ZPG PLC ZPG PLC AGREES TO ACQUIRE MONEY.CO.UK (0431Q)

TIDMZPG

RNS Number : 0431Q

ZPG PLC

07 September 2017

7 September 2017

ZPG PLC AGREES TO ACQUIRE MONEY.CO.UK

Strategic highlights

 
      --   Money.co.uk is one of the UK's leading financial 
            services comparison websites 
      --   With a comprehensive offering across 60+ financial 
            services product categories 
      --   Core part of ZPG's strategy to offer widest 
            range of products across its platforms 
      --   Highly complementary position in financial services 
            to uSwitch in home services 
      --   Further diversifies ZPG's brands, channels, 
            products and revenue opportunities 
      --   Long track record of strong financial performance 
            on both revenue & profitability 
      --   Significant structural growth and cross-sell 
            opportunities across product range 
      --   Expected to be earnings enhancing on an adjusted 
            basis in the first full year(1) 
 

ZPG Plc (LSE:ZPG) ("ZPG" or the "Company") which owns and operates some of the UK's most trusted property and household-related digital brands including Zoopla, uSwitch, PrimeLocation and Hometrack, today announces that it has conditionally agreed to acquire Dot Zinc Limited ("Money.co.uk" or "Money") for GBP80 million on a cash-free, debt-free basis, plus a performance-based earn-out of up to GBP60 million (the "Acquisition").

Established in 2008, Money is one of the UK's leading financial services comparison websites, allowing consumers to compare thousands of deals from over 600 providers across more than 60 product categories including mortgages, loans, credit cards, bank accounts and insurance. The business has a strong brand position with over 2 million visits per month to its website.

Money generated revenues of GBP24.7m with an Adjusted EBITDA of GBP8m in the year ended 31 October 2016. The Acquisition is a core part of ZPG's strategy to offer the widest range of relevant products across its platforms and is an ideal fit, with both businesses focussed on empowering consumers to make better-informed property and home-related decisions.

Money's strong financial services comparison offering is highly complementary to ZPG's market-leading position in home services comparison via its uSwitch brand. The combination will allow consumers to benefit from the best-in-class products across all ZPG's platforms which attract over 50 million visits per month with over 10 million registered users.

Money has a highly experienced team of over 50 staff with significant financial services comparison market expertise, operating out of its award-winning offices in Cirencester. Following completion, Money will continue to operate as a standalone brand and platform, headed up by Founder & CEO, Chris Morling.

Alex Chesterman, Founder & CEO of ZPG said, "We are delighted to announce this transaction. Adding Money, one of the UK's leading financial services comparison websites, to our existing brand portfolio will further enhance our product capabilities and consumer engagement across both our comparison and property platforms. Broadening our financial services offering has long been a key part of our strategy and I look forward to welcoming Chris and his team to the ZPG family."

Chris Morling, Founder & CEO of Money said: "I am very proud of what we have achieved over the last nine years. We have developed a strong brand and loyal following and are looking forward to the next phase of our growth. ZPG has led the way as an innovative digital consumer champion and we are looking forward to helping even more consumers make better-informed decisions as part of ZPG."

Transaction highlights

 
      --   Non-contingent consideration of GBP80m on a cash-free, 
            debt-free basis (GBP60m due in cash on completion 
            and GBP20m payable in cash in December 2017) representing 
            a multiple of 10x FY16 Adjusted EBITDA for Money 
      --   Earn-out consideration of up to GBP60m based on 
            Adjusted EBITDA over the next twelve months (payable 
            in cash or shares at ZPG's discretion) representing 
            a maximum multiple of 10x FY17 & FY18 incremental 
            Adjusted EBITDA for Money 
      --   The Company expects the Acquisition to be earnings 
            enhancing on an adjusted basis in first full year 
      --   The Acquisition will be financed through a combination 
            of existing cash resources and a GBP50m extension 
            to ZPG's current credit facilities including updated 
            leverage covenants 
      --   Strong deleveraging profile due to high levels of 
            cash generation with opening net debt ratio of c.2.75x 
            the enlarged Company's Adjusted EBITDA 
      --   Deal-related exceptional costs of c.GBP2.5m 
      --   Additional interest costs of c.GBP4m p.a. 
      --   Acquired amortisation charge of c.GBP9m p.a. 
      --   ZPG will maintain its current dividend policy of 
            35%-45% pay-out ratio of the enlarged Company's 
            profit after tax 
      --   Completion is conditional upon FCA approval of the 
            change of control of Money 
      --   The value of Money's gross assets was GBP14m as 
            at 31 October 2016 
 

Current trading and outlook

Management is very pleased with current trading and the Board anticipates FY17 Revenues and Adjusted EBITDA to be towards the top end of current market expectations(1) (excluding any impact from Ravensworth or Money).

Our Property division has performed strongly, driven by a continuation of returning portal partners, strong demand for our upsell products and further migration of our software partners to cloud-based products. Our Comparison division has also traded well, reaching a new milestone of over one million household energy switches in a twelve month period and saving consumers almost GBP300 million off their household bills over that period. In addition, the integrations of both Hometrack and Expert Agent into the wider business have progressed well and underpin future growth opportunities.

The Company's next scheduled update will be its full-year results on 29 November 2017.

This announcement contains inside information.

ENDS-

For further information, please contact:

Lawrence Hall, Head of Communications - [e-mail] / 07890 078 945

Rachael Malcolm, Head of Investor Relations - [e-mail] / 020 38725 648

James Isola, Maitland 020 7379 5151

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:

http://webcast.openbriefing.com/zpg_analyst_call_070917/

An audio dial-in will also be made available:

Standard International Access: [phone]

UK Toll-Free Number: 0808 109 0700

United States Toll-Free Number: 1 866 966 5335

United States Toll Number: 1 646 843 4608

Participant password: ZPG

(1) As at 6 September 2017, market expectations for FY17 Revenues and Adjusted EBITDA were in the range of GBP219m to GBP244m and GBP81m to GBP97m, respectively (Source: Bloomberg)

About ZPG Plc (www.zpg.co.uk)

ZPG Plc (LSE:ZPG) ("ZPG") owns and operates some of the UK's most trusted property and household-related digital brands including Zoopla, uSwitch, PrimeLocation and Hometrack.

We help empower smarter property and household decisions and our multi-brand, multi-channel approach creates a unique and unrivalled proposition with our websites and mobile apps attracting over 50 million visits per month and over 25,000 business partners using our services.

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 other products.

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

Hometrack is a leading automated valuation model (AVM) provider in the UK and Australia, providing residential property market insights to partners including mortgage lenders, developers, investors and others.

ZPG is also the UK's leading provider of cloud-based software and back office solutions for estate and letting agents across the UK with a portfolio of brands including Alto, Jupix, Expert Agent, Technicweb, Ravensworth, PropertyFile and MoveIT.

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

About Money (www.money.co.uk)

Money was established in 2008 by serial entrepreneur Chris Morling and is now one of the UK's leading financial services comparison websites. Its mission is to help consumers make smarter financial decisions by comparing thousands of deals from over 600 providers across more than 60 product categories including mortgages, loans, credit cards, bank accounts and insurance.

This information is provided by RNS

The company news service from the London Stock Exchange

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September 07, 2017 02:00 ET (06:00 GMT)