OnTheMarket plc Annual Report and
Consolidated Financial Statements
for the year ended 31 January 2018
Contents
Corporate Governance Statement
Financial Review and Key Performance Indicators
Risk Management and Principal Risks
1
At a glance
2
Overview
3
Chairman’s Statement
Strategic Report
4-11
4-6
• Chief Executive Officer’s Report
7-8
•
9-11
•
12
Board of Directors
13-16
Directors’ Report
14-16
•
Directors’ Remuneration Report
17-19
Directors’ Responsibilities Statement
20
Independent Auditor’s Report to the Members of OnTheMarket plc 21-23
Consolidated Income Statement
24
25
Consolidated Statement of Financial Position
26
Company Statement of Financial Position
27
Consolidated Statement of Changes in Equity
28
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
29
30-53
Notes to the Consolidated Financial Statements
54
Company Information
At a glance:
year ended 31 January 2018
OnTheMarket plc (“OTM” or the “Company”) is the
parent company of Agents’ Mutual Limited (“Agents’
Mutual”), which owns and operates the UK online
residential property portal OnTheMarket.com.
Agents’ Mutual was formed in January 2013 by
several leading estate and lettings agents to create
a new residential property portal as a challenger to
the two existing major portal groups, Rightmove
plc and ZPG plc.
Agents’ Mutual was born from widespread agent
dissatisfaction with the growing imbalance of
power between agents and the two existing
major portal groups. Both groups were felt to be
using their strong positions relative to their agent
customers to impose signifi cant price increases
for their portal services.
The Agents’ Mutual proposition, for a portal owned
by agents which would offer a premier search
service
to property-seeking consumers whilst
charging fair prices to agents, quickly found support
among a very wide group of leading independent
agents across the UK. These agent fi rms were
prepared to fund the venture by way of loan note
subscriptions and to commit to list with the portal
once it went live.
The portal launched in January 2015 as the fi rst
major new market entrant since 2008, with the
properties of 4,600 estate agent branches.
Agents provide the majority of income for the
property portals and also supply their essential
and most valuable content - the property listings.
As a portal with signifi cant agent support, the
Directors believe OnTheMarket.com is uniquely
positioned to create an alternative to the leading
incumbent portals. The Directors believe that
with their invaluable database of active property
vendors and property-seekers, agents are able to
proactively support the portal and create valuable
competitive advantage for it.
The Company’s senior management has signifi cant
industry experience and expertise. Led by Ian
Springett, Chief Executive Offi cer, it includes the team
responsible for founding and, until 2008 following
its sale to Daily Mail & General Trust plc, managing
PrimeLocation. In addition, many of the Group’s1
employees have previously worked for other UK
property portals.
Admission to AIM
to
the Alternative
the London Stock Exchange
The ordinary share capital of OTM was successfully
admitted
Investment Market
(“AIM”) on
of
9 February 2018 (“Admission”). Through a placing
to investors, £30m (gross) of new equity capital was
raised on Admission to fund the further growth of the
OnTheMarket.com portal.
At Admission agents owned approximately 70 per
cent. of the issued share capital.
OTM is incorporated in England & Wales and has its
registered offi ce in the UK.
1) The Group is OTM and its subsidiary undertakings as set out in note 15 to these fi nancial statements.
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
1
250074 OnTheMarket AR 01-11.indd 1
250074 OnTheMarket AR 01-11.indd 1
14/06/2018 11:36
14/06/2018 11:36
Overview:
year ended 31 January 2018
Financial highlights and KPIs
Group revenue £16.0m2 (2017: £17.8m).
Adjusted operating profi t3 £3.9m (2017: £2.3m).
Operating loss of £10.8m (2017: £1.2m)
which includes £14.7m (2017: £3.5m) of
exceptional items.
Loss after tax attributable to shareholders
£12.1m (2017: £4.0m).
Cash of £3.2m as at 31 January 2018 (£2.3m
at 31 January 2017).
ARPA4 £235 (2017: £235), average branch
numbers listed at OnTheMarket.com 5,694
(2017: 6,306), visits5 77.3m (2017: 85.0m).
Operational and strategic
highlights
In February 2017, the hearing of Agents’
Mutual and Gascoigne Halman Limited took
place before the Competition Appeal Tribunal
(see page 6).
In July 2017, the Competition Appeal
Tribunal ruled in favour of Agents’ Mutual
against Gascoigne Halman Limited on all
competition issues:
the One Other Portal rule6 was upheld as
lawful and enforceable; and
Agents’ Mutual was awarded £1.2m as an
interim payment towards litigation costs.
New Board members were appointed in
preparation for admission to AIM alongside a
capital raise.
Post period end highlights
On 9 February 2018, OTM was admitted to
trading on AIM and raised £30m of capital to
support the launch of a transformational growth
strategy.
The majority of Agents’ Mutual members
committed to new 5-year listing agreements
from Admission and to enter lock-in
arrangements to retain the majority of their
shares for 5 years.
As of 25 May 2018, OTM had signed listing
agreements with UK estate and letting agents
with more than 8,500 offi ces – up by more than
54% since admission to AIM.
Traffi c to the portal in the current fi nancial year
to end May was 42.2m visits, compared with
21.9m in the same period in 2017.
National TV advertising ran on prime time
channels in May 2018.
The Company rolled-out its fi rst outdoor
advertising campaign with over 1,500 sites in
London in May 2018.
By 31 May 2018 the fi eld sales team had more
than doubled to 32 since Admission and the IT
team had grown from 21 to 40.
Many agents are choosing to advertise their
new-to-market listings at OnTheMarket.com
before releasing them to other portals.
Revenues include an amount of £2.5m in respect of bad debts which are
charged as an expense within administrative expenses (2017: £2.2m).
advertisers for that period. ARPA presented herein is the average of the
monthly ARPAs for the year.
2)
3)
Adjusted operating profi t is defi ned as operating profi t before fi nance costs,
taxation, share based payments and exceptional or non-recurring items. This
is an alternative performance measure and should not be considered an
alternative to IFRS measures, such as revenue or operating profi t. Please
see page 4 for a reconciliation of operating loss to adjusted operating profi t.
5)
6)
4)
Average revenue per property advertiser, being revenues due from
property advertisers for a period divided by the average number of property
2
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
Visits comprise individual sessions on OnTheMarket.com’s web based portal
or mobile applications by users for the period indicated as measured by
Google Analytics.
The One Other Portal rule is a provision included in Agents’ Mutual’s original
listing agreements whereby agents committed to list their properties on
OnTheMarket.com and contractually agreed to using a maximum of one
other competing portal.
250074 OnTheMarket AR 01-11.indd 2
250074 OnTheMarket AR 01-11.indd 2
14/06/2018 11:36
14/06/2018 11:36
Current trading
Our start to the year following our listing, whilst covering
a short period of time, has proven to be encouraging
with agent customer recruitment, visits to our site and
conversion of traffi c to positive property leads for our
agent customers being all ahead of our own internal
expectations.
Our team of colleagues are highly focused to continue
to build upon our strong start to life as a listed company.
I would also like to thank all of my colleagues, team
members and shareholders for their continued hard work
and support.
Christopher Bell – Non-Executive Chairman
6 June 2018
Chairman’s Statement:
year ended 31 January 2018
I am pleased to be making my inaugural statement as
Non-Executive Chairman following our successful AIM
listing and fundraising on 9 February 2018.
During 2017 we completed our strategic
review,
concluding that a successful fund raise and listing on
AIM would enable the Company to accelerate its growth
and enhance its position as a serious challenger to the
duopoly UK property portals Zoopla and Rightmove by
offering a more responsive and better value option to
agents and property-seeking consumers alike.
The Board is grateful for all the resolute support from
Agents’ Mutual’s members, provided from launch and
through the strategic review, including the conversion of
all member interests and loan notes into shareholdings of
the Company.
Our £30m AIM fundraising is already being put to good
work by our team and is enabling us to achieve early
success against our own internal key performance
targets:
agent offi ces under listing contracts up by more
than 3,000 since Admission, with over 8,500 as at
25 May 2018;
traffi c to the portal in the current fi nancial year to end
May was 42.2m visits, compared with 21.9m in the
same period in 2017; and
key sales-force and IT recruitment ahead of plan,
with team numbers increased since Admission from
15 to 32 and 21 to 40 respectively by 31 May 2018.
2017 was a year spent reviewing our strategic direction
which resulted post year end in a successful fundraising
and listing on AIM.
Consequently 2017 proved to be a year of consolidation
and preparation in order to have a strong springboard to
challenge the UK digital property portal market during
2018, enabling us to accelerate growth and positioning us
to deliver shareholder value thereafter.
250074 OnTheMarket AR 01-11.indd 3
250074 OnTheMarket AR 01-11.indd 3
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
3
Strategic Report:
year ended 31 January 2018
Chief Executive Offi cer’s Report
I am pleased to report on OTM’s fi rst year end results. The demutualisation of Agents’ Mutual and the formation of OTM as
its holding company represented a transformational step in the development of the OnTheMarket.com portal, preparing the
Group for admission to AIM and securing new capital. A great deal of work had been done by Agents’ Mutual in developing
the portal and my thanks go to the Agents’ Mutual directors who stood down after Admission for their dedication and support.
I am also grateful to the Agents’ Mutual members who provided the funding and support to develop OnTheMarket.com from
scratch and who also supported the new strategy for the next phase of the portal’s development. Ongoing agent support
for OnTheMarket.com remains a key pillar of our strategy. As well as voting overwhelmingly in support of the new strategy,
including dropping the One Other Portal rule for new contracts, relaxing rules restricting the Group’s target markets and
converting the loan note holdings into equity on Admission, we are delighted to have had the majority of the members
commit to entering new fi ve year listing agreements and lock-in arrangements to retain the majority of their shares for fi ve
years. My fellow directors and I look forward to serving them as both customers and shareholders of the Group and greatly
value their continued support.
The Group delivered revenue of £16.0m in the year ended 31 January 2018, refl ecting a 10% decrease compared to 2017,
and adjusted operating profi t of £3.9m (2017: £2.3m), an increase of 67%. The reported operating loss of the Group was
£10.8m (2017: £1.2m) and is further analysed as follows:
Reconciliation of operating loss to adjusted operating profi t
Operating loss
Adjustments for:
Exceptional and non-recurring items (note 6)
Share based payment charge and related social security (note 22)
Adjusted operating profi t
2018
£’000
(10,839)
1,436
13,290
3,887
2017
£’000
(1,182)
3,506
-
2,324
This refl ected a busy corporate agenda and extremely limited resources. We ended the year with cash of £3.2m.
Strategy and current trading
The Group’s growth strategy remains the same as that detailed in our Admission Document, namely to increase support
for an agent-backed portal further through competitive pricing for property advertisers, a premier search experience for
property-seeking consumers and the targeted use of equity incentivisation to recruit key agents as customers on long
term contracts. In addition, the Directors believe that the funds raised will allow for signifi cant marketing spend to raise
brand awareness as well as team expansion to provide enhanced sales, sales support, customer engagement and IT
development and support functions.
Following Admission, the Group no longer requires the One Other Portal rule in new listing agreements. The Directors
believe that by offering listing agreements which do not include this rule the Group will be able to attract a number of agents
who want to list on all three portals.
To diversify the Group’s customer base, it will also expand the offering to the new home developer and online agent
markets and commercial and overseas property advertisers. Additionally, it will look to develop and offer value added
products to property advertisers and to target revenues from third party advertisers seeking to promote their goods and
services to the property-seeking consumers viewing properties at OnTheMarket.com.
4
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 01-11.indd 4
250074 OnTheMarket AR 01-11.indd 4
14/06/2018 11:36
14/06/2018 11:36
Strategic Report: continued
Chief Executive Offi cer’s Report (continued)
The Directors believe it is in the best interests of the Company, its shareholders and property-seekers that the Group seeks
a broader coverage of the property market and benefi ts from these additional revenue streams by providing products our
customers want.
Building the agency branch base
A key part of the Group’s growth strategy involves the rapid building of its agency branch base. As of 25 May 2018, OTM
has signed listing agreements with UK estate and letting agents with more than 8,500 offi ces, up by more than 54% since
admission to AIM.
The growth in our agency branch base to date has been predominantly from offering free listings under short term
introductory trial offers, with a view to converting these to full tariff contracts when the value of our offering has been
demonstrated. Hereafter, the Group intends to use more equity incentivisation to encourage agents to join as shareholders
in return for committing to long term paying contracts. At Admission, OTM had authority to issue 36.3 million shares for this
purpose, of which substantially all remain available to deploy.
Increasing the marketing spend
With the capital raised at Admission, the Group has been able to deploy signifi cant funds to marketing.
In addition to spend on digital marketing channels, the Group has been able to conduct its heaviest national TV advertising
in May 2018 since the launch period in 2015. A trial of out of home poster advertising in London was also initiated. A key
theme of these advertising campaigns is the “New & exclusive” properties, whereby many agents choose to list their new
instructions on OnTheMarket.com in advance of listing on other portals. The Directors believe this gives OTM a competitive
advantage as this has been shown to hold a signifi cant appeal to active property-seeking consumers, who are the key
target group as they in turn provide listing agents with high quality leads.
Building the team
The greater resources available to the Group have also been deployed in expanding the team, in particular the sales and
customer relations team and the IT team.
At admission on 9 February 2018, the fi eld sales team numbered 15 employees. As at 31 May 2018 this had been
increased to 32. This signifi cant expansion in sales and customer relations support enables us to rapidly and effectively
recruit new agents whilst implementing and maintaining the expected levels of service for existing customer agents during
the period of rapid growth.
Likewise, as at 31 May 2018, the IT team had been increased from 21 to 40. The enlarged team is initially focused on
technical support for on-boarding agents and property data, specifying and delivering new products for consumers and
customers and the continuous improvement of existing products.
Market developments
The Directors believe that the UK agency market is under pressure from a number of factors. Reduced transaction volumes
and slower house price growth, whilst not leading to a noticeable reduction in agent offi ce numbers, has, the Directors
believe, led to a reduction in agent commissions.
This has been exacerbated by the growth in online agents operating an upfront fi xed fee business model which has had a
detrimental impact on commissions as well as market share for traditional agents.
250074 OnTheMarket AR 01-11.indd 5
250074 OnTheMarket AR 01-11.indd 5
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
5
Strategic Report: continued
Chief Executive Offi cer’s Report (continued)
Against this backdrop, independent agents’ portal costs have continued to rise signifi cantly. Some portals are competing
with their agent customers for cross-sell revenues. The Directors believe that these market developments provide a strong
rationale for agents to support OnTheMarket.com, which provides a competitively priced service and increasing value as
we deliver on our strategy, including increasing website traffi c amongst the property-seeking public and growing the volume
of quality enquiries from these property-seekers to the agents listing at OnTheMarket.com.
Litigation
In July 2017, judgment was handed down by the Competition Appeal Tribunal in favour of Agents’ Mutual and against
Gascoigne Halman Limited on all competition issues: the One Other Portal rule was upheld as lawful and enforceable and
Agents’ Mutual was awarded £1.2m as an interim payment towards its litigation costs.
In December 2017, having had an application to appeal to the Competition Appeal Tribunal refused, Gascoigne Halman
Ltd was granted leave to appeal the judgment of the Competition Appeal Tribunal at the Court of Appeal. Should an appeal
proceed, and having taken appropriate legal advice, the Directors remain confi dent that the judgment of the Competition
Appeal Tribunal will be upheld.
In addition, during the year ended 31 January 2017 a further deposit of £450,000 was required to be made to court in
respect of litigation between Agents’ Mutual and Moginie James Ltd. Following the settlement of this case this deposit was
repaid to Agents’ Mutual in February 2017.
Outlook
The Group has benefi tted from growing agent support since Admission and is well positioned to continue its
growth in agent offi ces listing. The investment in marketing has led to a substantial increase in visitor traffi c to
OnTheMarket.com, generating greater value to our customers through more high quality leads. The investment in team
expansion has provided the Group with a workforce with the capability, motivation and capacity to deliver a fi rst class
product and service to both property-advertising agent customers and property-seeking consumers. The Group’s outlook
is therefore positive with continued signifi cant growth expected in agent offi ces under listing agreements and in traffi c to
OnTheMarket.com.
Finally, I thank my colleagues for all their hard work and commitment to date and I welcome all those new employees who
have recently joined us.
Ian Springett – Chief Executive Offi cer
6 June 2018
6
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 01-11.indd 6
250074 OnTheMarket AR 01-11.indd 6
14/06/2018 11:36
14/06/2018 11:36
Strategic Report: continued
Financial Review and Key Performance Indicators
During the year ended 31 January 2018 a number of factors meant that it was diffi cult to make progress prior to admission
to AIM, which occurred post year end on 9 February 2018. These factors included:
a lack of fi nancial resources;
a diversion of resource to the litigation with Gascoigne Halman Limited; and
a focus on the Group restructuring and investment of time in planning for Admission.
These factors, and the publicity around them, meant the ability to recruit new agents effectively ceased until Admission and
the associated capital raise, which together marked the beginning of a new chapter in the development of OnTheMarket.com.
As a result, throughout the year we saw a small decline in agents listing as those on shorter term contracts did not re-join,
and new agents could not be recruited, pending Admission. Together with other market factors, this led to a reduction in
revenues to £16.0m compared to the prior year (£17.8m).
Group operational KPIs were as follows:
ARPA £235 (2017: £235);
average branches listing 5,694 (2017: 6,306); and
visits 77.3m (2017: 85.0m).
At 31 January the Group had cash of £3.2m (2017: £2.3m).
The Group’s fi nancial performance is presented in the Consolidated Income Statement on page 24. Adjusted operating
profi t for the year was £3.9m (2017: £2.3m). The loss for the year attributable to the owners of the Group was £12.1m
(2017: £4.0m).
The Group has a number of customers who are not paying their contractually committed listing fees. The majority of these
chose to breach the One Other Portal rule in their listing agreements and left the portal some time ago. In 2018 a bad debt
expense of £2.5m (2017: £2.2m) was recognised and included within administrative expenses. It is the intention of the
Company to engage with these customers in due course, to seek either payment of both fees outstanding and further fees
as they fall due or to reach a compromise position such that historic debts are held in abeyance and potentially waived
in the future in return for entering, and honouring, a new long term listing agreement with the Company. As at 31 January
2018, should all arrears have been recovered, this would have amounted to approximately £5.9m.
Administrative expenses in 2018 fell to £12.2m (2017: £15.5m), with a reduction in marketing spend due to limited resources
the primary factor.
The loss for the year includes fi nance costs of £1.2m (2017: £1.4m). Finance expense arose from interest on loan notes
issued by the Group. The loan notes were converted to ordinary shares in the Company post year end upon admission of
the Company to AIM on 9 February 2018. Accrued interest owed to loan note holders was paid in full in cash immediately
following Admission.
Exceptional costs of £1.4m (net of costs of £1.2m awarded) were incurred in the year (2017: £3.5m). These related to the
litigation with Gascoigne Halman Limited, the demutualisation and the admission to AIM.
During the year there arose a non-cash charge of £13.3m in relation to share option awards made to employees. Under the
terms of a management agreement with Agents’ Mutual that was fi rst established in 2013 and revised in 2016, the founding
management team were entitled to 18% of the fully diluted share capital of the Company at the point of the restructuring in
September 2017. This entitlement was fulfi lled by the issue of 7,799,327 nil cost share options. A further 763,008 nil cost
options were issued to other Group employees, of which 7,272 were forfeited in the period.
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
7
250074 OnTheMarket AR 01-11.indd 7
250074 OnTheMarket AR 01-11.indd 7
14/06/2018 11:36
14/06/2018 11:36
Strategic Report: continued
Financial Review and Key Performance Indicators (continued)
At the end of the year, the Statement of Financial Position showed total assets of £7.4m (2017: £9.6m) and total equity of
£(9.7)m (2017: £(9.0)m). The negative reserves as at 31 January 2018 were extinguished post year end, on 9 February
2018, through a £30m capital raise by way of a placing of ordinary shares in the Company, together with the conversion of
loan notes into ordinary shares in the Company, on Admission.
Group restructuring
On 27 July 2017, the Company was incorporated under the name On The Market (Europe) Limited. On 2 August 2017, the
Company changed its name to On The Market Limited.
On 13 September 2017, the Group was restructured such that the Company became the holding company of Agents’
Mutual, a company limited by guarantee, in exchange for 35,530,261 ordinary shares of £0.002 in the Company. The
Company has accounted for this transaction using merger accounting, so these consolidated fi nancial statements present
the Group fi nancial information for this reporting period and for the comparative reporting period as if the Group has always
been in existence.
In December 2017, the Company re-registered as a public limited company under the name of OnTheMarket plc.
8
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 01-11.indd 8
250074 OnTheMarket AR 01-11.indd 8
14/06/2018 11:36
14/06/2018 11:36
Strategic Report: continued
Risk Management and Principal Risks
The Board assumes responsibility for risk management and the effective and appropriate delegation of responsibilities in
this regard. Risks and risk management are subject to regular review by the Board.
The key risks, other than fi nancial risks discussed in note 19, that the Group is exposed to include:
Category
Risk
Description
Mitigation
Commercial
Competitive portal
industry
The UK property portal market includes
large, established and well-resourced
competitors, as well as new and
potential new entrants looking to disrupt
the market with new and evolving
business models. Competition from
these, or the reversal in trends such as
the move to online digital advertising,
may impact the Group’s ability to retain
its customers or to win new customers.
Recruitment
of agents as
shareholders
The Group’s policy of issuing shares
to estate agents in return for listing
contracts to generate a signifi cant and
dispersed share owning estate agency
paying customer base may not be
successful or may give rise to greater
than anticipated dilution.
Changes to the UK
residential property
market
The Group derives its revenues from the
UK residential property market, and the
Group’s principal business is to derive
revenues from customers, which include
estate agents, letting agents and, in
future, new home developers, who pay
listing fees to market their property
listings and services on the Group’s
online portal OnTheMarket.com. As
such, the Group may be adversely
affected by factors outside its control,
which may reduce the advertising spend
of its customers, and/or by changes
in the United Kingdom’s residential
property market, which may cause a
lower volume of property transactions
and/or a lower number of estate agents,
letting agents and new home developers
seeking to use the Group’s services.
•
•
•
•
•
•
•
•
•
Offering competitive pricing and value
for money.
Strengthening the brand and profi le
of OnTheMarket.com and increasing
consumer traffi c through marketing
spend to provide increasing value to
customers.
Maintaining strong agent support
through shareholdings, fair pricing
and developing new and value added
products and services.
Investment in marketing and growth in
traffi c to the OnTheMarket.com portal
provides reassurance on value for
money to paying customers.
Growth in agents listing underpins
the longer term success of
OnTheMarket.com.
Offering competitive pricing to provide
an incentive for agents to support the
Company’s longer term success.
Offering competitive pricing and value
for money to provide a lower cost
marketing channel to customers if their
markets and revenues are weak.
Adopting revenue models that do not
depend directly on volumes or prices in
the underlying customer markets.
Strengthening the brand and profi le
of OnTheMarket.com and increasing
consumer traffi c through marketing
spend to provide increasing value to
customers.
250074 OnTheMarket AR 01-11.indd 9
250074 OnTheMarket AR 01-11.indd 9
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
9
Strategic Report: continued
Risk Management and Principal Risks (continued)
Category
Risk
Description
Mitigation
Legal
Litigation
Reputational
Brand strength
Human
resources
Employees
IT/Data
Security breaches
Agents’ Mutual Ltd has been party to
litigation with Gascoigne Halman Ltd,
an estate agent in the North West of
England, in relation to an agreement
between the Company and Gascoigne
Halman Ltd under which Gascoigne
Halman Ltd agreed to become a member
of Agents’ Mutual Ltd and to list certain
of its properties at OnTheMarket.com.
Gascoigne Halman Ltd has been granted
leave to appeal to the Appeal Court.
A strong brand and reputation is vital
to the Group’s growth strategies.
Brand strength and awareness is
important to drive end user traffi c on
OnTheMarket.com which in turn should
underpin the retention and recruitment
of advertising customers. Any damage
to the Group’s brand might reduce traffi c
and deter customers from joining or from
renewing contracts.
The Group’s operations are dependent
on the experience, skills and knowledge
of its executive offi cers and on its ability
to attract and retain talented employees.
Should key employees leave the Group,
or should the Group be unable to recruit
new staff with the required capabilities, it
may be unable to deliver its strategy for
growth.
The Group’s information technology
systems may be impacted by breaches of
security or may fail, or the transmission
of property listings data from agents may
be disrupted or impaired, with material
negative consequences for the Group.
•
•
•
•
•
•
•
•
•
•
•
•
The Competition Appeal Tribunal
handed down judgment in the Group’s
favour.
The Company continues to take expert
legal advice to defend its position in
relation to the possible appeal hearing
and any other potential litigation.
Investment in brand development
through marketing spend.
Regular risk review and oversight from
the Board and senior management.
Instilling a culture based on ethical
behaviour and commitment to the
customer and website users throughout
the workforce.
Instilling a strong team culture within
the Group.
Management has signifi cant experience
in building teams and integrating new
team members.
Providing competitive compensation
packages, which vest over time to
encourage retention.
Maintenance of up to date security
measures and regular review.
Regular security testing of IT systems.
Provision of appropriate staff training
and access levels.
Testing of builds against the latest
Open Web Application Security Project
web app security risks.
10
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 01-11.indd 10
250074 OnTheMarket AR 01-11.indd 10
14/06/2018 11:36
14/06/2018 11:36
Strategic Report: continued
Risk Management and Principal Risks (continued)
Category
Risk
Data
Description
Mitigation
The Group processes personal
data as part of its business.
There is a risk that this data
could become public if there
were a security breach at the
Group or third party service
providers in respect of such
data and the Group could face
liability under data protection
laws.
•
•
•
•
•
•
All infrastructure, devices and
laptops that touch personal data are
encrypted in transit and at rest.
The Company’s email and document
storage are encrypted in transit and
at rest.
Personal information is anonymised
and pseudonymised where
reasonably needed.
Staff are trained on handling personal
information.
OnTheMarket has policies,
procedures, and security in place to
protect personal data in accordance
with applicable data protection laws
including GDPR.
OnTheMarket has an ongoing
programme of security by design.
The General
Data Protection
Regulation
(“GDPR”)
GDPR came into force on 25
May 2018. Failure to comply
with GDPR could result in
the Group being liable under
GDPR, including for fi nes.
On behalf of the Board
Ian Springett – Chief Executive Offi cer
6 June 2018
250074 OnTheMarket AR 01-11.indd 11
250074 OnTheMarket AR 01-11.indd 11
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
11
Board of Directors:
year ended 31 January 2018
Christopher Bell – Non-Executive Chairman
Helen Whiteley – Commercial Director
Christopher joined OnTheMarket as its Non-Executive
Chairman in October 2017 as the Group prepared for its
proposed placing and admission to AIM. Christopher has
considerable listed board experience across a range of
sectors. He has, since 2015, been Senior Independent
Director for The Rank Group Plc, where he also serves
on both the Audit Committee and the Nominations
Committee.
is Non-Executive Chairman of
He
two AIM-listed
companies, XL Media plc and TechFinancials, Inc,
both of which he took to market and at both of which
he serves on key governance committees. He is also a
Non-Executive Director at AIM-listed Gaming Realms plc.
Christopher joined Ladbroke Group plc in 1991, becoming
Managing Director of its Racing Division in 1995. In 2000,
he became Chief Executive of Ladbrokes Worldwide
and joined the Board of the rebranded Hilton Group plc,
becoming Chief Executive of Ladbrokes plc, following
the sale of the Hilton International Hotel division, until
2010. He has also served as Non-Executive Director
at Spirit Pub Company plc (from 2011 to 2015) and as
Senior Independent Director at Quintain Estates and
Development plc (from 2010 to 2015). Prior to joining
Ladbrokes plc (formerly Hilton Group plc and Ladbrokes
Group plc), Christopher held senior marketing positions
at Allied Lyons plc.
Ian Springett – Chief Executive Offi cer
Ian joined the business in April 2013 as founding CEO.
After holding a number of senior banking roles over
15 years within NatWest Group, the last fi ve years of which
as Managing Director of Lombard Bank, Ian founded
PrimeLocation.com in 2000 and, as Chief Executive, led
its growth and ultimate sale to Daily Mail and General
Trust plc in 2006. He remained with the business until
2008, when he left to pursue other interests.
From 2012, he worked with the agent founders of Agents’
Mutual to develop its strategy and proposition and led the
recruitment of the broader group of agents who provided
funding for the venture in early 2014. Ian has driven the
successful launch and growth of the OnTheMarket.com
business and led its recent demutualisation in preparation
for Admission to AIM and the associated capital raise.
12
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
the
founding management
joined Agents’ Mutual
Helen
in August 2013,
having previously been Sales & Marketing Director
and part of
team at
PrimeLocation.com. Helen began her career at Citibank
and later joined Lombard Bank, where, as Marketing
Director, she developed the Lombard Direct brand with
national TV, press and direct marketing campaigns to
achieve a market-leading position. Helen has been
central to the planning, development and growth of
OnTheMarket.com, with responsibility for sales, member
relations and marketing.
Clive Beattie – Chief Financial Offi cer
Clive joined the business in March 2017. Having qualifi ed
as a chartered accountant with PriceWaterhouse he spent
12 years working in investment banking with UBS before
working six years at ThruVision, a security technology
business, initially as CFO and then also as CEO. Clive
then spent three years as CEO/CFO at Croft Associates,
a business specialising in containers for the transport and
disposal of radioactive materials.
Ian Francis – Non-Executive Director
Ian joined OnTheMarket as a Non-Executive Director in
October 2017 as the Company prepared for its proposed
placing and admission to AIM. Ian has extensive listed
board experience both from his executive career as
a senior audit partner with Ernst & Young and from his
subsequent roles at Umeme Limited and at Paysafe
Group plc. He was appointed to the board of Paysafe
Group plc (previously Optimal Payments plc) in 2010 as a
Non-Executive Director and served as Chairman of the
Audit Committee until its acquisition in December 2017.
Prior to this, he was a senior audit partner with Ernst &
Young London until 2009, specialising in FTSE-listed
and multinational companies. He also served as a
Non-Executive Director of Umeme Limited, the privatised
national power distribution company of Uganda, from
2009 to 2014. Ian established and chaired Umeme’s
Audit Committee. Ian is also an active mentor at Board
Mentoring, supporting executive and non-executive
directors stepping into new situations and roles.
250074 OnTheMarket AR 12-23.indd 12
250074 OnTheMarket AR 12-23.indd 12
14/06/2018 11:36
14/06/2018 11:36
Directors’ Report:
year ended 31 January 2018
The Directors present their report together with the
fi nancial statements for the year ended 31 January 2018.
Principal activities
The principal activity of OnTheMarket plc (the “Company”)
during the period was that of a holding company. The
principal activity of the subsidiaries (which together with
the Company form the “Group”) in the year under review
was that of providing online property portal services to
businesses in the estate and lettings agency industry
under the trading name of OnTheMarket.com. In operating
the OnTheMarket.com website and associated apps,
the Group seeks to provide the best online advertising
environment
their clients’
properties and the best property search experience for
property-seeking consumers.
to showcase
for agents
The Directors consider the principal place of business to
be 2-6 Boundary Row, London, SE1 8HP.
Results and dividends
An analysis of the Group’s performance is contained within
the Strategic Report. The Group’s income statement is
set out on page 24 and shows the result for the year.
No dividends were proposed or paid (2017: £nil) to the
holders of ordinary shares during the year.
Directors
The Directors who held offi ce during the year and up to
the date of signature of the fi nancial statements were as
follows:
(appointed 27 July 2017)
C Beattie
I Springett
(appointed 27 July 2017)
H Whiteley (appointed 27 July 2017)
C Bell
I Francis
(appointed 24 October 2017)
(appointed 24 October 2017)
Political and charitable donations
The Group made no charitable donations during the year
(2017: £nil).
Directors’ interests
The present membership of the Board, together with
biographies on each, is set out on page 12.
All of these Directors served during the year. Directors’
interests in shares in the Company are set out in the
Directors’ remuneration report.
Directors’ third party indemnity provisions
The Group maintains appropriate insurance to cover
directors’ and offi cers’ liability. The Group provides an
indemnity in respect of all the Group’s directors. Neither
the insurance nor the indemnity provides cover where the
Director has acted fraudulently or dishonestly.
Employees
The Group is an equal opportunities employer and no job
applicant or employee receives less favourable treatment
on the grounds of age, sex, marital status, sexual
orientation, race, colour, religion or belief.
It is the policy of the Group that individuals with
disabilities, whether registered or not, should receive full
and fair consideration for all job vacancies for which they
are suitable applicants. Employees who become disabled
during their working life will be retained in employment
whenever possible and will be given help with any
rehabilitation and retraining.
Going concern
On 9 February 2018, the Company’s entire issued share
capital was admitted to trading on AIM at the London
Stock Exchange. By way of a placing associated with
admission to AIM, the Company raised £30m (gross)
through the issue of 18,181,818 ordinary shares at £1.65
each. Additionally all outstanding loan notes issued by
the Company were converted at that date into ordinary
shares on a £ for £ basis.
In the light of this, the Directors consider the going
concern basis to be appropriate to the preparation of
these fi nancial statements.
Future developments
The Directors have discussed the future developments
for the business within the Strategic Report on page 6,
in accordance with Section 414C of the Companies Act
2016.
250074 OnTheMarket AR 12-23.indd 13
250074 OnTheMarket AR 12-23.indd 13
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
13
Directors’ Report: continued
Financial instruments
The Group’s risk management policies in relation to
fi nancial instruments are set out in note 19 to these
consolidated fi nancial statements.
Independent auditors
A resolution to reappoint RSM UK Audit LLP, Chartered
Accountants, as auditor will be put to the shareholders at
the annual general meeting.
Statement of disclosure to auditors
We, the Directors of the Company and Group, who held
offi ce at the date of the approval of these consolidated
fi nancial statements as set out above, each confi rm so far
as we are aware, that:
there is no relevant audit information of which the
Group’s auditor is unaware; and
we have taken all the steps that we ought to have
taken as Directors in order to make ourselves aware
of any relevant audit information and to establish that
the Group’s auditor is aware of that information.
The Directors are responsible for the maintenance and
integrity of the corporate and fi nancial information included
on the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination
of fi nancial statements may differ from legislation in
other jurisdictions.
Corporate Governance Statement
Compliance
The Directors recognise the importance of sound corporate
governance and have complied post-Admission with the
Quoted Companies Alliance’s Corporate Governance
Guidelines, to the extent appropriate for a company of
OTM’s nature and size.
The Corporate Governance Guidelines were devised by
the Quoted Companies Alliance (“QCA”), in consultation
with a number of signifi cant institutional small company
investors, as an alternative corporate governance code
applicable to AIM companies. An alternative code was
proposed because the QCA considers the UK Corporate
Governance Code
for many
AIM companies.
inappropriate
to be
The Corporate Governance Guidelines state that, “The
purpose of good corporate governance is to ensure that
the company is managed in an effi cient, effective and
entrepreneurial manner for the benefi t of all shareholders
over the longer term”.
The Board of Directors meets regularly throughout
the year to review the Group’s strategy and oversee
the Group’s progress towards its goals. The Board
has established an Audit Committee, a Remuneration
Committee, a Nomination Committee and an Agent
Recruitment Committee.
The Board
The Board comprises fi ve directors, made up of three
Executive Directors and two Non-Executive Directors,
refl ecting a blend of different experience and backgrounds.
The Board also has the services of a Company Secretary.
The Board is responsible for the overall performance of
the Group, which includes the broad strategic direction,
performance and the framework of internal controls of
the Group.
The policies and strategies of the Group are formulated
by the Board and the detailed considerations about the
day-to-day operations are delegated to an executive team
under the leadership of the Executive Directors.
The Board regularly monitors the implementation of
strategy and policy decisions to ensure that the operation
of the Group is at all times in line with the Group’s
objectives.
The Board has regular contact with its advisers to keep
up to date with corporate governance matters. The Chief
Financial Offi cer and the Company Secretary ensure that
Board procedures are followed and that applicable rules
and regulations are complied with. The Group purchases
appropriate insurance cover in respect of legal action
against its Directors.
The Chairman’s main function is to manage the Board
so that the Group is run in the best interests of its
stakeholders. It is also the Chairman’s responsibility to
ensure the Board’s integrity and effectiveness.
14
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 12-23.indd 14
250074 OnTheMarket AR 12-23.indd 14
14/06/2018 11:36
14/06/2018 11:36
Directors’ Report: continued
Corporate Governance Statement (continued)
The Chief Executive Offi cer is responsible for the running
of the Group’s businesses. Each Executive Director has
their own sphere of responsibility. Decisions relating to
strategy, major contracts, acquisitions and certain internal
controls, for example, are taken at Board level.
The Audit Committee has the primary responsibility for
ensuring that the fi nancial performance of the Group
is properly measured, reported on and monitored. In
this fi nancial year, it discharged its responsibilities by
reviewing:
Non-Executive Directors/Board independence
two
The Company has
independent Non-Executive
Directors, Christopher Bell (Non-Executive Chairman)
and Ian Francis, who provide an important contribution to
its strategic development. The Non-Executive Directors
are both treated as independent, having regard to the
guidance in the Quoted Companies Alliance’s Corporate
Governance.
The Non-Executive Chairman acquired 30,303 shares in
the Company in the placing which occurred after the year
end on 9 February 2018. However, due to the small size
of this shareholding, the Directors do not consider that
this impacts on the Chairman’s independence.
Board committees
Remuneration Committee
The Remuneration Committee is chaired by Christopher
Bell and its other member is Ian Francis. It will meet
at least twice a year and is responsible for advising
on the remuneration policy for Directors and senior
management only.
The Remuneration Committee has responsibility for
determining, within agreed terms of reference, the
Group’s policy on the remuneration of senior executives
and specifi c remuneration packages
for Executive
Directors including pension payments and compensation
rights. It is also responsible for making recommendations
for grants of options to Directors and senior management
under the Group’s share based plans.
The remuneration of Non-Executive Directors is a
matter for the Board. No Director may be involved in any
discussions as to their own remuneration. Details of the
level and composition of the Directors’ remuneration are
disclosed in the Directors’ remuneration report.
Audit Committee
The Audit Committee has Ian Francis as chairman,
and Christopher Bell is the other member. The Audit
Committee will meet at least twice a year.
the Group’s draft fi nancial statements prior to Board
approval and reviewing the external auditor’s detailed
reports thereon;
the appropriateness of
policies;
the Group’s accounting
the potential
statements of certain events and risks;
impact on
the Group’s fi nancial
the external auditor’s plan for the audit of the Group’s
accounts, which included key areas of audit focus,
key risks and the proposed audit fee;
the processes for identifying the risks to the business
and managing those risks; and
its terms of reference.
The Audit Committee makes recommendations to the
Board on the appointment, re-appointment and removal of
the external auditor. In making the recommendation on the
annual re-appointment of the external auditor, it monitors
the relationship to assess independence, objectivity and
cost effectiveness of the external auditor. It is responsible
for ensuring that an appropriate relationship between the
Group and the external auditors is maintained, including
reviewing non-audit services and fees.
The Directors meet regularly with the external auditor for
the purpose of discussing matters relating to the fi nancial
reporting and internal controls of the Group. Furthermore,
the Audit Committee’s chairman meets the external
auditors to discuss matters relating to the Committee’s
remit and any issues arising from the audit.
Nomination Committee
The Nomination Committee has Christopher Bell as
chairman and provides a formal, rigorous and transparent
procedure for the appointment of new directors to
the Board.
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
15
250074 OnTheMarket AR 12-23.indd 15
250074 OnTheMarket AR 12-23.indd 15
14/06/2018 11:36
14/06/2018 11:36
Relations with shareholders
is committed
The Board
to maintaining good
communications with shareholders and provides a
website at plc.onthemarket.com/investors for up-to-date
information on the Group.
The AGM is an opportunity for the Group to meet and
communicate with its investors and for them to raise with
the Board any issues or concerns they may have. The
Group dispatches the Notice of AGM at least 21 days
before the meeting. Shareholders receive electronic
communication unless they elect otherwise.
On behalf of the Board
Ian Springett – Chief Executive Offi cer
6 June 2018
Directors’ Report: continued
Corporate Governance Statement (continued)
The Nomination Committee will meet at least once a year.
Ian Francis and Ian Springett are the other members of
the Nomination Committee.
Agent Recruitment Committee
The Board has also established an Agent Recruitment
Committee, comprising of any one of the Non-Executive
Directors and any two of the Executive Directors, in order
to ensure that there is appropriate oversight of any future
issues of Agent Recruitment Shares. Accordingly, any
proposed issue of Agent Recruitment Shares to new
agents will need to be approved by the Agent Recruitment
Committee.
No meetings of the various Board committees were
held during the year to 31 January 2018 as these were
established for implementation post Admission of the
Company to AIM.
Internal control
The Board acknowledges that it is responsible for the
Group’s system of internal control and for reviewing its
effectiveness. Such a system is designed to manage
rather than eliminate the risk of failure to achieve business
objectives and can only provide reasonable and not
absolute assurance against material misstatement or loss.
The Board has established clear operating procedures
and responsibility structures. These procedures include:
monthly fi nancial reporting against budget and the
prior year;
day-to-day fi nancial control of operations;
annual budgeting and forecasting; and
the monitoring and assessment of risk.
16
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 12-23.indd 16
250074 OnTheMarket AR 12-23.indd 16
14/06/2018 11:36
14/06/2018 11:36
Directors’ Remuneration Report:
year ended 31 January 2018
As an AIM listed company, the Company is not required to comply with Schedule 8 of the Companies Act. However, in
accordance with AIM notice 36 the Company has provided, in the Directors’ remuneration report, the necessary disclosure
of the Directors’ remuneration earned in respect of the fi nancial year by each Director of the Company acting in such a
capacity during the fi nancial year. The Directors also feel it is appropriate to provide the following information to shareholders.
Remuneration Committee
The remuneration of each Executive Director is determined by the Remuneration Committee. It is chaired by Christopher
Bell and its other member is Ian Francis. The Remuneration Committee will meet at least twice a year.
The Committee seeks input from the Chief Executive Offi cer. The Committee refers to external evidence of pay and
employment conditions in other companies and is free to seek advice from external advisers.
Policy on remuneration of Directors
The Remuneration Committee has responsibility for determining, within agreed terms of reference, the Group’s policy on
the remuneration of senior executives and specifi c remuneration packages for the Executive Directors including pension
payments and compensation rights. It is also responsible for making recommendations for grants of options under Company
share option plans.
The remuneration of Non-Executive Directors is a matter for the Board. It consists of fees for their services in connection
with Board and Committee meetings. No Director may be involved in any discussions as to their own remuneration.
The remuneration policy is designed to shape the Company’s remuneration strategy for the future, ensuring that the
structure and levels of executive remuneration continue to remain appropriate for the Company. The policy aims to:
pay competitive salaries to aid recruitment, retention and motivation being refl ective of the executive’s experience and
importance to the Group;
pay annual bonuses to incentivise the delivery of stretching short-term business targets whilst maintaining an element
of variability allowing fl exible control of the cost base and being able to respond to market conditions; and
provide long-term share incentive plans designed to incentivise long-term value creation, reward execution of strategy,
align Directors’ interests with the long-term interests of investors and promote retention.
The main remuneration components are:
Basic salary or fees
Basic salary or fees for each Director are determined taking into account the performance of the individual and information
from independent sources on the rates of salary and fees for similar posts. The salaries and fees paid to Directors by the
Group were £535k (2017: £170k).
With effect from 1 February 2018, and based upon a review by the Remuneration Committee of performance and of rates
for similar posts, Executive Directors’ salaries were amended as follows:
Director
I Springett
H Whiteley
C Beattie
There were no changes to the rates of fees for Non-Executive Directors.
Previous Salary
(£’000)
New Salary
(£’000)
170
170
170
250
200
190
250074 OnTheMarket AR 12-23.indd 17
250074 OnTheMarket AR 12-23.indd 17
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
17
Directors’ Remuneration Report: continued
Bonus
The Company has a formal bonus scheme which was effective for the Executive Directors. Bonuses were paid to the
Executive Directors by the Group of £81k (2017: £17k).
Pensions
Contributions made to Directors’ pensions in the year were £1k (2017: £nil).
Share incentive
Under the terms of a management agreement with Agents’ Mutual, that was fi rst established in 2013 and revised in 2016,
the founding management team were entitled to 18% of the fully diluted share capital of the Company at the point of the
restructuring in September 2017. This entitlement was fulfi lled by the issue of nil cost share options, of which 5,199,551
were issued to certain Executive Directors. A further 151,515 nil cost options were issued to Clive Beattie, the Chief
Financial Offi cer.
No share options were exercised during the period.
Company policy on contracts of service
The Executive Directors of the Company do not have a notice period in excess of 12 months under the terms of their
service contracts. Their service contracts contain no provisions for pre-determined compensation on termination which
exceeds 12 months’ salary and benefi ts in kind. Non-Executive Directors do not have service contracts with the Company,
but have letters of appointment which can be terminated on 3 months’ notice.
Company policy on external appointments
The Company recognises that its Directors are likely to be invited to become non-executive directors of other companies
and that exposure to such non-executive duties can broaden their experience and knowledge, which will benefi t the Group.
Executive and Non-Executive Directors are therefore, subject to approval of the Company’s Board, allowed to accept
non-executive appointments, as long as these are not with competing companies and are not likely to lead to confl icts of
interest. Executive and Non-Executive Directors are allowed to retain the fees paid.
Directors’ emoluments
The fi gures below represent emoluments earned by Directors from the Group during the fi nancial year:
Executive Directors:
C Beattie
I Springett
H Whiteley
Non-Executive Directors:
C Bell
I Francis
Total remuneration before pension contributions
Pension contributions
Total remuneration
18
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
Salary &
fees
£’000
Bonus
£’000
2018
Total
£’000
2017
Total
£’000
149
170
170
489
32
14
46
535
1
536
13
34
34
81
–
–
–
81
–
81
162
204
204
570
32
14
46
616
1
617
–
187
–
187
–
–
–
187
–
187
250074 OnTheMarket AR 12-23.indd 18
250074 OnTheMarket AR 12-23.indd 18
14/06/2018 11:36
14/06/2018 11:36
Directors’ Remuneration Report: continued
Changes to Board members
During the year, the Company, OnTheMarket plc, was incorporated and all the following Directors joined the Board during
the year:
C Beattie
I Springett
H Whiteley
C Bell
I Francis
(appointed 27 July 2017)
(appointed 27 July 2017)
(appointed 27 July 2017)
(appointed 24 October 2017)
(appointed 24 October 2017)
Directors’ interests
The interests of the Directors and their spouses in the shares of the Company were as follows:
2018
Shares
No.
30,303
96,969
90,909
30,303
–
Options
No.
151,515
3,466,367
1,733,184
–
–
248,484
5,351,066
2017
Shares
No.
Options
No.
–
–
–
–
–
–
–
–
–
–
–
–
C Beattie
I Springett
H Whiteley
C Bell
I Francis
No dividends were paid to the Directors during the year.
On behalf of the Board
Christopher Bell – Non-Executive Chairman
6 June 2018
250074 OnTheMarket AR 12-23.indd 19
250074 OnTheMarket AR 12-23.indd 19
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
19
Directors’ Responsibilities Statement:
year ended 31 January 2018
The Directors are responsible for keeping adequate
accounting records that are suffi cient to show and explain
the Company’s and Group’s transactions and disclose
with reasonable accuracy at any time the fi nancial position
of the Company and Group and enable them to ensure
that the fi nancial statements comply with the Companies
Act 2006. They have a general responsibility for taking
such steps as are reasonably open to them to safeguard
the assets of the Company and Group and to prevent and
detect fraud and other irregularities.
The Directors are responsible for the maintenance
and integrity of the corporate and fi nancial information
included on the OnTheMarket plc website.
The Directors are responsible for preparing the Strategic
Report, the Directors’ Report and the consolidated
fi nancial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group
and Company fi nancial statements for each fi nancial
year. Under that law, the Directors have elected to
prepare the Group fi nancial statements in accordance
with International Financial Reporting Standards (“IFRS”)
as adopted by the European Union (“EU”), and have
elected to prepare the Company fi nancial statements in
accordance with UK Accounting Standards and applicable
law – UK Generally Accepted Accounting Practice (“UK
GAAP”), including Financial Reporting Standard 101:
Reduced Disclosure Framework (“FRS 101”).
The Group fi nancial statements are required by law and
IFRS adopted by the EU to present fairly the fi nancial
position and performance of the Group; the Companies
Act 2006 provides in relation to such fi nancial statements
that references in the relevant part of that Act to fi nancial
statements giving a true and fair view are references to
their achieving a fair presentation.
Under company law, the Directors must not approve the
consolidated fi nancial statements unless they are satisfi ed
that they give a true and fair view of the state of affairs of the
Company and Group and of the profi t or loss of the Group
for that period. In preparing each of the Group and Company
fi nancial statements, the Directors are required to:
select suitable accounting policies and then apply
them consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether they have been prepared in accordance
with IFRSs adopted by the EU; and
prepare the fi nancial statements on the going concern
basis unless it is inappropriate to presume that the
Group and the Company will continue in business.
20
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 12-23.indd 20
250074 OnTheMarket AR 12-23.indd 20
14/06/2018 11:36
14/06/2018 11:36
Independent Auditor’s Report to the Members of
OnTheMarket plc:
year ended 31 January 2018
Opinion
the consolidated
the fi nancial statements of
We have audited
OnTheMarket plc (the “parent company”) and
its
subsidiaries (the “Group”) for the year ended 31 January
income
2018 which comprise
statement,
the consolidated and parent company
statement of fi nancial position, the consolidated and
parent company statement of changes in equity, the
consolidated statement of cash fl ows and notes to the
fi nancial statements, including a summary of signifi cant
accounting policies. The fi nancial reporting framework
that has been applied in the preparation of the Group
fi nancial statements is applicable law and International
Financial Reporting Standards (“IFRSs”) as adopted by
the European Union. The fi nancial reporting framework
that has been applied in the preparation of the parent
company fi nancial statements is applicable law and
United Kingdom Accounting Standards including FRS
101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
the fi nancial statements give a true and fair view of
the state of the Group’s and of the parent company’s
affairs as at 31 January 2018 and of the Group’s loss
for the year then ended;
the Group fi nancial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
the parent company fi nancial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the fi nancial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the fi nancial statements section of our report.
We are independent of the Group and parent company
in accordance with the ethical requirements that are
relevant to our audit of the fi nancial statements in the
UK, including the FRC’s Ethical Standard, and we have
fulfi lled our other ethical responsibilities in accordance
with these requirements. We believe that the audit
evidence we have obtained is suffi cient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following
matters in relation to which the ISAs (UK) require us to
report to you where:
the Directors’ use of the going concern basis
of accounting in the preparation of the fi nancial
statements is not appropriate; or
the Directors have not disclosed in the fi nancial
statements any identifi ed material uncertainties that
may cast signifi cant doubt about the Group’s or the
parent company’s ability to continue to adopt the
going concern basis of accounting for a period of at
least twelve months from the date when the fi nancial
statements are authorised for issue.
Other information
The other information comprises the information included
in the annual report, other than the fi nancial statements
and our auditor’s report thereon. The Directors are
responsible for the other information. Our opinion on the
fi nancial statements does not cover the other information
and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the fi nancial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the fi nancial statements or our
knowledge obtained in the audit or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether there is a material misstatement in the fi nancial
statements or a material misstatement of the other
information. If, based on the work we have performed,
we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
250074 OnTheMarket AR 12-23.indd 21
250074 OnTheMarket AR 12-23.indd 21
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
21
Independent Auditor’s Report to the Members of OnTheMarket plc: continued
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
the information given in the Strategic Report and the
Directors’ Report for the fi nancial year for which the
fi nancial statements are prepared is consistent with
the fi nancial statements; and
the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
Group and the parent company and their environment
obtained in the course of the audit, we have not identifi ed
material misstatements in the Strategic Report and the
Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
the parent company fi nancial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’
specifi ed by law are not made; or
remuneration
we have not received all the information and
explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities
Statement set out on page 20, the Directors are
responsible for the preparation of the fi nancial statements
and for being satisfi ed that they give a true and fair view
and for such internal control as the Directors determine
is necessary to enable the preparation of fi nancial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the fi nancial statements, the Directors are
responsible for assessing the Group’s and the parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related
to going
concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group
or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
fi nancial statements
Our objectives are to obtain reasonable assurance about
whether the fi nancial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in
the aggregate, they could reasonably be expected to
infl uence the economic decisions of users taken on the
basis of these fi nancial statements.
A further description of our responsibilities for the audit
of the fi nancial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
22
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 12-23.indd 22
250074 OnTheMarket AR 12-23.indd 22
14/06/2018 11:36
14/06/2018 11:36
Independent Auditor’s Report to the Members of OnTheMarket plc: continued
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company
and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Colin Roberts (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
6 June 2018
250074 OnTheMarket AR 12-23.indd 23
250074 OnTheMarket AR 12-23.indd 23
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
23
Consolidated Income Statement:
year ended 31 January 2018
Revenue
Administrative expenses
Operating profi t before non-recurring items
Exceptional and non-recurring items:
Share-based management incentive
Professional fees
Operating loss
Finance income
Finance expense
Loss before income tax
Income tax
Loss and total comprehensive income for the year
attributable to owners of the parent
Loss per share from continuing operations
Basic and diluted
The operating loss arises from the Group’s continuing operations.
Notes
4
5
22
6
7
9
10
11
12
2018
£’000
16,046
(12,159)
2017
£’000
17,831
(15,507)
3,887
2,324
(13,290)
(1,436)
(10,839)
2
(1,233)
(12,070)
(22)
–
(3,506)
(1,182)
2
(1,353)
(2,533)
(1,486)
(12,092)
(4,019)
Pence
(34.03)
Pence
(11.31)
There is no recognised income or expense for the year other than the loss shown above and therefore no separate
statement of other comprehensive income has been presented.
The notes on pages 30 to 53 are an integral part of these consolidated fi nancial statements.
24
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 24-29.indd 24
250074 OnTheMarket AR 24-29.indd 24
14/06/2018 11:36
14/06/2018 11:36
Consolidated Statement of Financial Position:
at 31 January 2018
Company Reg. No. 10887621
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Current assets
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Provisions
Current tax
Non-current liabilities
Borrowings
Provisions
TOTAL LIABILITIES
NET LIABILITIES
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
Share capital
Merger reserve
Other reserve
Retained earnings
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
Notes
13
14
16
17
18
21
18
21
23
2018
£’000
18
3,654
3,672
553
3,174
3,727
7,399
(2,957)
(1,217)
(1,258)
(22)
(5,454)
2017
£’000
45
3,556
3,601
3,709
2,263
5,972
9,573
(5,937)
(1,379)
–
–
(7,316)
(11,256)
(354)
(11,256)
–
(11,610)
(11,256)
(17,064)
(18,572)
(9,665)
(8,999)
71
(71)
(252)
(9,413)
(9,665)
71
(71)
–
(8,999)
(8,999)
The notes on pages 30 to 53 are an integral part of these consolidated fi nancial statements.
These consolidated fi nancial statements are approved by the Board of Directors and authorised for issue on 6 June 2018
and are signed on its behalf by:
Clive Beattie – Chief Financial Offi cer
250074 OnTheMarket AR 24-29.indd 25
250074 OnTheMarket AR 24-29.indd 25
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
25
Company Statement of Financial Position:
at 31 January 2018
Company Reg. No. 10887621
ASSETS
Non-current assets
Investments in subsidiaries
Current assets
Trade and other receivables
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Current tax
Non-current liabilities
Borrowings
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Other reserve
Retained earnings
TOTAL EQUITY
Notes
15
16
17
18
18
23
2018
£’000
–
23,389
23,389
(82)
(512)
(22)
(616)
(11,256)
(11,872)
11,517
71
(252)
11,698
11,517
The Company’s profi t and total comprehensive income for the year was £91k (2017: £nil).
The notes on pages 30 to 53 are an integral part of these consolidated fi nancial statements.
These consolidated fi nancial statements are approved by the Board of Directors and authorised for issue on 6 June 2018
and are signed on its behalf by:
Clive Beattie – Chief Financial Offi cer
26
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 24-29.indd 26
250074 OnTheMarket AR 24-29.indd 26
14/06/2018 11:58
14/06/2018 11:58
Consolidated Statement of Changes in Equity:
year ended 31 January 2018
Share-based
payment
reserve
£’000
Share
capital
£’000
Merger
reserve
£’000
Other
reserve
£’000
Balance as at 1 February 2016
Loss for the fi nancial year
Total comprehensive expense
for the year
Balance as at 31 January 2017
Loss for the fi nancial year
Total comprehensive expense
for the year
Transactions with owners:
Share options issued
Transfer to retained earnings
Legal fees on after date
share issue
71
–
71
–
–
–
–
Balance as at 31 January 2018
71
Share capital
–
–
–
–
–
–
11,678
(11,678)
–
–
(71)
–
–
(71)
–
–
–
–
–
(71)
–
–
–
–
–
–
–
–
(252)
(252)
Retained
earnings
£’000
(4,980)
(4,019)
Total
equity
£’000
(4,980)
(4,019)
(4,019)
(4,019)
(8,999)
(12,092)
(8,999)
(12,092)
(12,092)
(12,092)
–
11,678
–
(9,413)
11,678
–
(252)
(9,665)
Share capital represents the par value of ordinary shares issued by the Company.
Share-based payment reserve
Share-based payment reserve represents the cumulative share-based payment expense for the Group’s share option
schemes.
Merger reserve
Merger reserve represents the difference between the cost of the investment in a subsidiary undertaking and the equity of
that subsidiary acquired, on consolidation.
Other reserve
Other reserve represents costs incurred for a share issue that took place after the year end (note 28). This reserve is
expected to transfer to share premium on the after date share issue.
Retained earnings
Retained earnings represent the cumulative profi t and loss net of distributions to owners.
The notes on pages 30 to 53 are an integral part of these consolidated fi nancial statements.
250074 OnTheMarket AR 24-29.indd 27
250074 OnTheMarket AR 24-29.indd 27
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
27
Company Statement of Changes in Equity:
year ended 31 January 2018
Share-based
payment
reserve
£’000
Share
capital
£’000
Other
reserve
£’000
Retained
earnings
£’000
Balance as at 27 July 2017
Profi t for the fi nancial period
Total comprehensive income for the period
Transactions with owners:
Issue of ordinary shares
Share options issued
Transfer to retained earnings
Legal fees on after date share issue
IAS 27 adjustment1
Balance as at 31 January 2018
–
–
–
71
–
–
–
–
71
–
–
–
–
11,678
(11,678)
–
–
–
–
–
–
–
–
–
(252)
–
(252)
–
91
91
–
–
11,678
–
(71)
11,698
Total
equity
£’000
–
91
91
71
11,678
–
(252)
(71)
11,517
1
In the circumstances of a group reorganisation as has been undertaken in the period under review, IAS 27 requires that the newly formed parent company
accounts for its interest in the original parent company at cost and it requires that cost to be measured at the carrying amount of its share of the equity
items shown in the separate fi nancial statements of the original parent at the date of the reorganisation. Since the original parent, Agents’ Mutual, had
negative equity at the relevant date, the investment was valued at £nil. In order to record the shares issued to effect the reorganisation at their nominal
value (£71k) an equal opposite debit entry is recognised against equity.
Share capital
Share capital represents the par value of ordinary shares issued by the Company.
Share-based payment reserve
Share-based payment reserve represents the cumulative share-based payment expense for the Group’s share option
schemes.
Other reserve
Other reserve represents costs incurred for a share issue that took place after the year end (note 28). This reserve is
expected to transfer to share premium on the after date share issue.
Retained earnings
Retained earnings represent the cumulative profi t and loss net of distributions to owners.
The notes on pages 30 to 53 are an integral part of these consolidated fi nancial statements.
28
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 24-29.indd 28
250074 OnTheMarket AR 24-29.indd 28
14/06/2018 11:36
14/06/2018 11:36
Consolidated Statement of Cash Flows:
year ended 31 January 2018
Cash fl ows from operating activities
Loss for the year after income tax
Adjustments for:
Income tax
Finance income
Finance expense
Amortisation
Depreciation
Impairment of investment
Share based payment
Operating cash fl ows before movements in working capital
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in provisions
Net cash generated from/(used in) operating activities
Cash fl ows from investing activities
Acquisition of intangible assets
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash fl ows from fi nancing activities
Finance income received
Finance expense paid
Issue of loan notes
Expenses incurred for share listing
Net cash (used in)/generated from fi nancing activities
Net movement in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Cash and cash equivalents
2018
£’000
2017
£’000
(12,092)
(4,019)
22
(2)
1,233
1,440
27
–
11,678
2,306
3,156
(2,980)
1,612
4,094
(1,538)
(1)
1
(1,538)
2
(1,395)
-
(252)
(1,645)
911
2,263
3,174
1,486
(2)
1,353
939
29
1
–
(213)
(3,071)
3,029
-
(255)
(1,621)
(2)
-
(1,623)
2
(939)
1,516
-
579
(1,299)
3,562
2,263
For the purposes of the statement of cash fl ows, cash and cash equivalents comprise cash at bank and in hand. This is
consistent with the presentation in the Statement of Financial Position.
The notes on pages 30 to 53 are an integral part of these consolidated fi nancial statements.
250074 OnTheMarket AR 24-29.indd 29
250074 OnTheMarket AR 24-29.indd 29
14/06/2018 11:36
14/06/2018 11:36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
29
Notes to the Consolidated Financial Statements:
year ended 31 January 2018
1. General information
The principal activity of the Company is that of a holding company. The principal activity for the Group continued to be that
of providing online property portal services to businesses in the estate and lettings agency industry under the trading name
of OnTheMarket.com.
The Company is a public company limited by shares and it is incorporated and domiciled in the UK. The address of its
registered offi ce is PO Box 450, 155-157 High Street, Aldershot, GU11 9FZ.
On 27 July 2017, the Company was incorporated under the name On The Market (Europe) Limited. On 2 August 2017, the
Company changed its name to On The Market Limited. In December 2017, the Company re-registered as a public limited
company under the name of OnTheMarket plc.
2. Summary of signifi cant accounting policies
The principal accounting policies applied in the preparation of these consolidated fi nancial statements are set out below.
They have, unless otherwise stated, been applied consistently to all periods presented.
2.1 Basis of preparation
These consolidated fi nancial statements have been prepared on a going concern basis and in accordance with International
Financial Reporting Standards (“IFRS”) and IFRS Interpretation Committee interpretations (“IFRS IC”) as adopted by the
European Union and with the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated fi nancial statements comprise an income statement, a statement of fi nancial position, a statement
of changes in equity, a statement of cash fl ows and notes. Income and expenses, excluding the components of other
comprehensive income, are recognised in the statement of profi t or loss. Other comprehensive income is recognised in the
statement of comprehensive income and comprises items of income and expenses (including reclassifi cation adjustments)
that are not recognised in the statement of profi t or loss, as required or permitted by IFRS. Reclassifi cation adjustments
are amounts reclassifi ed to profi t or loss in the current period that were recognised in other comprehensive income in the
current or previous periods. Transactions with the owners of the Group in their capacity as owners are recognised in the
statement of changes in equity.
The Group presents the statement of profi t or loss using the classifi cation by function of expenses. The Group believes this
method provides more useful information to the users of its fi nancial statements as it better refl ects the way operations are
run from a business point of view. The statement of fi nancial position format is based on a current /non-current distinction.
All of the consolidated comparative fi gures relate to the subsidiary only, because the holding company was not formed until
27 July 2017. This is because the fi nancial statements have been prepared under the principles of merger accounting.
The share capital shown in the comparative consolidated statement of fi nancial position represents the share capital of the
Company, even though the Company was not yet formed at 31 January 2017, because merger accounting assumes that
the Group entities have been combined throughout the current and comparative periods.
Measurement bases
The consolidated fi nancial statements have been prepared under the historical cost convention. Historical cost is generally
based on the fair value of the consideration given in exchange for assets.
The preparation of the consolidated fi nancial statements in compliance with adopted IFRS requires the use of certain
critical accounting estimates and management judgements in applying the accounting policies. The signifi cant estimates
and judgements that have been made and their effect is disclosed in note 3.
30
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 30
250074 OnTheMarket AR 30-end.indd 30
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
2.2 Basis of consolidation
The consolidated fi nancial statements incorporate those of OnTheMarket plc and all of its subsidiaries (i.e. entities that the
Group controls through its power to govern the fi nancial and operating policies so as to obtain economic benefi ts). These
are adjusted, where appropriate, to conform to Group accounting policies.
The acquisition of Agents’ Mutual Limited and On The Market (Europe) Limited (formerly On The Market Limited) (the
“subsidiary undertakings”) occurred as a group reconstruction on 13 September 2017. As this business combination is
a combination of entities under common control, it therefore falls outside of the scope of IFRS 3. In this context, the
Directors have elected to account for the acquisition using the approach to merger accounting set out in UK GAAP, FRS
102 Section 19.
The consolidated fi nancial statements merge the fi nancial statements of the subsidiary undertakings as if they had been
combined throughout the current and comparative accounting period. Assets and liabilities have not been fair valued on
acquisition and the difference between the nominal value of the new shares issued by the Company for the acquisition
of Agents’ Mutual Limited has been refl ected in the merger reserve in the consolidated fi nancial statements. Where
necessary, adjustments have been made to the accounting policies of Agents’ Mutual Limited in order to achieve uniformity
of accounting policies in the combining entities.
All intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated
on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
2.3 Reduced disclosures
The fi gures presented in relation to the Company’s solus fi nancial statements have been prepared in accordance with
FRS 101 Reduced Disclosure Framework (“FRS 101”).
In accordance with FRS 101 the following exemptions from the requirements of IFRS have been applied in the preparation
of the Company fi nancial statements and, where relevant, equivalent disclosures have been made in the consolidated
fi nancial statements of the Company:
presentation of a Company Cash Flow Statement and related notes;
disclosure of the objectives, policies and processes for managing capital;
inclusion of an explicit and unreserved statement of compliance with IFRS;
disclosure of Company key management compensation;
disclosure of the categories of fi nancial instrument and nature and extent of risks arising on these fi nancial instruments;
related party disclosures in respect of two or more wholly owned members of the Group; and
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the
reporting date.
The fi nancial statements of the Company are consolidated within these fi nancial statements which will be publicly available
from Companies House, Crown Way, Cardiff, CF14 3OZ following their approval by shareholders.
250074 OnTheMarket AR 30-end.indd 31
250074 OnTheMarket AR 30-end.indd 31
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
31
Notes to the Consolidated Financial Statements: continued
2.4 Company statement of comprehensive income
As permitted by s408 of the Companies Act 2006, the Company has not presented its own statement of comprehensive
income. The Company’s profi t and total comprehensive income for the period from incorporation on 27 July 2017 to
31 January 2018 was £91k.
2.5 Going concern
The Group made a loss after tax for the year of £12,092k (2017: £4,019k), and as at 31 January 2018 the Group had a net
cash balance of £3,174k (2017: £2,263k).
On 9 February 2018, the Company’s entire issued share capital was admitted to trading on AIM at the London Stock
Exchange. By way of a placing associated with Admission to AIM, the Company raised £30m (gross) through the issue of
18,181,818 ordinary shares of £0.002 at £1.65 each.
In the light of this, the Directors consider the going concern basis to be appropriate to the preparation on these fi nancial
statements.
2.6 Adoption of new and revised standards and interpretations
Application of new and amended standards
For the preparation of these consolidated fi nancial statements, the following new or amended standards are mandatory for
the fi rst time for the fi nancial year beginning 1 January 2017.
Amendments to IAS 7, “Disclosure Initiative” (issued in January 2016) - The amendments require entities to provide
information that enables users of fi nancial statements to evaluate changes in liabilities arising from the entity’s fi nancing
activities. The effect of the amendments on the Group’s consolidated fi nancial statements has been the inclusion of
additional disclosures in note 18.
New standards, amendments and interpretations not yet adopted
IFRS 9, “Financial instruments”, addresses the classifi cation, measurement and recognition of fi nancial assets and
fi nancial liabilities. It replaces the guidance in IAS 39 that relates to the classifi cation and measurement of fi nancial
instruments. IFRS 9 is effective for accounting periods beginning on or after 1 January 2018. An expected credit
losses model replaces the incurred loss impairment model used in IAS 39. The Directors anticipate that this will not
impact on the bad debt provision in the year to 31 January 2018, but it is not yet possible to quantify the fi nancial
impact for future periods. The Group is working towards the implementation of IFRS 9 for the year ended 31 January
2019. It anticipates that the classifi cation and measurement basis for its fi nancial assets and liabilities will be largely
unchanged by adoption of IFRS 9.
IFRS 15, “Revenue from contracts with customers”, deals with revenue recognition and establishes principles for
reporting useful information to users of fi nancial statements about the nature, amount, timing and uncertainty of
revenue and cash fl ows arising from an entity’s contracts with customers. Revenue is recognised when a customer
obtains control of a good or service and thus has the ability to direct the use and obtain the benefi ts from the good
or service. The standard is effective for annual periods beginning on or after 1 January 2018. The Group is working
towards the implementation of IFRS 15 for the year ended 31 January 2019. As this work is ongoing the Directors
are not able to quantify yet the impact of any changes to revenue recognition that may be necessary. The profi le of
cash receipts is not affected by this standard.
32
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 32
250074 OnTheMarket AR 30-end.indd 32
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
IFRS 16, “Leases”, addresses the defi nition of a lease, recognition and measurement of leases, and it establishes
principles for reporting useful information to users of fi nancial statements about the leasing activities of both lessees
and lessors. A key change arising from IFRS 16 is that almost all operating leases will be accounted for on balance
sheet for lessees. The standard replaces IAS 17, “Leases”, and related interpretations. The standard is effective
for annual periods beginning on or after 1 January 2019, and earlier application is permitted, subject to the entity
adopting IFRS 15, ‘Revenue from contracts with customers’, at the same time. The Directors are in the process of
reviewing contracts to identify any additional lease arrangements that would need to be recognised under IFRS 16,
however, they have not yet calculated the fi nancial impact of the standard.
2.7 Functional and presentation currency
The consolidated fi nancial statements are presented in ‘Pounds Sterling’, rounded to the nearest thousand (£’000), which
is also the Group’s functional currency.
2.8 Property, plant and equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Depreciation is calculated using an appropriate method to allocate their cost amounts to their residual
values over their estimated useful lives, as follows:
Fixtures, fi ttings and equipment
Straight line 4 years
2.9
Intangible assets
In accordance with IAS 38, “Intangible Assets”, expenditure incurred on research and development is distinguished as
relating to a research phase or to a development phase.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally generated intangible asset arising from the development and enhancement of the online platform,
OnTheMarket.com, and associated applications is recognised when the development has been deemed technically
feasible, that the Group has the intention to complete the development, that probable future economic benefi ts will occur,
that the Group has the required funds to complete the development and has the ability to measure the expenditure on the
development reliably.
The amount initially recognised for internally generated intangible assets is the sum of the directly attributable expenditure
incurred from the date when the intangible asset fi rst meets the recognition criteria defi ned above.
Capitalisation ceases when the asset is brought into use. Where no internally generated asset can be recognised,
development expenditure is recognised in the income statement in the period in which it is incurred.
Subsequent to initial recognition, internally generated assets are reported at cost less accumulated amortisation and
impairment losses. Amortisation is charged on a straight-line basis over 4 years from when the asset is fi rst brought into
use. The current intangible assets will be fully amortised in the next 2-4 years.
2.10 Impairment of property, plant and equipment and intangible assets
At each year end date, the carrying amounts of assets are reviewed to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash fl ows that are
independent from other assets, the recoverable amount of the cash-generating unit to which the asset belongs is estimated.
250074 OnTheMarket AR 30-end.indd 33
250074 OnTheMarket AR 30-end.indd 33
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
33
Notes to the Consolidated Financial Statements: continued
2.10 Impairment of property, plant and equipment and intangible assets (continued)
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as
an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease.
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 the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in prior years. A reversal of an impairment loss is recognised immediately as profi t, unless the relevant asset is carried at a
revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
2.11 Investments in subsidiaries
The investment in the Company’s subsidiary undertakings is stated at cost less any impairment. Where management
identify uncertainty over these investments, the investment is impaired to an estimate of its net realisable value.
2.12 Financial instruments
Recognition, initial measurement and de-recognition
The Group recognises a fi nancial asset or a fi nancial liability in the consolidated statement of fi nancial position when, and
only when, it becomes a party to the contractual provisions of the instrument. On initial recognition, the Group recognises
all fi nancial assets and fi nancial liabilities at fair value. The fair value of a fi nancial asset / liability on initial recognition
is normally represented by the transaction price. The transaction price for fi nancial assets / liabilities other than those
classifi ed at fair value through profi t or loss includes the transaction costs that are directly attributable to the acquisition
/ issue of the fi nancial instrument. Transaction costs incurred on acquisition of a fi nancial asset and issue of a fi nancial
liability classifi ed at fair value through profi t or loss are expensed immediately.
Classifi cation and subsequent measurement of fi nancial assets
For the purpose of subsequent measurement fi nancial assets, other than those designated and effective as hedging
instruments, are classifi ed into the following categories upon initial recognition:
loans and receivables; and
fi nancial assets at fair value through profi t or loss.
For the years that ended on 31 January 2018 and 2017, the Group did not classify any fi nancial assets at fair value through
profi t or loss.
Loans and receivables
Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an
active market. Assets that the Group intends to sell immediately or in the near term cannot be classifi ed in this category.
These assets are carried at amortised cost using the effective interest method (except for short-term receivables where
interest is immaterial) minus any reduction for impairment or uncollectability.
Typically trade and other receivables, bank balances and cash are classifi ed in this category.
34
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 34
250074 OnTheMarket AR 30-end.indd 34
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid
investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash
and which are subject to an insignifi cant risk of changes in value.
Classifi cation and subsequent measurement of fi nancial liabilities
Subsequent measurement of fi nancial liabilities depends on how they have been categorised on initial recognition. The
Group classifi es fi nancial liabilities under the following category:
Other fi nancial liabilities
The Group’s liabilities fall into this category. These liabilities are carried at amortised cost using the effective interest method.
Typically, trade and other payables and borrowings are classifi ed in this category. Items classifi ed within trade and other
payables are not usually remeasured, as the obligation is known with a high degree of certainty and settlement is short-term.
Derecognition of fi nancial liabilities
A fi nancial liability is removed from the Group’s statement of fi nancial position only when the liability is discharged, cancelled
or expired (i.e. extinguished). The difference between the carrying amount of the fi nancial liability derecognised and the
consideration paid is recognised in profi t or loss.
2.13 Impairment of fi nancial assets
Financial assets not carried at fair value through profi t or loss are assessed at each reporting date to determine whether
there is evidence that they are impaired. A fi nancial asset is impaired if there is evidence that a loss event has occurred
after the initial recognition of the asset and that the loss event had a negative effect on the estimated future cash fl ows of
that asset that can be estimated reliably.
An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the difference between
its carrying amount and the present value of the estimated future cash fl ows discounted at the asset’s original effective
interest rate.
Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event
causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profi t or loss.
The carrying amounts of the Group’s non-fi nancial assets, other than inventories and deferred tax assets are reviewed
at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated.
2.14 Share capital
Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of new ordinary shares are
shown in equity as a deduction, net of tax, from the proceeds.
2.15 Income taxes
Tax currently payable is calculated using the tax rates in force or substantively enacted at the reporting date. Taxable profi t
differs from accounting profi t either because some income and expenses are never taxable or deductible, or because the
time pattern that they are taxable or deductible differs between tax law and their accounting treatment.
250074 OnTheMarket AR 30-end.indd 35
250074 OnTheMarket AR 30-end.indd 35
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
35
Notes to the Consolidated Financial Statements: continued
Using the statement of fi nancial position liability method, deferred tax is recognised in respect of all temporary differences
between the carrying value of assets and liabilities in the consolidated statement of fi nancial position and the corresponding
tax base, with the exception of temporary differences arising from goodwill or from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that affects neither the taxable profi t nor the accounting profi t.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date.
Deferred tax assets are recognised only to the extent that the Group considers that it is probable (ie more likely than not)
that there will be suffi cient taxable profi ts available for the asset to be utilised within the same tax jurisdiction.
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to offset current tax assets against
current tax liabilities, they relate to the same tax authority and the Group’s intention is to settle the amounts on a net basis.
The tax expense for the period comprises current and deferred tax. Tax is recognised in profi t or loss, except if it arises
from transactions or events that are recognised in other comprehensive income or directly in equity. In this case, the tax is
recognised in other comprehensive income or directly in equity, respectively. Where tax arises from the initial accounting
for a business combination, it is included in the accounting for the business combination.
Since the Group is able to control the timing of the reversal of the temporary difference associated with interests in
subsidiaries, associates and joint arrangements, a deferred tax liability is recognised only when it is probable that the
temporary difference will reverse in the foreseeable future mainly because of a dividend distribution.
2.16 Employee benefi ts
Defi ned contribution plans
The Group pays fi xed percentage contributions into independent entities in relation to plans and insurances for individual
employees. The Group has no legal or constructive obligations to pay contributions in addition to its fi xed percentage
contributions, which are recognised as an expense in the period that related employee services are received.
Short-term employee benefi ts
Short-term employee benefi ts, including holiday entitlement, are current liabilities included in pension and other employee
obligations, measured at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.
2.17 Share-based payments
The Group operates equity-settled share-based remuneration plans for its employees. All goods and services received in
exchange for the grant of any share-based payment are measured at their fair values.
Where employees are rewarded using share-based payments, the fair value of employees’ services is determined indirectly
by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes
the impact of non-market vesting conditions (for example profi tability and sales growth targets and performance conditions).
All share-based remuneration is ultimately recognised as an expense in profi t or loss with a corresponding increase to
equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the
best available estimate of the number of share options expected to vest.
36
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 36
250074 OnTheMarket AR 30-end.indd 36
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
Non-market vesting conditions are included in assumptions about the number of options that are expected to become
exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to
vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is
recognised in the current period.
The number of vested options ultimately exercised by holders does not impact the expense recorded in any period. Upon
exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share
capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
The social security contributions payable in connection with the grant of the share options are considered an integral part
of the grant itself and the charge will be treated as a cash-settled transaction.
2.18 Provisions
Where, at the reporting date, the Group has a present obligation (legal or constructive) as a result of a past event and it is
probable that the Group will settle the obligation, a provision is made in the statement of fi nancial position. Provisions are
made using best estimates of the amount required to settle the obligation. Changes in estimates are refl ected in profi t or
loss in the period they arise. Provisions for social security on share options granted are measured using the fair value of
the expected number of share options to be exercised at the applicable tax rate in use at the measurement date.
2.19 Revenue
Revenue represents income for the sales of services, net of discounts and rebates, to external customers at invoice
value less value added tax. Revenue represents listing fees in respect of the property portal OnTheMarket.com. Revenue
is recognised evenly over the life of the contract. Amounts are billed monthly in advance and released to the income
statement as the services are provided and the risks and rewards of listing have been transferred to the customer.
2.20 Exceptional items
Exceptional items are disclosed separately in the fi nancial statements where it is necessary to do so to provide further
understanding of the fi nancial performance of the Group. They are items that are material, either because of their size or
their nature, or that are non-recurring, and are presented within the line items to which they best relate.
2.21 Leased assets
Operating leases – Group as lessee
All leases are operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line
basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.
3. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated fi nancial statements requires management to make judgements, estimates and
assumptions concerning the future which impact the application of accounting policies and reported amounts of assets,
liabilities, income and expenses. The accounting estimates resulting from these judgements and assumptions seldom
equal the actual results but are based on historical experiences and future expectations.
Bad debt provisions
Provisions are made relating to all overdue receivable balances save for those which from experience are expected to be
recovered in the short term. The overdue receivables that the Company provides for arise primarily from agent customers
under contract but in arrears.
250074 OnTheMarket AR 30-end.indd 37
250074 OnTheMarket AR 30-end.indd 37
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
37
Notes to the Consolidated Financial Statements: continued
Share based payment charge
In relation to equity-settled remuneration schemes, employee services received, and the corresponding increase in
liabilities, are measured by reference to the fair value of the liability at the date of grant. Where there are vesting conditions
that require ongoing service as an employee the charge is apportioned over the vesting period. The fair value of share
options is estimated by using appropriate valuation models on the date of grant, which are based on certain assumptions.
For options awarded with an exercise price of £nil, the fair value is deemed to be the share price at the date of grant. In
the absence of a publicly quoted market price at the date of grant, this value is based upon the Directors’ judgement of the
appropriate share price, taking into account relevant factors both at, and arising after, the grant date (note 22).
4. Revenue and segmental information
The Group has determined that the Chief Executive Offi cer (“CEO”) is the chief operating decision maker. Monthly
management numbers are reported and issued to the CEO, which are used to assess the performance of the business.
The Group has determined it has only one reportable segment, namely the provision of access to its online portal
OnTheMarket.com (listing fees).
All revenue is generated in the UK for this service.
5. Expenses by nature
Expenses are comprised of:
Depreciation
Amortisation
Staff costs (note 8)
Operating lease expense – property
Operating lease expense – other
Bad debt expense
Other administrative expenses
6. Exceptional costs
Professional fees
Compensation
2018
£’000
27
1,440
3,416
397
113
2,492
4,274
2017
£’000
29
939
3,264
392
118
2,219
8,546
12,159
15,507
2018
£’000
2,679
(1,243)
1,436
2017
£’000
3,506
–
3,506
Professional fees incurred during the current and prior years were in relation to the Group’s restructuring and preparation
for admission to AIM and the capital raise by way of an associated placing, as well as to ongoing litigation. Compensation
received during the current year was in respect of ongoing litigation. These costs relate to one off events that are not
expected to be recurring, they have therefore been classifi ed as exceptional.
38
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 38
250074 OnTheMarket AR 30-end.indd 38
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
7. Operating loss
Operating loss is stated after charging:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease expense – property
Operating lease expense – other
Share based payment expense (note 22)
Foreign exchange (gains)/losses
Audit fees payable to the Company’s auditor:
– audit of Group fi nancial statements
Other fees payables to the Company’s auditor:
– taxation compliance services
– all other services not covered above
2018
£’000
2017
£’000
27
1,440
397
113
11,678
(2)
55
58
68
29
939
392
118
–
11
49
31
25
In addition to the above fees paid to the Company’s auditor there is a further £46k for other services (2017: £nil) which is
disclosed within other reserves.
8. Employees and Directors
Group
Staff costs (including Directors) comprise:
Wages and salaries
Social security costs
Pension
2018
£’000
3,999
497
11
4,507
2017
£’000
3,889
464
–
4,353
The amounts above include £1,092k (2017: £1,089k) of staff costs that have been capitalised to intangible assets.
Company
Staff costs (including Directors) comprise:
Wages and salaries
Group
The average monthly number of persons employed by the Group during the year was:
Non-Executive Directors
Marketing, sales and administration
IT
The only employees of the Company during the period were the Directors.
2018
£’000
2017
£’000
46
–
2018
Number
2017
Number
1
40
20
61
–
42
22
64
250074 OnTheMarket AR 30-end.indd 39
250074 OnTheMarket AR 30-end.indd 39
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
39
Notes to the Consolidated Financial Statements: continued
Directors’ remuneration
Group
Aggregate emoluments
Pension contributions
Share based payments
Highest paid Director
Group and Company
Aggregate emoluments
2018
£’000
616
1
7,724
8,341
2018
£’000
204
2017
£’000
187
–
–
187
2017
£’000
187
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the Group. In the prior year, with the board of Agents’ Mutual comprising representatives from certain
members as non-executive directors save for Ian Springett, who was appointed to the board as an executive director
during the year, the key management was deemed to include certain senior managers also. Following the appointment
of the Executive and Non-Executive Directors to the Board of OTM, the Group considers the Directors to be the only key
management personnel.
9. Finance income
Finance income:
Other interest receivable
10. Finance expense
Interest arising on:
Interest payable on loan notes
Other interest payable
2018
£’000
2017
£’000
2
2
2018
£’000
1,230
3
1,233
2017
£’000
1,349
4
1,353
40
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 40
250074 OnTheMarket AR 30-end.indd 40
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
11. Income tax
Current tax:
UK corporation tax on income for year
Total current tax
Deferred tax:
Origination and reversal of timing difference
Total deferred tax
Income tax charge
Factors affecting tax charge for the year
2018
£’000
2017
£’000
22
22
–
–
22
–
–
1,486
1,486
1,486
The tax assessed for the year is different to the effective rate of corporation tax as explained below:
Loss before taxation
2018
£’000
2017
£’000
(12,070)
(2,533)
Loss before taxation multiplied by the effective rate of corporation tax 19.18% (2017: 20%)
(2,315)
(507)
Effects of:
Expenses not deductible for tax purposes
Share based payment not deductible for tax purposes
Deferred tax not recognised
Capital allowances in excess of depreciation
Write down of deferred tax asset
Tax expense
539
2,549
(1,032)
281
–
22
5
–
477
25
1,486
1,486
The Finance Act 2016 was enacted during the period. The Finance Act 2016 includes provisions to reduce the main rate
of corporation tax to 17% from 1 April 2020. Deferred tax is measured at 17% (2017: 17%) as this is the materially correct
rate at which deferred tax assets and liabilities are expected to unwind. The subsidiary, Agents’ Mutual, has trading losses
available for carry forward of £8,798k (2017: £11,031k) for which no deferred tax asset has been recognised.
The Group has been developing new strategic plans for the long term development of the business. These plans envisage
a period of strong growth in the future, underpinned by signifi cant initial investment. As a result of the change to the Group’s
strategic plans, circumstances with respect to recoverability of the deferred tax asset in relation to losses carried forwards
in the foreseeable future remain uncertain. Consequently no deferred tax asset has been recognised. The Group has also
not recognised a deferred tax asset arising on the share based payment charge of £2,426k (2017: £nil).
The Group has not recognised a deferred tax liability arising on non-current asset timing differences of £560k (2017:
£805k) due to the availability of tax losses to extinguish this liability.
250074 OnTheMarket AR 30-end.indd 41
250074 OnTheMarket AR 30-end.indd 41
14/06/2018 12:00
14/06/2018 12:00
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
41
Notes to the Consolidated Financial Statements: continued
12. Earnings per share
Numerators: Earnings attributable to equity
Loss for the year from continuing operations attributable to owners of the Company
Total basic earnings and diluted earnings
Denominators: Weighted average number of equity shares
Basic and diluted
As the Group made a loss for the year there is no dilutive effect.
13. Property, plant and equipment
Group
Cost:
At 1 February 2016
Additions
At 31 January 2017
Depreciation:
At 1 February 2016
Charge for the year
At 31 January 2017
Net book value:
At 31 January 2017
Cost:
At 1 February 2017
Additions
Disposals
At 31 January 2018
Depreciation:
At 1 February 2017
Charge for the year
At 31 January 2018
Net book value:
At 31 January 2018
2018
£’000
(12,092)
(12,092)
2017
£’000
(4,019)
(4,019)
No.
No.
35,530,263
35,530,263
Fixtures,
fi ttings and
equipment
£’000
114
2
116
42
29
71
45
116
1
(1)
116
71
27
98
18
Depreciation is included within administrative expenses in the income statement.
42
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 42
250074 OnTheMarket AR 30-end.indd 42
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
14. Intangible assets
Group
Cost:
At 1 February 2016
Additions – internally developed
At 31 January 2017
Amortisation:
At 1 February 2016
Charge for the year
At 31 January 2017
Net book value:
At 31 January 2017
Cost:
At 1 February 2017
Additions – internally developed
At 31 January 2018
Amortisation:
At 1 February 2017
Charge for the year
At 31 January 2018
Net book value:
At 31 January 2018
Development
costs
£’000
3,441
1,621
5,062
567
939
1,506
3,556
5,062
1,538
6,600
1,506
1,440
2,946
3,654
Amortisation is included within administrative expenses in the income statement.
The development costs relate to those costs incurred in relation to the development of the Group’s online property portal,
OnTheMarket.com. The development costs capitalised above are amortised over a period of 4 years which represents the
period over which the Directors expect the Group to consume the asset’s future economic benefi ts. The development costs
are amortised from the point at which the asset is ready for use within the business.
15. Investments in subsidiaries
Company
At 27 July 2017
Additions
At 31 January 2018
Subsidiary
undertakings
£’000
–
–
–
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
43
250074 OnTheMarket AR 30-end.indd 43
250074 OnTheMarket AR 30-end.indd 43
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
The Company has the following investments in subsidiary undertakings:
Agents’ Mutual Limited
On The Market (Europe) Limited
Class of
shares held1
Principal
activity
Ownership
2018
Member Online property
100%
Ordinary
portal services
Dormant
100%
1 Agents’ Mutual Limited is a company limited by guarantee and has no shares. The Company owns the only member interest in Agents’ Mutual Limited.
All the above subsidiary undertakings share the same registered offi ce as the Company.
On The Market (Europe) Limited is a subsidiary of Agents’ Mutual Limited.
On 13 September 2017, the Company acquired 100% of Agents’ Mutual Limited by becoming the sole member of this
company limited by guarantee. Shares in OnTheMarket plc were issued in consideration for this acquisition.
16. Trade and other receivables
Trade receivables
Amounts due from Group undertakings
Other receivables
Prepayments and accrued income
Group
2018
£’000
Company
2018
£’000
433
–
59
61
553
–
23,366
–
23
23,389
Group
2017
£’000
408
–
3,257
44
3,709
Company
2017
£’000
–
–
–
–
–
The Group trade receivables are stated after deductions of provisions for bad and doubtful debts amounting to £1,616k
(2017: £1,500k).
The aged analysis of trade receivables is shown in note 19.
17. Trade and other payables
Current liabilities
Trade payables
Social security and other taxes
Other payables
Accruals and deferred income
Group
2018
£’000
Company
2018
£’000
Group
2017
£’000
Company
2017
£’000
317
637
–
2,003
2,957
1
5
–
76
82
972
292
–
4,673
5,937
–
–
–
–
–
44
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 44
250074 OnTheMarket AR 30-end.indd 44
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
18. Borrowings
Current borrowings
Accrued loan interest
Non-current borrowings
Loan notes
Group
2018
£’000
Company
2018
£’000
Group
2017
£’000
Company
2017
£’000
1,217
512
1,379
11,256
12,473
11,256
11,768
11,256
12,635
–
–
–
The fair value of the Group and Company’s borrowings is the same as their book value stated above. The loan is initially
accounted for at fair value, but is thereafter shown at amortised cost.
The Group and Company re-issued a loan note instrument during the year of £10,000k of which £7,947k (2017: £7,947k)
was drawn at the year end and which bears interest at 15% with a 30 June 2020 maturity date. The re-issue took place as
part of a group reconstruction and extinguished a loan note in the subsidiary, Agents’ Mutual Limited, in exchange for a loan
note with the same conditions in OnTheMarket plc. Interest does not accrue on loan notes in default.
The Group and Company re-issued a loan note instrument during the year of £10,000k of which £2,511k (2017: £2,511k)
was drawn at the year end and which bears interest at 10% with a 30 June 2020 maturity date. The re-issue took place as
part of a group reconstruction and extinguished a loan note in the subsidiary, Agents’ Mutual Limited, in exchange for a loan
note with the same conditions in OnTheMarket plc. Interest does not accrue on loan notes in default.
The Group and Company re-issued a loan note instrument during the year of £10,000k of which £798k (2017: £798k) was
drawn at the year end and which bears interest at 7% with a 30 June 2020 maturity date. The re-issue took place as part of
a group reconstruction and extinguished a loan note in the subsidiary, Agents’ Mutual Limited, in exchange for a loan note
with the same conditions in OnTheMarket plc. Interest does not accrue on loan notes in default.
There are provisions in the loan note agreements that allow for early repayment in certain circumstances and provisions
whereby the loan notes must be converted to shares at par in the event of the Company listing. The loan notes were
extinguished after the year end by way of such a share issue (see note 28).
The Directors have assessed that all loans are held at fair value. These interest rates are fi xed and the Company and
Group are therefore not exposed to changes in interest rates in respect of these liabilities.
Reconciliation of liabilities arising from fi nancing activities:
Accrued loan interest
Loan notes
31 January
2017
£’000
1,379
11,256
12,635
Cash
fl ows
£’000
(1,392)
–
(1,392)
Non-cash
fl ows
£’000
31 January
2018
£’000
1,230
–
1,230
1,217
11,256
12,473
250074 OnTheMarket AR 30-end.indd 45
250074 OnTheMarket AR 30-end.indd 45
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
45
Notes to the Consolidated Financial Statements: continued
19. Financial instruments and fi nancial risks
Financial risks
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and,
whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that
ensure the effective implementation of the objectives and policies to the CEO. The Board receives monthly reports from
the fi nance function through which it reviews the effectiveness of the processes put in place and the appropriateness of
the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and fl exibility. Further details regarding these policies are set out below:
The Group is exposed through its operations to the following fi nancial risks:
credit risk;
liquidity risk; and
interest rate risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of fi nancial instruments. This
note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure
them from previous periods unless otherwise stated in this note.
Credit risk
Credit risk is the risk of fi nancial loss to the Group if a counterparty to a fi nancial instrument fails to meet its contractual
obligations.
The Group is exposed to credit risk primarily on its trade receivables, which are spread over a range of customers. There
are no specifi c concentrations of credit risk. The maximum credit risk exposure relating to fi nancial assets is represented
by their carrying value at the statement of fi nancial position date.
The Group assesses the risk associated with its customers based on its own experience with the customer before entering
into binding contracts and, where considered necessary, the use of independent credit rating agency reports. The risk is
mitigated further by requesting advance payment from customers. Each customer account is reviewed on an on-going
basis based on available information and payment history.
The credit risk on liquid funds is limited as the funds are held at banks with high credit ratings assigned by international
credit rating agencies.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the fi nance charges and principal repayments on
its debt instruments. It is the risk that the Group will encounter diffi culty in meeting its fi nancial obligations as they fall due.
In order to maintain liquidity to ensure that suffi cient funds are available for ongoing operations and future developments,
the Group monitors forecast cash infl ows and outfl ows on a monthly basis.
46
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 46
250074 OnTheMarket AR 30-end.indd 46
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
Fair value interest rate risk
The Group’s exposure to changes in interest rate risk relates primarily to interest bearing fi nancial liabilities. Interest rate
risk is managed by the Group. All borrowing is approved by the Board to ensure that it is conducted at the most competitive
rates available to it at fi xed rates where possible to reduce unknown exposure.
The Directors have not prepared sensitivity analysis in relation to interest rates as all interest rates are currently defi ned and
not subject to change. Interest rates are fi xed and movements in market interest rates may make this policy advantageous
or disadvantageous. After the year end, the loan notes were extinguished by a share issue (note 28).
The fi nancial assets and liabilities of the Group are as follows:
Loans and receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Total fi nancial assets
Other liabilities held at amortised cost
Current liabilities
Trade and other payables
Borrowings – accrued interest
Non-current liabilities
Borrowings
Total fi nancial liabilities
Capital risk management
2018
£’000
492
3,174
3,666
2018
£’000
1,278
1,217
2017
£’000
3,665
2,263
5,928
2017
£’000
4,504
1,379
11,256
13,751
11,256
17,139
Management considers capital to be the carrying amount of equity. The Group manages its capital to ensure its obligations
are adequately provided for, while maximising the return to shareholders through the effective management of its resources
and to ensure that loan notes are repaid when due.
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern. The Group meets
its objective by aiming to achieve growth which will generate regular and increasing returns to its shareholders.
Financial assets
Details of fi nancial assets are included in note 16, but fi nancial assets exclude prepayments and statutory taxes receivable.
Cash at bank, included in cash and cash equivalents, is with institutions with credit ratings of A or better.
250074 OnTheMarket AR 30-end.indd 47
250074 OnTheMarket AR 30-end.indd 47
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
47
Notes to the Consolidated Financial Statements: continued
The following table shows an aged analysis of trade receivables for the Group.
0 – 30 days
31 – 60 days
61 – 90 days
91 – 120 days
Over 120 days
2018
£’000
146
49
45
49
144
433
2018
%
34%
11%
1 1%
11%
33%
2017
£’000
150
48
48
44
118
408
2017
%
36%
12%
12%
11%
29%
The Group reviews trade receivables balances on a routine basis and makes provision for any amounts where it believes
the receivable is likely to be uncollectable. In 2018, bad debt expense was £2,492k (2017: £2,219k) and the year-end bad
debt provision was £1,616k (2017: £1,500k).
The following table shows a reconciliation of the bad debt provision for the Group:
Bad debts provision at 1 February
Debts recovered so no longer requiring provision
Decrease in existing provision due to write off
Additional provision recognised for new bad debts
Bad debts provision at 31 January
2018
£’000
1,500
(477)
(2,376)
2,969
1,616
2017
£’000
868
(444)
(1,587)
2,663
1,500
The total value of debts past due but not impaired is £433k (2017: £408k). All overdue debt has been provided for subject
to an estimated recovery amount, based on historical trends and knowledge of the customer.
Financial liabilities
The following is an analysis of the maturities of the fi nancial liabilities in the Statement of Financial Position, excluding
amounts owed in relation to statutory taxes:
2018
Trade and other payables
Accrued loan interest
Borrowings
Carrying
amount
£’000
6 months
or less
£’000
6-12
months
£’000
1 year
or more
£’000
1,278
1,217
11,256
13,751
1,278
1,217
–
2,495
–
–
–
–
–
–
11,256
11,256
48
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 48
250074 OnTheMarket AR 30-end.indd 48
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
2017
Trade and other payables
Accrued loan interest
Borrowings
Carrying
amount
£’000
6 months
or less
£’000
6-12
months
£’000
1 year
or more
£’000
4,504
1,379
11,256
17,139
4,504
1,379
–
5,883
–
–
–
–
–
–
11,256
11,256
All fi nancial liabilities are denominated in Sterling.
The borrowings consist of loan notes which are long term in nature, however these were extinguished after the year end
by way of a share issue (note 28).
Fair values of fi nancial assets and liabilities
The fair value of the Group’s fi nancial assets and liabilities are not materially different from their book values and therefore
the Directors consider no hierarchical analysis is necessary.
20. Deferred income tax – Group and Company
Asset
At 1 February
Charge to income statement
At 31 January
21. Provisions
Social security on share options granted
At 1 February 2017
Grant of share options
At 31 January 2018
Disclosed as:
Current liability
Non-current liability
2018
£’000
–
–
–
2018
£’000
1,258
354
1,612
2017
£’000
1,486
(1,486)
–
£’000
–
1,612
1,612
2017
£’000
–
–
–
The provision for social security on share options granted relates to the social security charges that will be incurred by the
Group when the share options are exercised.
250074 OnTheMarket AR 30-end.indd 49
250074 OnTheMarket AR 30-end.indd 49
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
49
Notes to the Consolidated Financial Statements: continued
22. Share based payments
The Group operates management and employee equity settled share schemes under which nil cost options over its shares
were awarded to employees.
The Company generally considers the Black-Scholes method to value share options when issued. However, the options
issued during the year were issued at a nil strike price. As a result, the Black-Scholes model is not appropriate. Accordingly,
these options were fair valued by reference to the closing share price of the shares on the day of admission to AIM, which
took place after the year end (note 28). The fair value is charged to the profi t and loss account over the vesting period
related to ongoing employment. Where there is no such vesting period the charge is recognised in full on grant.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the
Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the
grant date fair value, is recognised over the relevant period as an increase to investment in subsidiary undertakings, with
a corresponding credit to equity, unless an agreement has been made for the subsidiary undertaking to reimburse the
Company for the fair value of options granted.
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 the period end after deducting the exercise price of the share option, adjusted
to account for any vesting period related to ongoing employment.
The Company has granted share options under its Management Incentive Plan and its employee share scheme. The
unexercised options at the end of the year are stated below:
Grant date of option
Granted 15 September 2017
Granted 19 September 2017
Granted 10 October 2017
Outstanding at 31 January
Option exercise
price per share
£
Expiry
2027
2027
2027
nil
nil
nil
2018
Number
7,950,842
526,043
78,178
8,555,063
2017
Number
–
–
–
–
The estimated fair values of these share options is £1.48 per share. The value of employee services provided of £11,678k
(2017: £nil) has been charged to the income statement.
Management Incentive Plan
Further details of the management incentive share option plan are as follows:
Granted in the period and outstanding at 31 January
Exercisable at 31 January
Weighted
average
2018 exercise price
£
Number
7,799,327
6,066,143
nil
nil
These share options expire 10 years after the date of grant. Share options granted under this scheme have a nil exercise
price. 1,733,184 options are exercisable as to 10% after the fi rst anniversary of Admission (as described in note 28), a
further 10% after the second anniversary and the remainder after the fi fth anniversary. The remaining 6,066,143 options
are exercisable immediately, however any shares arising from exercise are subject to a restriction on sale such that shares
deriving from up to 10% of the options are available to be sold after the fi rst anniversary of the Admission, a further 10%
after the second anniversary and the remainder after the fi fth anniversary. The fair value of all these options is charged to
the profi t and loss account in full this year.
50
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 50
250074 OnTheMarket AR 30-end.indd 50
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
Employee share scheme
Further details of the employee share option plan are as follows:
Granted in the period
Forfeited in the period
Outstanding at 31 January
Exercisable at 31 January
Weighted
average
2018 exercise price
£
Number
763,008
7,272
755,736
–
nil
nil
nil
–
These share options expire 10 years after the date of grant. Share options granted under this scheme have a nil exercise
price and vest 3 years after the date of grant. The fair value of these share options is charged to the profi t and loss account
over the vesting period. The share options are forfeit should the employee leave.
National Insurance Contributions
National insurance contributions are payable by the Group in respect of share based payment schemes. A provision has
been recognised at 13.8% for a total expense of £1,612k (2017: £nil) (note 21).
The following have been expensed to the consolidated income statement:
Share based payment charge
Employer’s social security on share options
23. Share capital
Share capital issued and fully paid
Ordinary shares of £0.002 each
Ordinary shares of £0.002 each
On incorporation, the Company issued 2 ordinary shares of £0.002 each at par.
2018
£’000
11,678
1,612
13,290
2017
£’000
–
–
–
2018
No.
2017
No.
35,530,263
35,530,263
2018
£’000
71
2017
£’000
71
In September 2017, the Company issued 35,530,261 ordinary shares of £0.002 each at par. This issue was in exchange
for the member interests in the subsidiary undertaking, Agents’ Mutual, as part of a group reconstruction.
Share option scheme
At the year end, there were a total of 8,555,063 (2017: nil) share options under the Company’s share option plans (note
22), which on exercise can be settled either by the issue of ordinary shares or by market purchases of existing shares.
250074 OnTheMarket AR 30-end.indd 51
250074 OnTheMarket AR 30-end.indd 51
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
51
Notes to the Consolidated Financial Statements: continued
24. Leases
Operating leases
At year end, the Group had the following future minimum lease payments under non-cancellable operating leases for each
of the following periods:
Land and buildings:
Not later than one year
Later than one year and not later than fi ve years
Other:
Not later than one year
Later than one year and not later than fi ve years
25. Retirement benefi t schemes
Defi ned contribution schemes
2018
£’000
2017
£’000
432
–
432
11
–
11
443
423
70
493
11
60
553
The Group operates defi ned contribution pension schemes. The assets of the schemes are held separately from those of
the Group in independently administered funds. The cost charged represents contributions payable by the Group to the
funds. At the balance sheet date contributions of £nil (2017: £nil) were outstanding.
Contributions payable by the Group for the year
26. Controlling parties
2018
£’000
11
2017
£’000
–
The Directors do not consider there to be a single immediate or ultimate controlling party.
27. Related party relationships and transactions
Some directors of Agents’ Mutual during the year were also directors or partners of estate agency fi rms who are shareholders
and also subscribe for services supplied by the Group. Listing fee income of £1,417k was received from such shareholders
in the year (2017: £1,452k). None of these shareholders received preferential rates in the year. At the year end, £5,194k
(2017: £5,128k) of the Group’s loan note instruments were held by such shareholders and these instruments had interest
due of £650k (2017: £789k).
In the ordinary course of business the Group has entered into transactions with Whiteleys Chartered Certifi ed Accountants,
a company controlled by a direct relation of Helen Whiteley, an Executive Director of the Group. Whiteleys Chartered
Certifi ed Accountants provides an outsourced fi nance function to the Group. During the year, the Group purchased services
amounting to £478k (2017: £401k) and at the year end the Group owed £56k (2017: £49k).
52
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
250074 OnTheMarket AR 30-end.indd 52
250074 OnTheMarket AR 30-end.indd 52
14/06/2018 11:37
14/06/2018 11:37
Notes to the Consolidated Financial Statements: continued
28. Post balance sheet events
On 9 February 2018, the Company’s entire issued share capital was admitted to trading on AIM at the London Stock
Exchange.
By way of a placing associated with admission to AIM, the Company raised £30m (gross) through the issue of 18,181,818
ordinary shares at £1.65 each.
In addition, effective on Admission, the Company issued 6,821,237 ordinary shares of £0.002 each at £1.65 per share to the
loan note holders on a £ for £ basis equivalent to their loan note holdings. The loan notes were extinguished by this issue.
Accrued loan interest was settled in cash from the placing proceeds immediately following Admission.
250074 OnTheMarket AR 30-end.indd 53
250074 OnTheMarket AR 30-end.indd 53
14/06/2018 11:37
14/06/2018 11:37
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
53
Company Information
Directors
C Beattie
I Springett
H Whiteley
C Bell
I Francis
(appointed 27 July 2017)
(appointed 27 July 2017)
(appointed 27 July 2017)
(appointed 24 October 2017)
(appointed 24 October 2017)
Company Secretary
R Almond
(appointed 27 December 2017)
Company number
10887621
Registered offi ce
Auditor
Nominated adviser
and joint broker
Joint broker
Solicitor
Registrars
PO Box 450
155-157 High Street
Aldershot
England
GU11 9FZ
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
Zeus Capital Limited
82 King Street
Manchester
M2 4WQ
Stockdale Securities Limited
100 Wood Street
London
EC2V 7AN
Eversheds Sutherland (International) LLP
One Wood Street
London
EC2V 7WS
Link Market Services Limited
The Registry
34 Beckenham Road
Beckenham
BR3 4TU
Website
plc.onthemarket.com/investors
54
OnTheMarket plc Annual Report and Consolidated Financial Statements 2018
Designed and produced by Perivan Financial Print 250074
250074 OnTheMarket AR 30-end.indd 54
250074 OnTheMarket AR 30-end.indd 54
14/06/2018 11:37
14/06/2018 11:37
Contents
At a glance
Overview
Chairman’s Statement
Strategic Report
• Chief Executive Officer’s Report
•
Financial Review and Key Performance Indicators
•
Risk Management and Principal Risks
Board of Directors
Directors’ Report
•
Corporate Governance Statement
Directors’ Remuneration Report
Directors’ Responsibilities Statement
Consolidated Income Statement
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Independent Auditor’s Report to the Members of OnTheMarket plc 21-23
Notes to the Consolidated Financial Statements
30-53
Company Information
1
2
3
4-11
4-6
7-8
9-11
12
13-16
14-16
17-19
20
24
25
26
27
28
29
54
OnTheMarket plc Annual Report and
Consolidated Financial Statements
for the year ended 31 January 2018