortisation

The Group splits out amortisation of intangibles arising on acquisitions and amortisation of other intangibles for the purposes of calculating Adjusted basic EPS. Amortisation of acquired intangibles increased to £7.5 million as a result of a full year's amortisation charge arising on the acquisition of uSwitch and five months charge of amortisation arising on the acquisition of Property Software Group. The Group's amortisation of acquired intangibles charge will increase in financial year 2017 to reflect the valuation of Property Software Group and a full year's impact of its respective charge.

Amortisation of other intangibles increased to £2.0 million reflecting the Group's capital expenditure on building integrated projects and products such as the 'Running Costs' tool as outlined in the Business Review.

Exceptional items

Exceptional items include costs that Management believe to be exceptional in nature by virtue of their size or incidence. Total exceptional items of £11.4 million in 2016 represent costs relating to the Property Software Group acquisition in addition to deferred costs relating to the uSwitch acquisition.

Net finance costs

The Group incurred net finance costs of £3.5 million during the Period. The increased charge reflects the drawdown of debt via the Group's revolving credit facility to help fund the acquisition of Property Software Group.

Income tax expense

The Group's income tax charge was £9.5 million representing an effective income tax rate of 20.5%. This is higher than the statutory tax rate of 20.0% due to non-deductible transaction costs and management deferred and contingent consideration expenses arising on acquisitions. This was offset by the revaluation of deferred tax assets and liabilities as a result of the anticipated reduction in the rate of corporation tax to 19% from 1 April 2017 and 17% from 1 April 2020.

Profit for the year

Adjusted profit for the year, calculated as profit for the year after adding back exceptional items and amortisation of intangible assets arising on acquisitions adjusted for tax, increased by 51% to £52.4 million. Statutory profit increased by 44% to £36.7 million.

Earnings per share (EPS)

Adjusted basic EPS, which strips out the impact of exceptional items and amortisation of intangible assets arising on acquisitions, increased by 51% to 12.7p. Statutory basic EPS grew by 44% to 8.9p.

Summary statement of financial position

The Group was in a strong financial position as at 30 September 2016 with net assets of £142.2 million. Intangible assets increased to £322.6 million reflecting acquired intangibles as a result of the Property Software Group acquisition. The increase in property, plant and equipment to £6.4 million reflects the Group's investment in a new headquarters as outlined in the Business Review. The Group recognised a liability of £30.7 million for deferred and contingent consideration payable as a result of the Group's acquisitions.

Net debt position

As at 30 September 2016 the Group had net debt of £146.3 million including loans and borrowings of £149.7 million. The overall increase in net debt can be attributed to the acquisition of Property Software Group in April 2016 and the payment of the deferred consideration relating to the uSwitch acquisition and deal-related earnout in the second half of 2016.

Summary statement of cash flows

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

2 Includes both current and non-current balances

The Group continues to be highly cash generative with net cash inflows from operating activities of £62.1 million during the Period. This 59% increase, compared to the same period last year, is largely due to the incorporation of twelve months of trading in the Comparison Services division. The Group had a net outflow of £88.6 million relating to the cash costs of the acquisition of Property Software Group and deferred consideration relating to the uSwitch acquisition.

Dividends

The Group maintains a target dividend pay-out ratio of 35-45% of profits excluding share-based payments and exceptional items based on the strong cash generation and long-term earnings potential of the Group. The Directors have proposed a final dividend of 3.7 pence per share, bringing total dividends for the Period to 5.2 pence per share. Subject to shareholder approval at the 2017 Annual General Meeting, this will be paid on 9 February 2017 to those shareholders on the share register as at 16 December 2016.

Appendix 1: Group proforma KPIs

As outlined at ZPG's Capital Markets Day in September, the Group has updated its key performance indicators ('KPIs') to reflect the evolution of the business following our acquisitions and our new bundled property proposition.

The table below shows how the Group will disclose its KPIs from financial year 2017 onwards. The figures below are for the twelve-month periods to 30 September 2016 and 30 September 2015. Each period includes a full year's trading in the Comparison Services division and Property Software Group in order to give a more meaningful comparative.

1Financial year 2015 and 2016 pro forma figures include the following exceptional events: 1) UK Agency churn in H1 2015 which equated to £4.2m of Revenue and £4.2m of Adjusted EBITDA; and 2) Outperformance in the Comparison Services division in FY16 which equated to £15.0m of Revenue and £8.0m of Adjusted EBITDA

2Other Costs represents technology, property and administrative costs

3Adjusted EBITDA is defined as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items.

4Visits comprise individual sessions on the Group's websites or mobile applications by users for the Period indicated as measured by Google Analytics

5FTEs is defined as the average number of full time equivalent employees across the Group

6Agency represents revenue generated from UK estate & lettings agents, overseas agents and commercial property agents

7Other represents revenue generated from advertising, marketing services, data sales

8ARPP (average revenue per partner) is defined as revenue generated from the Group's Property partners in a given month divided by the total number of Property partners during the month, measured as a monthly average over the Period.

9Total unique number of Property partners is defined as the total number of UK estate & lettings agency branches, new home developers, overseas and commercial agency branches paying subscription fees to for either advertising or software services

10Other represents revenue generated from financial services switching, boiler cover, business energy and data insight

11ARPL (average revenue per lead) is the revenue generated from energy switching, communications switching, financial services switching, boiler cover, business energy and data insight divided by the total number of Comparison Services leads during the month, measured as a monthly average over the period

12A Comparison Services lead is measured at the point when a consumer completes an application form hosted on the Group's website or at the point in time when the customer leaves the Group's website having clicked through to a third party website

Principal risks and uncertainties

The EU referendum

The result of the UK's EU referendum has increased the level of macroeconomic uncertainty and could increase the likelihood of the impacts outlined under 'macroeconomic conditions' above. During the year, the Group considered the impact of this result on the business and its potential implications. The Directors believe that the Group's multi-channel, multi-brand strategy creates a diverse revenue base which means it is well placed to minimise any negative impacts. In particular:

· The Property Services division is largely subscription based and is therefore less susceptible to short term shocks or variations in the property market or wider economy;

· A large proportion of our Property partners are engaged in both sales and lettings which reduces the risk of any downturn in the property market on their businesses;

· An economic downturn increases the propensity for consumers to search our Comparison platform for the best deals to save money on their household expenses;

· The Group has minimal exposure to foreign exchange although a weaker Pound may lead to higher price inflation in areas such as energy bills which may benefit our Comparison division; and

· The Group has external debt with a variable interest rate and therefore any decrease in interest rates should reduce the Group's finance costs.

Full year results

The financial information set out below has been taken from the consolidated financial statements of Zoopla Property Group Plc for the year ended 30 September 2016 which were approved by the Board of Directors on 29 November 2016. The financial information does not constitute statutory accounts within the meaning of sections 435(1) and (2) of the Companies Act 2006. The consolidated financial statements will be filed with the Registrar of Companies, subject to their approval by the Company's shareholders at the Company's Annual General Meeting on 2 February 2016. The Company's Annual Report for the year ended 30 September 2016 will be posted to shareholders, and will be made available on the Company's website, in December 2016.

Independent Auditors' report to the shareholders of Zoopla Property Group Plc on the preliminary announcement.

We confirm that we have issued an unqualified opinion on the full financial statements of Zoopla Property Group Plc.

Our audit report on the full financial statements sets out the following risks of material misstatement which had the greatest effect on our audit strategy; the allocation of resources in our audit; and directing the efforts of the engagement team, together with how our audit responded to those risks:

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we did not provide a separate opinion on these matters.

Our liability for this report, and for our full audit report on the financial statements is 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 our audit report or this report, or for the opinions we have formed.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Statement of Directors' responsibilities

The responsibility statement below has been prepared in connection with the Company's full Annual Report for the year ended 30 September 2016. Certain parts thereof are not included within this Announcement.

The Directors confirm to the best of their knowledge that:

a) the Group consolidated financial statements from which the financial information within these preliminary consolidated financial results have been extracted, are prepared in accordance with IFRSs as adopted by the European Union and give a true and fair view of the assets, liabilities, financial position and profit of the Group and the undertakings included in the consolidation taken as a whole; and

b) the Annual Report and the Business Review and Finance Review include a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole together with a description of the principal risks and uncertainties faced by the Group.

The Directors of Zoopla Property Group Plc and their respective responsibilities are listed in the Annual Report for 2016. This responsibility statement was approved by the Board of Directors and is signed on its behalf by:

Alex Chesterman

Director

29 November 2016

Consolidated statement of comprehensive income

For the year ended 30 September 2016 from continuing operations

Consolidated statement of financial position

As at 30 September 2016

The consolidated financial statements of Zoopla Property Group Plc were approved by the Board of Directors and were signed on its behalf by:

Consolidated statement of cash flows

For the year ended 30 September 2016

Consolidated statement of changes in equity

For the year ended 30 September 2016

1 The transfer from merger reserve to retained earnings in 2016 and 2015 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 policies

Zoopla Property Group Plc is a company domiciled and incorporated in the United Kingdom. The address of the registered office is The Cooperage, 5 Copper Row, London SE1 2LH.

1.1 Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below for the years ended 30 September 2016 and 30 September 2015. 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 IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRS"). 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 are only effective for financial years beginning on or after 1 January 2016:

• IFRS 9 - financial instruments - classification of financial assets and financial liabilities

• Amendments to IFRS 11 - accounting for acquisition of interests in joint operations

• Amendments to IAS 16 and IAS 38 - clarification of acceptable methods of depreciation and amortisation

• IFRS 15 - revenue from contracts with customers

• Amendments to IAS 27 - equity method in separate financial statements

• Improvements 2014 - annual improvements to IFRSs: 2012-2014

• Amendments to IFRS 10, IFRS 12 and IFRS 28 - investment entities: Applying the consolidation exception

• Amendments to IAS 1 - Disclosure initiative

• IFRS 16 - leases

IFRS 15 - revenue from contracts with customers is effective for the first time for the Group's financial year commencing 1 October 2018. The Group is currently in the process of assessing the full impact of IFRS 15. It is not currently practical to quantify the impact of this standard.

The impact of IFRS 16 - leases is to require the Group to record its current head office building and fleet of motor vehicles on the statement of financial position. These items are currently treated as operating expenses. The change in recognition is expected to increase future depreciation charges and lead to a reduction in operating expenses.

All other standards identified above are not expected to have a material impact on the financial statements.

1.2 Adoption of new and revised standards

These financial statements have been prepared in accordance with the policies set out in the Group's Annual Report for the year ended 30 September 2015. No new or revised accounting standards were adopted in the period.

1.3 Basis of consolidation

The consolidated financial statements incorporate the accounts of Zoopla Property Group Plc ("the Company") and entities controlled by the Company ("its subsidiaries") (together "the Group"). Control exists when the Group has existing rights to give it the ability to direct the relevant activities of an entity and has the ability to affect the returns the Group will receive as a result of its involvement with the entity. The results of subsidiaries are included in the consolidated financial statements from the date control commences until the date when control ceases.

On 28 April 2016 the Group acquired Property Software Holdings Limited and its subsidiaries (together "Property Software Group") from which date the results of Property Software Group have been consolidated. Therefore, consolidated results for 2016 include five months of performance of Property Software Group and are not a like for like comparison for 2015. Details of the acquisition are set out in Note 13.

On 1 June 2015 the Group acquired Ulysses Enterprises Limited and its subsidiaries (together "uSwitch") from which date the results of uSwitch have been consolidated. Therefore, consolidated results for 2015 include only four months of performance within the Group's Comparison Services division and are not a like for like comparative for 2016. Details of the acquisition are set out in the Group's Annual Report 2015 and are summarised in Note 13.

1.4 Going concern

The financial position of the Group shows a positive net asset position and the Group continues to generate positive Adjusted EBITDA, positive net cash flows from operating activities and maintain its current dividend policy. As a consequence, the Directors believe that the Group is well placed to manage its business and financial risks successfully.

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

1.5 Revenue

Revenue represents amounts due for services provided during the period, net of value added tax. The Group recognises revenue under two categories - Property Services and Comparison Services.

Revenue from Property Services derives principally from subscription to the Group's property websites and from the provision of property software to UK domestic estate agents ("UK Agency revenue"), home developers ("New Homes revenue") and overseas and commercial estate agents. Subscription revenue is recognised over the period of the subscription. Software revenue includes subscription to Software as a Service ("SaaS"), desktop software licensing, support and installation fees. Installation fees are recorded at fair value when the installation is complete. Ongoing SaaS revenue, support and licensing fees are recognised over the service period. Revenue from other property services is recognised in the month in which the service is provided.

The main sources of Comparison Services revenue are fees received for gas and electricity comparison services ("Energy revenue") and mobile, broadband, pay TV and home phone comparison services ("Communications revenue"). Revenue is recognised at the point at which the Group generates a lead to an energy or communications provider, based on the historical conversion of such leads into completed switches. Revenue from other comparison services ("Other Comparison Services revenue") is recognised in the month in which the service is provided.

1.6 Leases

During the period the Group entered into a new 15 year lease agreement for the Group's head office at The Cooperage, London.

All of the Group's current lease arrangements are recognised as operating leases as the material risks and rewards incidental to ownership remain with the lessor. Operating lease rentals are charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the lease. Rent-free periods, lease arrangement fees and other direct costs are amortised through the consolidated statement of comprehensive income over the term of the lease.

1.7 Finance income and costs

Finance income represents interest receivable on cash and deposit balances. Interest income is recognised as it accrues using the effective interest method.

Finance costs represent interest and certain fees charged on the Group's revolving credit facility. Finance costs are recognised as they accrue using the effective interest method.

1.8 Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. This cost includes the purchase price, 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. Items of property, plant and equipment are subsequently measured at cost less accumulated depreciation and are not revalued.

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, as follows:

The Directors review the residual values and useful economic lives of assets on an annual basis.

1.9 Business combinations

The acquisition of subsidiaries and businesses is accounted for using the acquisition method in accordance with IFRS 3. The consideration for each acquisition is measured at the aggregate of fair values of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, net of cash acquired. Acquisition related costs, other than those associated with the issue of debt or equity securities, are recognised in the consolidated statement of comprehensive income as incurred.

At the acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair value with the exception of deferred tax assets and liabilities, which are measured in accordance with IAS 12 - income taxes. Identifiable net assets include the recognition of any separately identifiable intangible assets. Further detail of the identifiable assets and liabilities recognised during the year on the acquisition of Property Software Group and on the 2015 acquisition of uSwitch is provided in Note 13.

Deferred and contingent consideration are measured at fair value at the date of acquisition. Where the amounts payable are classified as a financial liability any subsequent change in the fair value is charged/credited to the Group's consolidated statement of comprehensive income. Amounts classified as equity are not subsequently remeasured. Where consideration to management shareholders is contingent on their continued employment the amount is recognised as a remuneration expense in the statement of comprehensive income over the deferral period.

1.10 Goodwill

Goodwill arising on a business combination represents the difference between the fair value of the consideration paid and the fair value of assets and liabilities acquired and is recorded as an intangible asset. Goodwill is not subsequently subject to amortisation but is tested for impairment annually and whenever the Directors have an indication that it may be impaired. For the purposes of impairment testing goodwill is allocated to the cash-generating units expected to benefit from the combination. Any impairment in carrying value is charged to the consolidated statement of comprehensive income.

1.11 Intangible assets

Purchased intangible assets with finite lives are initially recorded at cost. Intangibles arising on acquisition are recorded at fair value. All intangibles are subsequently stated at initial value 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:

1.12 Impairment of tangible and intangible assets

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. 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. Any impairment loss is recognised immediately in the consolidated statement of comprehensive income.

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 the consolidated statement of comprehensive income.

1.13 Research and development

The Group incurs expenditure on research and development in order to develop new products and enhance the existing websites. Research expenditure 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 enhancement 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.

Research and Development tax credit claims made are recognised as a credit to administrative expenses in the financial year relevant to the claim.

1.14 Financial instruments

Financial assets and financial liabilities are recognised on the statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Full details of financial instruments are included in Note 26.

Investments in unlisted securities not meeting the definition of associates, joint ventures or subsidiaries are classified as available for sale financial assets and are initially recorded at fair value plus transaction costs. The investments are then remeasured at each subsequent reporting date to fair value. Changes in the fair value or impairments arising from the significant or prolonged decline in fair value of the unlisted securities are recognised in other comprehensive income. On disposal of the asset any gains and losses recorded within other comprehensive income are realised and are reclassified to the consolidated statement of comprehensive income.

Trade and other receivables 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. The provision is reviewed regularly in conjunction with a detailed analysis of historical payment profiles and past default experience. When a trade receivable is deemed uncollectable, it is written off against the allowance account. The Group receives interest income on certain amounts held in escrow.

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.

Loans and borrowings are measured at amortised cost, net of direct costs. Direct costs are released through the consolidated statement of comprehensive income under the effective interest method, along with interest charged, over the life of the instrument.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The Company'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.

The Group's cash and cash equivalents represent amounts held in the Group's current accounts and overnight deposits that are immediately available.

1.15 Current tax

Current income tax comprises UK income tax and 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. Current tax is recognised in the consolidated statement of comprehensive income except to the extent that it is required to be recognised directly in equity.

1.16 Deferred tax

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

• the initial recognition of goodwill;

• 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

• 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. Deferred tax is recognised in the consolidated statement of comprehensive income except to the extent that it is required to be recognised directly in equity.

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 income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle balances on a net basis.

1.17 Provisions

Provisions are recognised when the Group has a present obligation, legal or constructive, as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate of the amount of the obligation can be made. Provisions are measured at Management's best estimate of the expenditure required to settle the obligation at the statement of financial position 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 estimate of costs to make good the Group's leasehold properties at the end of the lease term.

Onerous lease provisions relate to contracts whereby the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received under it. The Group's onerous lease provision relates to one of the Group's previous office buildings which was vacated in September 2016.

1.18 Employee benefits: defined contribution benefit scheme

The Group operates a defined contribution pension scheme which is a post-employment benefit plan under which the Group pays fixed contributions into a fund. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Contributions payable to the fund are charged to the statement of comprehensive income in the period to which they relate.

1.19 Share-based payments

The Group provides equity-settled share-based incentive plans whereby Zoopla Property Group Plc grants shares or nil-cost options over its shares to employees of its subsidiaries for their employment services. The Group also issues warrants over shares in Zoopla Property Group Plc to a number of the Group's estate agent partners, allowing them to acquire shares in exchange for making their property listings available for inclusion on the Group's property websites.

Equity-settled share-based payments to employees and partners are measured at the fair value of the equity instruments at the grant date. The fair value is measured using a suitable valuation model, including the Black-Scholes and Monte-Carlo valuation models where appropriate, and is charged to the consolidated statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to meet a market vesting condition. Details regarding the determination of the fair value of equity-settled share-based payment transactions are set out in Note 24.

Where the terms and conditions of options are modified before they vest, the increase in fair value of the options, measured immediately before and after the modification, is charged to the income statement over the remaining vesting period.

Within the company accounts of Zoopla Property Group Plc equity-settled share options granted directly to employees or estate agent partners of 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 24. 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 2016 after deducting the exercise price of the share option.

1.20 Critical accounting judgements and key sources of estimation uncertainty

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.

Acquisition of Property Software Group

On 28 April 2016 the Group completed its acquisition of Property Software Group. The process of determining the fair value of assets and liabilities acquired is inherently judgemental and there is a risk that inappropriate methodologies or assumptions could lead to the valuation of acquired intangibles, goodwill or the fair value of other net assets being misstated. The details of the assets and liabilities recognised are set out in Note 13. The Group engaged third party valuations experts to mitigate the risk associated with the valuation of assets and liabilities on acquisition; however, Management judgement remains in the preparation of forecasts and other assumptions which are included within the valuation model.

Impairment of goodwill and intangibles

The Group holds goodwill and intangibles on the statement of financial position in respect of business acquisitions made. During 2016 the Group has recognised intangible assets and goodwill of £75.9 million in respect of the acquisition of Property Software Group. In 2015 the Group recognised £181.4 million in respect of the uSwitch acquisition. Acquired intangibles include acquired brands, customer relationships, databases, websites and software. The Group is required to review these assets annually 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 of the relevant cash-generating unit, which represents the higher of fair value and value in use. 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. Details of the assumptions used for 2016 are included in Note 14 to the financial statements.

Revenue and accrued income

Revenue generated by the Group's Comparison Services division is recognised predominantly from online switching services. An element of Management judgement is required in calculating a revenue accrual which estimates the number of successful switches based on leads provided for each partner in the period between the last date of billing and the latest partner data being made available. The accrued income is estimated by considering the volume of leads that have passed from the Group's websites to the partner, the historical conversion of such leads into completed switches and contracted revenue per switch. As at 30 September 2016 the Group holds £17.2 million of accrued income (2015: £10.7 million) on the statement of financial position.

Revenue from Property Services is predominantly subscription based and therefore there is a lower amount of estimation uncertainty and Management judgement involved in its recognition and measurement.

1.21 Non-GAAP performance measures

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

• Adjusted EBITDA - which is defined as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items (Note 3); and

• Adjusted basic EPS - which is defined as profit for the year, excluding exceptional items and amortisation of intangible assets arising on acquisitions, adjusted for tax and divided by the weighted average number of shares in issue for the year (Note 11).

Both of these measures are used in determining the remuneration of the Executive Directors and Management.

2. Business segments

The Board of Directors has been identified as the Group's chief operating decision maker. The monthly reporting pack provided to the Board to enable assessment of the performance of the business has been used as the basis for determining the Group's operating segments.

Whilst the chief operating decision maker monitors the performance of the business at a revenue and Adjusted EBITDA level, depreciation and amortisation, share-based payments, exceptional items, finance income and costs and income tax are all monitored on a consolidated basis. As the Group continues to evolve we will assess the relevance of splitting out Adjusted EBITDA for the Property Services and Comparison Services divisions.

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

The chief operating decision maker monitors six individual revenue streams as set out below. The six revenue streams are grouped under two headings: Property Services and Comparison Services. Adjusted EBITDA is monitored on an aggregated basis under these two headings. Revenue and costs shown under the UK Agency heading include trading for the five months from 28 April 2016 to 30 September 2016 of Property Software Group, being the period of consolidation. The consolidated results for 2015 include only four months of performance within the Group's Comparison Services division and are therefore not a like for like comparative for 2016.

Property Services

• UK Agency revenue, which represents property advertising services and the provision of property software to UK estate agents and lettings agents;

• New Homes revenue, which represents property advertising services provided to new home developers;

• Other Property Services revenue, which predominantly represents overseas and commercial property advertising services, display advertising and data services.

Comparison Services

• Energy revenue, which represents gas and electricity switching services;

• Communications revenue, which represents mobile, broadband, pay TV and home phone switching services; and

• Other Comparison Services revenue, which predominantly represents financial services switching, boiler cover, business energy and data insight services.

All material revenues are generated in the UK.

The following table analyses the Group's revenue streams as described above:

1 Includes revenue of £7.3 million contributed by Property Software Group during the year (2015: £Nil).

3. Adjusted EBITDA

Adjusted EBITDA is used by Management as a key measure to monitor the Group's business and the Directors believe it should be disclosed on the face of the statement of comprehensive income to assist in the understanding of the Group's underlying financial performance. Furthermore, the terms of the Group's revolving credit facility require Management to report on the Group's net debt to Adjusted EBITDA ratio. Adjusted EBITDA is therefore considered a key performance metric for Management, the providers of the Group's external debt and other stakeholders.

The Group defines Adjusted EBITDA as operating profit after adding back depreciation and amortisation, share-based payments and exceptional items. Exceptional items include costs and income which Management believes to be exceptional in nature by virtue of their size or incidence. Such items would include costs associated with business combinations, one-off gains and losses on disposal, and similar items of a non-recurring nature together with reorganisation costs and similar charges. In 2016 exceptional items related to the acquisition of Property Software Group and the 2015 acquisition of uSwitch.

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 partners; and (ii) employee incentive plans which are aimed at retaining staff and aligning employee objectives with those of the Group. The Directors consider that excluding share-based payments and other non-cash charges such as depreciation and amortisation in arriving at Adjusted EBITDA gives a more appropriate measure of the Group's underlying financial performance and a closer approximation to the Group's operating cash flows.

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

Exceptional items comprise:

4. Operating profit

The total gross value of research and development expenditure in the period was £4.3 million, of which £1.5 million was capitalised on the statement of financial position. Research and development expenditure relates to staff costs incurred in the development of new products and features.

5. Auditor's remuneration

6. Employee costs

7. Remuneration of key Management personnel

Key Management personnel comprises the Chairman, the Directors and the Managing Directors of the Property Services and Comparison Services divisions.

Further information about the remuneration of the Directors is provided in the audited part of the Directors' remuneration report in the Group's Annual Report 2016.

All of the key Management personnel excluding the Chairman and the Non-Executive Directors are members of the Group's defined contribution pension plans (2015: all).

8. Director and employee numbers

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

9. Income tax expense

Corporation tax is calculated at 20% (2015: 20.5%) of the taxable profit for the year.

On 15 September 2016 the Finance act 2016 confirmed a reduction in the rate of corporation tax to 19% from 1 April 2017 and 17% from 1 April 2020. The Finance Bill was substantively enacted at the year end date and therefore the one-off impact of remeasuring the UK deferred tax assets and liabilities for the rate change is recognised at 30 September 2016.

The charge for the period can be reconciled to the profit in the statement of comprehensive income as follows:

In addition to the amount charged to profit and loss, the following amounts relating to tax have been recognised directly in equity:

The Group's effective tax rate for the year ended 30 September 2016 is 20.5% (2015: 24%). The effective tax is higher than the statutory rate due to non-deductible transaction costs, management deferred and contingent consideration incurred on acquisitions. In 2016 this has been offset by the revaluation of deferred tax assets and liabilities as a result of the reduction in the corporation tax rate to 19% from 1 April 2017 and 17% from 1 April 2020.

10. Dividends

During the year the Group paid £16.6 million in dividends to shareholders. Additionally, the Directors propose a final dividend for 2016 of 3.7 pence per share (2015: 2.5 pence per share) resulting in a final proposed dividend of £15.3 million (2015: £10.3 million). The dividend is subject to approval at the Group's AGM on 2 February 2017. The final dividend proposed has not been included as a liability at the statement of financial position date.

11. Earnings per share

Adjusted Earning per Share figures for 2016 exclude the amortisation of intangible assets arising on the acquisitions of uSwitch and Property Software Group, which arise only on consolidation. Management believes that excluding the amortisation of these intangibles better reflects the underlying performance of the Group and increases comparability of performance year on year.

The dilutive effect of share options and warrants arises from the various share schemes operated by the Group as set out in note 24. The dilutive effect of potentially issuable shares of 4.1 million in 2015 related to the institutional deferred consideration on acquisition of uSwitch which could be settled in either cash or shares. This was fully settled in cash during 2016.

12. Investment in subsidiaries

Details of the Company's direct and indirect subsidiaries at 30 September 2016 are shown below. All of the subsidiaries listed are included in the consolidated accounts of Zoopla Property Group Plc, the ultimate parent company of the Group. The Ordinary Share capital of each subsidiary is owned entirely by the direct parent indicated. ZPG Limited, Ulysses Enterprises Limited and Property Software Holdings Limited are the only direct subsidiaries of Zoopla Property Group Plc. All subsidiaries are incorporated in the UK and registered at The Cooperage, 5 Copper Row, London, SE1 2LH.

The acquired entity Property Software Holdings Limited and its direct and indirect subsidiaries have a reporting period ending 31 March. The dormant subsidiaries have not taken an exemption from the preparation of individual accounts in respect of the year ended 31 March 2016 by virtue of the s394A of Companies Act 2006. All other subsidiaries have a reporting period ending 30 September.

13. Acquisitions

Property Software Group

On 28 April 2016 Zoopla Property Group Plc completed its acquisition of Property Software Group through the purchase of 100% of the issued share capital of Property Software Holdings Limited for total consideration of £69.6 million as measured in accordance with IFRS 3.

Expenses incurred on the acquisition of £1.3 million are included within administration expenses in the statement of comprehensive income. These costs have been considered exceptional in arriving at Adjusted EBITDA for 2016 (Note 3).

Property Software Group was consolidated into the Group on 28 April 2016. In the period post acquisition, Property Software Group recorded revenue of £7.3 million and adjusted EBITDA of £1.7 million. On a like-for-like basis, assuming Property Software Group was consolidated from the commencement of the 2016 financial year, the combined Group would have recorded revenue of £207.4 million and adjusted EBITDA of £80.2 million.

The purchase has been accounted for as a business combination under the acquisition method in accordance with IFRS 3. In calculating the goodwill arising on acquisition the fair value of net assets acquired was assessed and no material adjustments from book value were made to existing assets and liabilities with the exception of "intangible assets - software" which has been recorded at a fair value of £5.9 million compared to a book value of £3.5 million. The Group has also recognised a number of separately identifiable intangibles as part of the acquisition, details of which are set out in Note 13.1.

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

13.1 Intangible assets recognised on consolidation

Brand

£2.2 million has been recognised in respect of brand names operated by Property Software Group. The brands consist of desktop software products "Vebra", "Core" and "CFP" and SaaS products "Alto" and "Jupix". Property Software Group is an established software developer and supplier and the brands are considered to be highly recognisable in the UK real estate market. The brands have been valued using a relief from royalty approach. A brand royalty rate of 1.75% and a post-tax discount rate of 14.4% have been used to determine the net present value of avoided cash flows. Useful economic life of the brand assets are assessed as five years for desktop products and ten years for SaaS products.

Customer relationships

£20.5 million has been recognised in respect of customer relationships held by Property Software Group. The customer relationships relate to existing customers with subscriptions and licences to Property Software Group's desktop and SaaS products. The customer relationships have been valued using a multi-period excess earnings approach. A post-tax discount rate of 14.7% has been applied to forecast cash flows relating to the existing customers. Useful economic life of the customer relationships are assessed as five years for desktop products and ten years for SaaS products.

Software

£5.9 million has been recognised in respect of software assets developed by Property Software Group. Property Software Group has developed market leading desktop and SaaS software products. The software has been valued using a relief from royalty approach. A royalty rate for the software of 7% and a post-tax discount rate of 14.5% has been used to determine the net present value of avoided cash flows. Useful economic life of the software is assessed as three years for Desktop products and five years for SaaS products.

13.2 Goodwill

The acquisition of Property Software Group provides a number of benefits to the Group. The goodwill recognised on acquisition represents the value arising from intangible assets that are not separately identifiable under IAS 38 including the skills and knowledge of Property Software Group's workforce. 

The Board believes that the integration of Property Software Group into the Property Services division will result in an unrivalled UK property market proposition supporting professionals with their software and CRM solutions, digital marketing requirements and market insight tools along with providing them a range of new revenue opportunities through Property Software Group's MoveIT platform. The Board believes this unique proposition will drive an increase in revenue from its partners.

13.3 Debt assumed and discharged

Immediately prior to acquisition Property Software Group had outstanding debt of £24.9 million. The outstanding debt was assumed and discharged by Zoopla Property Group Plc on acquisition.

The following table provides a reconciliation of the amounts included in the consolidated statement of cash flows:

13.4 Deferred and contingent consideration

On acquisition the Group recognised deferred consideration of £22.5 million. A further £5.7 million is payable to Management shareholders and is conditional on the continued employment of Management up to and including the date of payment. In accordance with IFRS 3, this consideration will be recognised as a remuneration expense in the Group's consolidated statement of comprehensive income over the deferral period of between 12 months and 24 months from the date of acquisition. The Group is accruing the full £5.7 million over the deferral period, adjusted by an estimation of the number of leavers.

The movement in the value of deferred and contingent consideration between the date of acquisition and 30 September 2016 is set out in Note 19.

13.5 uSwitch

On 1 June 2015 Zoopla Property Group Plc completed its acquisition of uSwitch through the purchase of 100% of the issued share capital of Ulysses Enterprises Limited for total consideration of £177.6 million as measured in accordance with IFRS 3. Full details of the acquisition are included in the Annual Report 2015. On a like-for-like basis, assuming uSwitch was consolidated from the commencement of the 2015 financial year, the combined Group would have recorded revenue of £160.1 million and adjusted EBITDA of £63.3 million.

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

The following table provides a reconciliation of the amounts included in the consolidated statement of cash flows:

The earn-out performance period for the uSwitch acquisition ended on 30 April 2016. As a result of the performance of the Comparison Services division during the performance period the full £30.0m became due to the business' previous shareholders. The full amount, less a reduction for any management shareholders which left the business prior to settlement, was paid in May 2016. Of the amount settled, £2.5m is contingent on the continued employment for a further 24 months of Management shareholders and is currently held in escrow.

14. Intangible assets

Goodwill and intangibles are tested for impairment by comparing the carrying amount of the cash-generating unit (CGU) with its recoverable amount, which represents the higher of its estimated fair value and value in use. An impairment loss is recognised when the carrying value of the asset exceeds its recoverable amount.

The intangible assets relate to the three separate CGU's: Comparison Services, Property Services excluding Property Software Group and Property Software Group. Goodwill is allocated to each CGU per the below table.

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 the Board covering a three 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 three year period have been extrapolated using perpetuity growth rates.

A growth rate of 3% has been applied to extrapolate the cash flows into perpetuity. Growth has been capped at 3% across both business units so as not to exceed the long-term expected growth rate of the country and industry the Group operates in, in accordance with IAS 36. The pre-tax discount rate was used for each CGU was in the range 10.1% to 14.2%.

The analysis performed calculates that the recoverable amount of each CGU's assets exceeds their carrying value, as such no impairment was identified. The Directors are comfortable that a reasonable change in the underlying assumptions would not indicate an impairment. Amending the analysis such that a growth rate into perpetuity of negative 3%, or a reasonable increase in discount rate, is applied across all CGU's whilst holding all other variables constant would still not give rise to an impairment.

15. Property, plant and equipment

16. Available for sale financial assets

Available for sale financial assets represent the Group's strategic partnerships with a number of UK Proptech and Fintech companies.

17. Trade and other receivables

The Directors consider that the carrying value of trade and other receivables is approximate to their fair value. The carrying value also represents the maximum credit exposure.

£9.9 million is held in escrow for the settlement of deferred consideration payable in relation to the acquisition of uSwitch.

Details of the Group's exposure to credit risk are given in Note 26.

18. Trade and other payables

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 26.

19. Deferred and contingent consideration

The Group's liabilities in respect of deferred and contingent consideration arising on the acquisition of Property Software Group on 28 April 2016 and the acquisition of uSwitch on 1 June 2015 and are set out below:

20. Provisions

The movement in provisions can be analysed as follows:

The dilapidation provisions relate to Management's best estimate 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 on completion of the Group's new property lease at the Cooperage, London. During the period the Group vacated a number of previous office buildings, utilising £0.2m of the brought-forward provision.

The onerous lease provision relates to Management's best estimate of the fair value of future lease payments falling due prior to the expected assignment of the lease of one of the Group's previous office buildings which was vacated in September 2016. It is anticipated that the onerous lease provision shall be fully utilised in the 2017 financial year.

21. Loans and borrowings

On 30 April 2015 the Group entered into an agreement for the provision of a five year, £150.0 million revolving credit facility. On 18 April 2016 a £50.0 million extension to the revolving credit facility was agreed to finance the acquisition of Property Software Group. 

The drawn portion of the facility incurs interest at UK Libor plus a margin. The margin is variable based on the Group's net debt to Adjusted EBITDA ratio. The effective interest rate for the period is set out in Note 26.

The Group has no other loans or borrowings.

22. Deferred tax