Proposed acquisition of uswitch

Proposed acquisition of uswitch Investor presentation 30 April 2015

Disclaimer This presentation (the Presentation ) contains statements related to our future business and 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 believe, estimates, plans, projects, expects, anticipates, intends, may, will, or should or, in each case, their negative or other variations or comparable terminology. These forwardlooking statements include matters that are not historical facts and include statements regarding the Group s intentions, beliefs or current expectations. They reflect the Group s current expectations, assumptions and projections about future events. By their nature, 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. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Accordingly, no representations or warranties are made as to the accuracy of such statements, estimates or projections. You should not place undue reliance on forwardlooking statements, which speak only as of the date of this presentation. The information and opinions contained in this Presentation do not purport to be comprehensive, are provided as at the date of the Presentation and are subject to change without notice. The Group is not under any obligation to update or keep current the information contained herein. 2

Agenda Overview Acquisition rationale uswitch business overview Finance review Current trading & summary Q&A 3

Creating the next generation property portal + Acquisition of uswitch, the market leading price comparison website (1) for home services switching (energy and communications), with a revenue CAGR of 20% (2012-2014) Consideration of 160m representing 9.9x uswitch s 2014 Adjusted EBITDA (2) plus a performance based earn-out of up to 30m; to be funded from existing cash resources and a new revolving credit facility Transaction represents a significant step towards delivering our strategy of becoming the UK s most trusted online resource for consumers and most effective lead generation engine for professionals in the property space Building a single go to home services platform for consumers to research, find and manage their home (1) Market share based on 2013 price comparison website revenues by vertical (2) Valuation multiple based on audited 2014 Adjusted EBITDA of 16.2m and an enterprise value on a cash-free, debt-free basis 4

About uswitch The market leading UK price comparison website for home services switching (energy and communications) Business model overview Revenues are primarily generated from a fixed fee paid by suppliers for completed switches Consumers Comparison and switch Strong track record of growth (20% revenue CAGR 2012-2014) and robust cash flow generation FY14 revenues of c. 63m and Adjusted EBITDA of c. 16m Arrive at site Suppliers uswitch will continue to operate as a standalone brand and platform with dedicated management team uswitch services will be integrated into the ZPG website user journeys Consumer flow Fixed fees per switch & marketing tenancies Revenue flow 5

Transaction Highlights Shareholder consideration Initial consideration paid to all shareholders Acquisition Terms Funded by existing cash resources with the remainder funded by a new five-year 150m credit facility, of Amount 142.6m Payment date On completion Financing which c. 125m will be drawn as part of the initial consideration Opening net debt ratio of c.2.0x the combined Group s EBITDA Strong deleveraging profile due to cash generated by the combined Group Deferred consideration paid to institutional shareholders Deferred consideration paid to management shareholders 10m Dec 15 7.4m Fixed consideration 160m Performance related earn-out paid to all shareholders 0-30m Consideration range: 160m 190m 66% in FY17 and 34% in FY18 FY16 / FY17 / FY18 Financial impact Approval process Expected to be earnings enhancing in first full year Substantial cross-selling opportunities ZPG dividend policy to be maintained Transaction costs of c. 7m Class 1 transaction, subject to shareholder approval at a GM; Circular to be posted shortly Directors and DMGT intend to vote in favour of acquisition Change of control approval required by FCA Completion expected in June 2015 6

Leading the Property Portal Evolution ZPG will continue to lead the next phase of innovation across the industry, creating a single online resource where consumers can research, find and manage their home Portal 1.0 SEARCH Classifieds shift online Highly fragmented Basic consumer experience Portal 2.0 SEARCH + RESEARCH Zoopla launches with data driven offering More transparency and efficiency Richer consumer experience Portal 3.0 SEARCH + RESEARCH + MANAGE Single home services resource for all things property Drives engagement and cost savings for consumers The go to UK property resource 8

Complementary Brands and Audiences 1 Enhanced consumer products and offering for both homemovers and non-movers More switches 2 uswitch services to become an integrated part of ZPG user journey and products - driving enhanced engagement and lead generation More switching revenue / data analytics to focus marketing spend More revenue 3 ZPG to develop new products for users to manage home moves and home services - driving enhanced revenues Extending the ZPG value proposition and monetising the consumer side of the ZPG platform ZPG/uSwitch Current ZPG A significant step towards delivering the UK s most trusted online resource and lead generation engine for all things property 9

Consumer and Member Benefits Consumers More useful products and tools to help consumers research, find and manage their home Empower consumers to make smarter property decisions, manage their household bills and save money ZPG members Earlier engagement with potential movers More data on consumers and property requirements uswitch members Engagement at the decision making stage More data on consumers and household requirements ZPG and uswitch Member Benefits Greater exposure through enhanced audience size and more frequent engagement Revenue opportunities via new ZPG products Driving enhanced lead generation 10

uswitch represents a unique opportunity in the PCW market PCWs continue to establish themselves as an important tool to help consumers to make more informed decisions uswitch is a market leading PCW in energy and communications: Energy and Communications are less mature PCW markets 40% of UK households have never switched energy supplier The average household can save 228 a year by switching their energy supplier Opportunity for ZPG to deliver on a core long term strategy at an attractive valuation The Government recognises PCWs provide a service to consumers that helps them save money Price comparison website market share of revenues, 2013 (1) uswitch MoneySupermarket Go Compare Compare the Market Confused Broadband Choices Other uswitch #1 position 42% uswitch #1 position 54% Energy (2) Communications Financial services Market size Energy Communications Financial Services Total number of switches c.5.6m c.15.8m c.19.8m Number of switches via PCWs c.2.5m c.850k c.11.3m 1% Note: Market overview chart reflects estimated representative market data (1) Estimated proportion of total parent company, BISL (aside from Energy, where exact switching volumes are known) (2) Energy Helpline is not included to avoid double counting their primary offer is a white label switching service, for (among others) Compare the Market and Go Compare 12

uswitch s Products & Services Three business units providing price comparison and switching services for the home: Energy Communications Financial Services #1 Market leader #1 Market leader Nascent % FY2014A total revenue 47% 45% 8% Products offered to consumers Energy Broadband Mobiles Money Insurance Gas & electricity Landline, Broadband and TV packages Mobile phone, SIM only and PAYG plans Credit cards, loans, mortgages, current accounts and credit reports Car, home, life and health insurance Source of revenue Fixed fee Fixed fee Marketing tenancy revenue Fixed fee Marketing tenancy revenue Fixed fee Fee paid on % click-outs Source: uswitch management accounts (actuals) 13

PCW Regulatory Environment Regulatory Framework uswitch s energy offering is accredited by Ofgem s strengthened Confidence Code (March 2015) uswitch s Insurance and Money verticals are regulated by the FCA for insurance and money and subject to consumer protection regulations Government Initiatives In February 2015, the Department for Energy and Climate Change launched its Power to Switch national advertising campaign encouraging consumers to Go Energy Shopping In February 2015, the House of Commons Select Committee on Energy and Climate Change published a report about making energy PCWs more transparent The Government responded to the Committee s report stating: The Government does not see benefit in requiring price comparison sites to display the commission they receive for each switch at point of sale. Regulatory / Political updates Energy: The CMA is currently conducting a wide ranging investigation into the UK energy market, including examining the roles of PCW. Findings are expected in December 2015 Broadband - In June 2015, new regulations come into effect that will remove the need for the consumer to contact their existing provider in order to switch Insurance: FCA conducted a thematic review of PCWs in 2014 General Election: Labour plan to freeze energy bills until 2017, ensuring that bills can fall but not rise 14

Post-acquisition Integration Approach Leveraging ZPG s proven track record of successfully integrating multiple businesses since launch in 2008 Customer journey ZPG will integrate uswitch s products into the ZPG user journey, providing more switching at zero customer acquisition cost uswitch brand With a 15 year heritage and market leading in its core market verticals, the intention is to keep the uswitch brand post-acquisition Technology ZPG will keep the uswitch technology platform, engineering teams and customer services as separate standalone operations post-acquisition Management uswitch senior management is expected to remain with the business and have long term performance based incentive packages in place 15

Consideration Consideration of 160m plus a performance based earn-out of up to 30m Shareholder consideration Amount Payment date Method of payment Initial consideration paid to all shareholders 142.6m On completion Cash Deferred consideration paid to institutional shareholders 10m Dec 15 Cash / shares at ZPG s discretion Deferred consideration paid to management shareholders 7.4m 66% in FY17 and 34% in FY18 Cash Fixed consideration: 160m Performance related earn-out paid to all shareholders 0-30m FY16 / FY17 / FY18 Cash / up to 50% in shares at ZPG s discretion Total consideration range: 160m - 190m Note: All shareholders comprise institutional and management shareholders 17

Combined Group Capital & Debt Terms Funded by a mixture of existing cash and a new five-year 150m revolving credit facility with HSBC, Barclays, RBS and Lloyds as Mandated Lead Arrangers and original lenders Opening net debt of c.2.0x the combined Group EBITDA Year 1 consideration paid of 152.6m ( 142.6m initial consideration + 10m deferred consideration paid to institutional shareholders) Transaction costs of c. 7m will be treated as an exceptional item Interest costs of c. 3m pa based on a 125m drawn balance Strong de-leveraging profile due to cash generation by the combined Group after payment of dividends Facility Type Five-year 150m revolving credit facility Debt Terms Interest rate on drawn down portion Libor + 1.75% Interest rate on undrawn portion 0.54% Arrangement fee 0.90% Covenants Interest cover (Adj EBITDA: Net finance charge) At least 4:1 Leverage (Net debt: Adj EBITDA) 3:1 until Sept 16; 2.75:1 until March 17 an 2.5:1 thereafter Note: Interest rates based on a draw down of 125m Net Debt ratio: Net Debt divided by 12 months of consolidated Adjusted EBITDA to 31 May 2015. Where Net Debt = Borrowings minus cash plus the portion of deferred consideration and Earn-out expected to be settled in cash.. 18

% uswitch Financial Performance Attractive revenue growth and profitability uswitch 2012-2014 Dec YE m 2013 Revenue Q-o-Q % Growth 70 63 Marketing constitutes uswitch s most significant cost 59 63 60 50 40 30 36 23 FY14 EBITDA margin of 26%, including investment into new verticals 43 20 10 0 15 Q1 Q2 Q3 Q4 FY13 results benefited from energy price rises in September 2013 13 18 16 Pre-2014, certain admin costs not charged by previous owners increased margins EBITDA Margin 2012 2013 2014 30% 31% 26% Revenue EBITDA ( m) Source: uswitch management accounts (actuals) 19

uswitch Income Statement & Cash Flow Strong results with a 20% revenue CAGR (2012-14) Strong cash generation with 96% of Adjusted EBITDA converted into net cash from operating activities for 2014 D&A is driven by the acquisition related amortisation of intangibles, such as the uswitch brand, in 2013 INCOME STATEMENT Year ended 31 December CASH FLOW Year ended 31 December 2012 000 2012 000 FULL YEAR 2013 000 FULL YEAR 2013 000 2014 000 Revenue 43,488 59,486 62,885 Administrative expenses (31,072) (46,571) (51,158) Adjusted EBITDA 13,122 18,451 16,174 Depreciation and amortisation (706) (1,765) (4,293) Exceptional items - (3,771) (154) 2014 000 Profit before tax 12,867 9,240 2,572 Depreciation, amortisation and loss on disposal of fixed assets 998 1,765 4,293 Financial income and expense (451) 3,675 9,155 Operating cash flow before changes in working capital 13,414 14,680 16,020 Movement in working capital (137) 2,653 2,401 Cash from operating activities 13,277 17,333 18,421 Income tax paid (2,205) (2,606) (2,945) Net cash inflows from operating activities 11,072 14,727 15,476 Source: uswitch management accounts (actuals) 20

Pro-forma Financials Expected to be earnings enhancing in first full year Substantial cross-selling opportunities ZPG dividend policy maintained INCOME STATEMENT ZPG 30 Sept 2014 uswitch 31 Dec 2014 Combined Group (1) 000 000 000 Revenue 80,230 62,885 143,115 Admin expenses (51,763) (51,158) (102,921) Adjusted EBITDA 39,614 16,174 55,788 Share-based payments (3,910) - (3,910) D&A (1,658) (4,293) (5,951) Exceptional items (5,579) (154) (5,733) Operating profit 28,467 11,727 40,194 Accounting impact The combined Group expects the following income statement impacts going forward with all adjustments being recorded outside of adjusted EBITDA: Management deferred consideration costs c. 3m in FY16 & FY17 and c. 1m in FY18 Amortisation charges in respect of intangible assets acquired as part of the transaction of c. 5m pa (2) Interest costs of c. 3m pa Further charge of between 0-10m over three years as a result of a management performance bonus (1) Group combination of adjusted results from ZPG based on year ended Sept 2014. uswitch based on year ended Dec 2014 (2) The actual Fair Value of the intangible assets acquired as part of the transaction will be determined on completion as part of the Purchase Price Accounting process 21

Current Trading ZPG current trading The Group anticipates revenues of over 41 million and Adjusted EBITDA of around 21 million for the six months ended 31 March 2015 Visits up 11% to 265.5 million in H1 2015, with average monthly visits of 44.2 million Mobile devices now account for 63% of monthly visits, up 34% y-o-y Strong Agency ARPA growth as members continue to see the benefits of digital marketing with ZPG Significant slow down in Agency membership losses Robust overall Developer performance as the Group continues to develop a targeted product offering uswitch year-to-date Robust trading performance so far this year Members Energy vertical performing particularly well during a period of increased switching We will next update the market with our half-year results on 20 May 2015 ARPA 2015 H1 2014 H1 Change 2015 H1 2014 H1 Change Agency 12,449 16,261-23% 353 311 + 13% Developer 2,781 2,626 + 6% 332 253 + 31% Overseas 664 352 + 89% 148 143 + 4% Commercial 182 - - 93 - - Total members / Blended ARPA 16,076 19,239-16% 340 301 + 13% Source: ZPG Management accounts: Unaudited key performance indicators for the six months ended 31 March 2015; uswitch Management accounts 23

Summary Acquisition of uswitch, the market leading price comparison website for both energy and communications switching, with a revenue CAGR of 20% (2012-2014) A significant step towards becoming the UK s most trusted online resource for consumers and most effective lead generation engine for professionals in the property space Leading innovation across the industry, building a single home services platform for consumers to research, find and manage their home Additional revenues from a market leading business with a complementary brand, audience and business model Completion is subject to: 1) ZPG shareholder approval at a GM; Circular to be posted shortly 2) FCA approval of the change of control of uswitch We anticipate completion in June 2015 A significant step towards delivering the UK s most trusted online resource and lead generation engine for all things property 24

Appendix uswitch Management Team uswitch Homepage uswitch End Markets Group Pro-forma Balance Sheet ZPG Timeline 26

uswitch - Experienced Management Team Steve Weller, CEO Joined in 2006, held the position of Director of Marketing prior to appointment as CEO in 2009 13 years of experience in brand development and customer acquisition Responsible for the product launch of the Irish mobile network, Meteor James Davis, CFO Joined in 2014, significant CFO experience working with online exchanges and digital businesses including Sporting Index, Four Cross Media and Blur the B2B services provider 15 years of experience working with PE houses Mike Jones, CTO Joined in 2010, 15 years experience in design and delivery of business critical applications in a variety of domains, from banking to start-ups Managing teams using principles from XP, Agile, and Lean since 2004 and including 2 years at Thoughtworks Paul Whitehead, Commercial Director Joined in 2014, 15 years of experience growing businesses on digital platforms in online, mobile, TV and telecoms Experience includes: Head of Corporate Business Development at Channel 4 and previously BSkyB Daphne Scott-Sawyer, HR Director Joined in 2013 as Director of HR, previously Senior HR Business Partner at Forward Internet Group supporting uswitch Over 15 years of experience within HR, working with the Walt Disney Company EMEA, ESPN EMEA and Marks and Spencer Chartered MCIPD 27

uswitch Homepage 28

Energy Market uswitch s energy revenue growth is underpinned by growth in the switching market and PCW share of switching: Dominated by Big 6 providers but alternative providers growing market share Market structure / size c.5.6m switches per year 40% of UK households have never switched 13 12 11 10 9 Total 8 switches 7 (m) 6 5 4 3 2 1 0 2009 PCW share of energy switching over time, 2009 2014 2010 Non- PCW 2011 2012 PCW Inter-provider 2013 PCW retention 2014 Market drivers / growth Role of PCW/ drivers Consumers being prompted to reduce bills End of fixed contracts Essential to the market, making up the bulk of supplier customer acquisition channels 29

Communications Market uswitch s position in Broadband and Mobile benefits from high barriers to entry Communications: c.15.8m switches per year Market structure / size Broadband: Four major providers (Sky, Virgin, BT, TalkTalk); c.4.2m switches per year Mobile: Four major providers (3, EE, BT and Vodafone); c.11.6m switches per year Market drivers / growth Broadband: Roll out of NGA and consumers saving money by getting a cheaper deal / upgrading Mobile: Shortening contract lengths and successive releases of new handsets Role of PCW/ drivers Broadband: Consumers and suppliers positive about use of PCWs Mobile: PCWs provide a useful channel for lead generation primarily for other intermediaries and resellers 30

Financial Services Market uswitch has a nascent financial services business but an opportunity for growth in Money products where it has had success in the credit cards segment in particular Market structure / size Four major players MoneySuperMarket.com, GoCompare.com, CompareTheMarket.com and Confused.com with most major PCWs owned by insurers Financial services: c.19.8m switches per year Insurance: c.11.5m switches per year Money: c.8.3m switches per year Market drivers / growth Insurance: Expansion of underdeveloped product areas Money: Recovery of underlying Credit Card market Role of PCW/ drivers Insurance: Most mature PCW market, large advertising TV spend Money: Increased consumer confidence in PCWs 31

Pro-forma Balance Sheet Strong net asset position Estimated 228m of consolidated Goodwill and intangible assets Repayment of existing uswitch borrowings using an example draw down of 125m from the new Revolving credit facility Deferred consideration of 25m comprising: c. 10m payable to Institutional shareholders 0-30m Earn-out which has been estimated at 15m for illustrative purposes (1) BALANCE SHEET Combined Group 000 PPE 2,140 Goodwill and Intangibles 228,400 Deferred tax assets - Trade and other receivables 26,134 Cash and cash equivalents 11,762 Total assets 268,436 Trade and other payables (17,330) Loans and borrowings (125,000) Current tax liabilities (4,774) Deferred consideration (25,000) Deferred tax liabilities (4,379) Derivative liabilities (148) Provisions (634) Total liabilities (177,265) Net assets 91,171 (1) The actual Fair Value of the Earn-out will be determined on completion as part of the Purchase Price Accounting process 32

ZPG Timeline of Key Events Our journey so far: a story of innovation and differentiation 2007 Zoopla Ltd founded 2008 2009 Acquired: PropertyFinder.com HotProperty.co.uk ThinkProperty.com #2 property portal by unique visitors in under two years Launch of property listings Winner of Best UK Property Portal (Daily Mail Awards) Winner of Best Real Estate Website (Website of the Year Awards) 2m visits pm Zoopla.co.uk launched Launch of Automated Value Model (AVM) Winner of UK s Most Promising Internet Company (First Tuesday) Winner of UK s Best Property Website (Web User) 0.4m visits pm 2010 2011 Acquired: Acquired: BytePlay Winner of 100 Most Innovative UK Businesses (Smarta) Launch of ZooplaPro Listed as one of the Top UK Tech Companies (Guardian) 5m visits pm 0.3m leads pm HousePrices.co.uk Winner of Best Property Portal: Western Europe (Property Portal Awards) Winner of Innovative Business of the Year (Fast Growth Business Awards) Listed as one of the Top 100 UK Tech Companies (Daily Telegraph) 10m visits pm 0.6m leads pm 2012 2013 Acquired: SmartNewHomes.com HomesOverseas.co.uk Winner of Best Brand (Sunday Times Tech Track 2013 Awards) Winner of Company of the Year (Growing Business Awards 2013) Winner of Europe s Most Exciting Investor Backed Company of the Year (Investor Allstars Awards 2013) 35m visits pm 2.2m leads pm Acquired: UpMyStreet.com PrimeLocation.com FindaProperty.com Globrix.com Acquisition and integration of DPG created Zoopla Property Group Ltd 16m visits pm 1.0m leads pm 2014 Successful IPO on the London Stock Exchange Rated an Outstanding place to work by Best Companies Launch of commercial property channel 43m visits pm 2.4m leads pm 2015 Record levels of consumer traffic 60% of visits now via mobile with more than 5m app downloads Robust current trading with record levels of leads per listing 33