TIDMRMV
RNS Number : 7131F
Rightmove Plc
23 February 2018
STRATEGIC REPORT - Highlights
Financial highlights
2017 2016 Change
----------------------------------------- ----------- ----------- -------
Revenue GBP243.3m GBP220.0m +11%
Operating profit GBP178.3m GBP161.6m +10%
Underlying operating profit(1) GBP184.4m GBP166.2m +11%
Basic earnings per share 156.8p 137.9p +14%
Underlying basic earnings per share(2) 163.3p 142.8p +14%
Final dividend 36.0p 32.0p +14%
-- Revenue up 11% year on year with growth driven by our Agency and New Homes businesses
-- Underlying operating profit(1) up 11% and operating profit up 10%
-- Underlying basic earnings per share(2) and basic earnings per share both up 14%
-- GBP140.4m (2016: GBP131.3m) of cash returned to shareholders
through dividends and share buybacks in the year
-- Final dividend of 36.0p (2016: 32.0p) per ordinary share
making a total dividend of 58.0p for the year (2016: 51.0p), up
14%
Operational Highlights
-- Record customer numbers with Agency and New Homes customers up 2% to 20,427
-- 1 million UK residential properties advertised on Rightmove
which is a significant stock advantage compared to any other UK
portal
-- Continued traffic growth with visits up 4% averaging over 125
million visits per month(3) and time on site unchanged at nearly 1
billion minutes per month(3)
-- Average Revenue Per Advertiser (ARPA)(4) up 10% to GBP922 per month
-- Further product, software and data innovation to make the
property marketplace more efficient and home moving easier for
consumers and customers alike
(1) Before share-based payments and NI on share-based
incentives
(2) Before share-based payments, NI on share-based incentives
and no related adjustment for tax
(3) Source: Google Analytics
(4) For Agency and New Homes customers
Peter Brooks-Johnson, Chief Executive Officer, said:
"The UK public has once again moved with Rightmove, spending
11.7 billion minutes on Rightmove platforms in 2017. Our focus and
innovation continue to make us the place that consumers turn to
first and that property professionals turn to most often.
Our customer numbers increased to a record high of nearly
20,500, testament to our aim to provide customers with the most
effective marketing exposure and the highest quality leads, as well
as helping to drive efficiencies within their businesses though
tools and support.
As the industry becomes more digital our software has become
even more valuable to our customers with 90% of our Agency members
making use of it each month. Our market leading position, our
culture of restlessness, and our ambition to make our marketplace
even more efficient means there are many reasons to be excited by
the opportunities ahead for Rightmove, and the Board remains
confident of making further progress in 2018".
STRATEGIC REPORT - Chairman's Statement
I am pleased to present Rightmove plc's results for the year
ended 31 December 2017.
Throughout our history we have enabled our property industry
partners to be more informed, make better and faster decisions and
realise efficiencies both during robust and quieter housing market
cycles. Perhaps the most notable feature of 2017 was our continued
innovation of digital solutions for the UK housing market. We have
also continued to be the only place where consumers can see almost
the entire UK property market, giving our customers access to an
unrivalled audience for their brands and exposure for their sales
and rental properties.
Rightmove's higher value Optimiser product package is a perfect
example of the changing and improved nature of our digital product
suite. It gives our customers the ability to select the tools and
advertising that best strengthen their marketing plans and achieve
their business goals after discussion with and insight from
Rightmove account managers.
Notable new products in 2017 include Rightmove Discover, which
leverages Artificial Intelligence to assist estate agents with
identifying instruction opportunities which is the raw material for
our customers' businesses. Property data has always been at the
core of our business and we are excited about continuing to harness
the power of our data to drive further efficiency in the property
market, predict market opportunities and drive success for our
customers and consumers.
Rightmove's culture is to remove complexity and our ambition is
to make home moving easier and more efficient. Our attachment to
our homes and the emotional experience of moving house over a
lifetime is not lost on us. That recognition is underscored in our
recent television advertising campaign that captures not only a
series of personal home moving experiences, but also reflects our
focus on the end game. We make home search simple. The quality and
clarity of user experience across desktop, smartphone and tablet is
testament to our developers and designers who seek to achieve this
outcome.
It was a proud year of achievement serving property
professionals and home hunters. We are committed to continue that
effort with the same level of energy, innovation and sensitivity to
the needs and demands of all our stakeholders in 2018.
Financial results
The strength of our business model and core value proposition
once again underpins our robust financial results in 2017.
Underlying operating profit(1) was up 11% to GBP184.4m (2016:
GBP166.2m) and operating profit was up 10% at GBP178.3m (2016:
GBP161.6m) driven by revenue growth of 11% to GBP243.3m (2016:
GBP220.0m) and a disciplined approach to cost control. Underlying
basic earnings per share(2) and basic earnings per share were both
up 14% at 163.3p (2016: 142.8p) and 156.8p
(2016: 137.9p) respectively, even greater than the percentage
increase in profits and in part as a result of 2.2m shares bought
back during the year at a cost of GBP90.8m as part of our policy of
returning cash to shareholders.
Returns to shareholders and dividend
Our commitment to return excess cash promptly to investors
continues to be as strong as ever and in 2017 we returned a further
GBP140.4m (2016: GBP131.3m) to shareholders through dividends and
share buybacks. Operating cash conversion(3) was again very strong
and remains in excess of 100% of operating profit.
The Board increased the interim dividend to 22.0p (H1 2016:
19.0p) per ordinary share, which was paid on 3 November 2017. We
are confident in our ability to deliver sustainable returns to
shareholders and consistent with our policy of increasing the total
dividend for the year broadly in line with earnings per share, the
Board recommends a final dividend of 36.0p (2016: 32.0p) per
ordinary share. This brings the total dividend for the year to
58.0p (2016: 51.0p), an increase of 14%. The final dividend,
subject to shareholder approval, will be paid on 1 June 2018 to all
shareholders on the register on 4 May 2018.
Corporate governance
One of the Board's responsibilities is ensuring that the Group
applies good governance to facilitate effective management of a
high growth business. As the Company's Chairman I am pleased to
note that the Group is continuing to foster an environment of
entrepreneurial leadership and innovation in a framework of
responsible governance and risk management as set out in the
Corporate Governance Report on pages 37 to 55.
Board changes
In May 2017, after 16 years of leadership, Nick McKittrick
retired from the Board. Nick had led the Company as Chief Executive
Officer since April 2013 and together with his management team
helped deliver an outstanding financial performance with revenues
growing by over 50% and a strong share price rise during that
period that reflected our delivery of continued improvements in
value provided to customers and consumers alike.
Nick passed the baton to Peter Brooks-Johnson, our Chief
Operating Officer and Board director since 2011, and I am pleased
to say, that as anticipated, the transition has been seamless with
the strong results in 2017 and continued positive outlook being
testament to this.
Having completed three full terms, Colin Kemp retired from the
Board as a Non-Executive Director in May 2017. In June 2017 as part
of our Board succession plans, we welcomed Andrew Findlay to the
Board in advance of the retirement of our current Audit Committee
Chairman, Ashley Martin, in May 2018. Andrew brings a wealth of
financial expertise, commercial experience and a strong
consumer-centric background and will be appointed Chair of the
Audit Committee in May 2018. Ashley leaves Rightmove after nine
years of providing sage advice during a period in which our
business, financial systems and controls have evolved
significantly. The Board has benefited from his valuable
contributions and I am personally grateful for his wise
counsel.
Following the year end, we announced the appointment of Lorna
Tilbian as a Non-Executive Director with effect from 1 February
2018. Lorna has had a distinguished career in the media sector and
I am delighted to welcome her to the Board. Lorna's addition to the
Board is also notable in that from May 2018, this will bring our
female Board representation to 50% overall with a 50:50
representation of men and women at both executive and non-executive
director level.
Looking forward
The Board and I are grateful for the confidence and support of
all our customers and for the talent and dedication of our
employees. We are clear that our goal is to continue to work
together to position Rightmove as the essential marketplace for
home hunters and for property advertisers to reach by far the
widest possible audience.
Scott Forbes
Chairman
(1) Before share-based payments charge of GBP4.9m (2016:
GBP4.1m) and NI charge of GBP1.2m (2016: GBP0.5m) on share-based
incentives.
(2) Before share-based payments charge of GBP4.9m (2016:
GBP4.1m) and NI charge of GBP1.2m (2016: GBP0.5m) on share-based
incentives and no related adjustment for tax.
(3) Cash generated from operating activities of GBP183.9m
compared to operating profit as reported in the profit or loss of
GBP178.3m.
STRATEGIC REPORT - Business model
What we do
Rightmove is the UK's number one property portal and the UK's
largest property marketplace. We bring the UK's largest and most
engaged property audience and the largest inventory of properties
together in one place. We benefit from strong network effects as
our property audience and the properties our customers advertise
create a 'virtuous circle' enhancing the Rightmove value
proposition.
Our customers are primarily estate agents, letting agents and
new homes developers advertising properties for sale and to rent in
the UK.
The Rightmove network effect
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
Our aim is to create a more efficient housing marketplace and
make home moving easier
The UK housing market, both in sales and rentals, is complex and
often inefficient. Moving home can be a stressful and time
consuming experience for consumers and an inefficient, frustrating
process for professionals often with elements of wasted effort and
unavoidable manual processes. We believe by creating a simpler and
more efficient marketplace we can make home moving in the UK
easier. A better marketplace which empowers consumers and property
professionals alike creates a better housing market. By creating
value for, and building long-term partnerships with, both consumers
and property professionals we are able to grow our revenue. Our
continued growth allows us to innovate to create more value for
all.
How we make the market more efficient for consumers
Rightmove is free to consumers, and it is the only place where
home buyers and renters can see almost the entire UK property
market in one place. The ease of accessing the UK property market
through fast, always available digital platforms means Rightmove
has become the place consumers turn to first when they think about
moving home.
The simplicity Rightmove brings can reduce the stress of finding
your next home. The carefully designed website avoids distractions
in pursuit of simplicity, putting home hunters in control of their
search and research. Rightmove takes some of the effort out of the
home search by bringing suitable properties to home hunters, and in
2017 we sent more than half a billion instant alerts to over two
million people. Knowing the moment a new property comes to market
allows a home hunter to stay abreast of the market wherever they
are. Combined with our near whole of market view, consumers need
not fear missing their dream property when it comes to market.
Rightmove uses its unrivalled data to create well-designed
features which help people make more informed decisions. Finding
the place to move to, that is affordable, meets ones commuting
criteria and fulfils ones property dreams can prove challenging.
This year we launched the innovative 'Where can I live?' feature
which helps home hunters work through the bewildering array of
location choices in the initial stages of their property search and
opens up possibilities to find the next home which is right for
them.
Rightmove is compelling to home sellers and landlords too. It's
no wonder, when home sellers and landlords are so much more likely
to find their buyer or tenant on Rightmove compared to any other
portal, that 85%(1) of people selling their home rank Rightmove as
the most important site for marketing their property.
Beyond finding a buyer or tenant, the tools we provide for
researching the market bring simplicity and confidence to sellers
and landlords as they consider one of the largest transactions of
their lives and choose an agent to help them on their home moving
journey.
How we make the market more efficient for industry
professionals
By creating the UK's largest property marketplace we have
brought together virtually all the audience our customers want to
attract. We are able to offer the most significant and effective
exposure for their brands and properties resulting in the largest
source of high quality leads, thereby significantly increasing our
customers' marketing efficiency.
We also help drive efficiencies within our customers' businesses
by providing best in class software that delivers data, market
insight and tools to help them inform their decisions. 90% of our
Agency customers now use our software each month.
(1) Property Academy - Home Moving Trends Survey 2017
We continue to innovate to create value for our customers. In
2017 we significantly enhanced our market intelligence software,
known as Rightmove Intel, for agents. Rightmove Intel focuses on
the key information a business owner wants to know: how they
measure up against their competition and where they can win new
business. Previously, many of our customers would have manually
gathered valuation and comparable data or paid a third party to
count 'For Sale' and 'Sold' advertising boards for market share
information. This was quickly out of date whereas today this is
available in real time as part of their membership
subscription.
Winning new business is a resource intensive activity for our
customers. Rightmove Intel now highlights both new and secondary
business opportunities meaning agents can spend more of their time
on the most valuable opportunities.
The value of our unrivalled whole of market view extends beyond
property search and research, it also helps make the process of
valuing properties for mortgage applications simpler and more
efficient. In 2017 we released the latest version of our market
leading 'Surveyors Comparable Tool'. The tool is used by surveyors
to support their valuations in the majority of all successful
mortgage applications. The new version supports our surveyor
customers' increasingly mobile ways of working both on and offline
giving them flexible access to key data and allowing them to have
more choice on where and when they work.
How we create value for our shareholders
Our principal sources of revenue are the monthly subscription
fees paid by customers to advertise all of their properties and the
fees paid for our additional advertising products and packages. Our
additional advertising products increase a customer's share of
voice and competitiveness. These are critical factors for our
customers and particularly for an agent to help to win the
instruction opportunity to sell or rent a home, which remains the
lifeblood of their business.
In 2017 our Average Revenue Per Advertiser was again driven by
our customers adopting our higher value packages and products. We
now have over 45% of independent agency customers spending over
GBP1000 per month on Rightmove, up from 36% a year ago.
As the property industry becomes more digital, Rightmove's
market leading audience and best in class software is becoming even
more valuable to customers. Average Revenue Per Advertiser growth
will continue to be driven by increased product penetration,
pricing and innovation and is underpinned by the value of our
audience and data, our substantial product inventory and our
culture and track record of innovation.
We also continue to develop a number of smaller adjacent
businesses such as advertising overseas and commercial properties
and providing property related data and valuation services.
STRATEGIC REPORT - Chief Executive's review
Rightmove, the UK's number one property portal, has delivered
another year of record results. Our number of advertisers grew by
2% to reach an all-time high of nearly 20,500 and with advertisers
spending more on our products, data and services, our revenue
increased by 11% to GBP243.3m with underlying operating profit(1)
up 11% to GBP184.4m and operating profit up 10% to GBP178.3m.
Home movers visited Rightmove over 1.5 billion times in 2017, an
increase of over 4% on 2016 and they spent nearly a billion minutes
on Rightmove every month.
Our continued progress is testament to our restless focus on the
UK property advertising market and the huge effort 'Rightmovers'
have made to build our business in partnership with our industry
customers. This restless innovation was recognised by Forbes in
2017, ranking Rightmove as the world's most innovative growth
company for the second year in a row. Our innovation is focused on
making our marketplace simpler and more efficient, creating even
more reasons to be excited by the opportunities ahead for
Rightmove.
Our Strategy - making home moving easier
The place consumers 'turn to first' and engage with most
At the core of our strategy is a relentless focus on continual
improvement and innovation to create the most compelling experience
for consumers so that they turn to us first. With our focus on
doing the right thing for both consumers and customers, Rightmove
is a trusted and valuable source of property information. We
provide support for home movers enabling them to feel confident,
inspired and in control. This not only results in more consumers
turning to Rightmove first and engaging with us, but importantly it
generates more and better quality leads for our customers than
anywhere else, leading to better outcomes and greater value for
them.
We continue to achieve this by providing consumers with the most
up to date, engaging and comprehensive property content together
with search, research and home moving tools to support their home
moving journey. In addition to the hundreds of updates to our
platforms each month, recent improvements and innovations include:
redesigning map-based search and the introduction of 'Where can I
live?' discovery-based search functionality which helps consumers
find homes in areas which are affordable and convenient for them.
Innovation requires experimentation, and in 2017 we piloted an
experimental app, 'RentLondon', which explored trends in search to
make the process of finding a rental property more efficient. It
incorporated a 'messenger bot' to enable renters to conduct their
entire search using natural language via Facebook Messenger. The
future is exciting as we take the learnings from RentLondon and
apply them to our core search functionality in 2018.
We continued to invest in our brand in 2017, concentrating on
two market sectors: renters, and those looking to find the right
home near the right school. We launched the latest iteration of our
'find your happy' television campaign on Christmas Day. This next
phase brings to life strong emotional stories which many home
hunters connect with. The stories all relate to why people move,
not just the search process. Our first critically acclaimed advert
in the series addresses downsizing and growing families. It not
only created a bit of a stir on social media but reflects our
position at the heart of home moving for all generations. Brand
building will continue to focus on national television through our
partnership with Channel 4 supported by online video on demand. We
will also continue to add further presence in London with 400
branded taxis, additional outdoor media and our exclusive
partnerships with the Evening Standard and Time Out.
More consumers than ever turned to Rightmove in 2017 with over
1.5 billion visits across all our platforms. Time spent on the
Rightmove platforms was unchanged year on year at a record
equalling 11.7 billion minutes. Against the backdrop of a new,
faster site infrastructure rolled out during 2016, a less frenetic
lettings market and the increase in use of mobile devices, which
typically have lower average time per visit, this demonstrates the
continued popularity and importance of our platforms. Our market
share of traffic across both desktop and mobile was 73%(2) with the
mobile component even higher at 79%(2) .
The tools we provide for researching the market bring simplicity
and confidence to sellers and landlords.
Traffic to our research tools also grew significantly in 2017 as
sellers and landlords turned to Rightmove first to help inform
their decisions. Our research tools, such as sold prices data, are
by far the most widely used in the UK and provide the unique
benefit of access to our catalogue of one million currently listed
properties and 45 million historical property records. Consumers
spent over 420 million minutes using our research tools in 2017
which is up by over 15% on the previous year.
Visits to our Overseas property site remained consistent with
levels seen in 2016, suggesting the dream of owning a property
abroad for many of the British public continues to be a popular
one, despite the fall in Sterling and uncertainty around the UK's
relationship with Europe. Given the environment, it is testament to
the value of our advertising platform that the number of overseas
properties we advertised increased by 6% on average despite the
number of overseas estate agent and developer customers advertising
falling by 7%.
Our Commercial property advertising business continues to gain
momentum with commercial property professionals and occupiers
spending over 11 million minutes per month searching commercial
property listings on Rightmove. This activity generated more than
650,000 leads for our customers. As a result more and more
commercial agents and commercial landlords are choosing to
advertise with us.
Our Data Services business continues to help the property
industry by leveraging our unmatched pool of property data. In
addition to providing our Agency and New Homes customers with
invaluable data driven insights, we use our data and technology to
run a market leading automated valuation model for some of the
largest lenders and help the surveying industry to drive
efficiencies in their businesses. For example, our Surveyors
Comparable Tool saves surveyors preparation time, improves
valuation accuracy and provides documentary proof of the process
making it the go-to tool for the industry. During 2017 the tool
assessed and scored over 1.7 billion comparable property records to
create over two million compatible reports for surveyors.
Unrivalled exposure, leads and products for our customers
With visits to our platforms growing for the 16(th) consecutive
year we continued to increase the exposure for our customers'
brands and properties. This exposure generated 43.6 million leads
for our customers, seven percent down on 2016. The surge in
lettings stock following the stamp duty increase for second
properties in April 2016 meant for most of 2017 the lettings market
was less frenetic giving potential tenants more choice. In these
market conditions each tenant typically sends fewer leads as they
are more assured of securing the property they want. In addition,
this takes account of the full year impact of changes we made to
the search flow in the second half of 2016 to further increase the
quality of our leads. In order to help agents become more efficient
every lead sent though Rightmove is now about a specific
property.
Our focus on the quality of our leads continues to stand us in
good stead as they convert far more often to instructions, sales
and lets for our customers. In fact, we generate 86%(3) of the
sales and lets from portals for our Agency customers, our fourth
year of consecutive growth. No wonder, when home sellers and
landlords are so much more likely to find their buyer or tenant on
Rightmove compared to any other portal, that 85%(4) of people
selling their home rank Rightmove as the most important site for
marketing their property.
Winning the right to an instruction to sell or let a property is
critical to an agent's success. Over a million of the email leads
sent by home movers to agents highlighted that they had a property
to sell, each one creating an instruction opportunity for a
customer. These were in addition to the instruction opportunities
that came via our telephone leads, which accounted for around 60%
of all leads. We also delivered 175,000 leads from people asking
for a valuation on their home, for those customers who bought our
popular Local Valuation Alert product.
Following the acquisition of the Outside View in 2016 we
launched our new 'Rightmove Discover' product in July 2017. Using
our combined knowhow and Rightmove's unique dataset, Rightmove
Discover uses predictive analytics to identify the most likely
potential sellers in a local area within the next six months and
markets to them on behalf of an agent. The early success of
Rightmove Discover is encouraging and since launch, we have
delivered nearly 16,000 high quality email leads to our customers
in 750 areas. Customers also report an increase in potential
vendors contacting them via telephone and their own websites. Our
customers who have purchased the product have benefitted from
exclusive, early contact from vendors of an equivalent of 5% of
resale properties which came to market in the second half of the
year.
There is significant headroom to grow product revenue as we
leverage data to increase the penetration of existing products,
evolve their value and pricing, and continue to innovate and
introduce new products as customers look to invest more to drive
their brand exposure and gain market share. This year Average
Revenue Per Advertiser increased by 10% to GBP922 driven by
customers spending more on products and packages and price
increases.
Innovation to create a simpler and more efficient
marketplace
Combining our software and whole of market dataset whilst
supported by our dedicated account management teams, we help
customers drive operational efficiencies and inform their business
decisions. Our focus is in the areas our customers value most,
which in the case of our agents is identifying potential business
and winning and retaining that business.
Whilst our software tools are already recognised as being best
in class and widely adopted with 90% of our Agency customers using
our tools each month, it is not in our DNA to stand still and we
have continued to innovate our market intelligence software for
agents, Rightmove Intel. Winning new business is a resource
intensive activity for our customers and 2017 saw the introduction
of a number of reports which highlight both new and secondary
business opportunities meaning agents can spend more of their time
on the most valuable opportunities.
These innovations have been warmly received by customers. For
example in November 2017 our customers ran over two million
reports, a remarkable 67,000 reports per day and more than double
the number in November 2016.
Rightmove Intel also helps customers more efficiently
communicate the marketing performance of properties to their
vendors. The Marketing Report, which shows the interest a property
is generating compared to similar properties on the market,
launched at the end of 2016, was run on over 400,000 different
properties for sale in 2017, covering nearly a third of all
properties listed in the year.
2018 will see us continue on this path. We will be releasing a
number of new tools to help agents become more efficient including
a tool to help prioritise vendor enquiries from Rightmove and a
solution to better manage the process of referencing rental tenants
in advance of the looming tenant fee ban.
Beyond Rightmove Discover our data continues to provide the
basis for a rich seam of innovation. Following successful
experiments during 2017, we intend to launch Rightmove Active
Display in 2018, which will allow our New Homes customers to target
their potential audience on Rightmove based on the home hunter's
usage of Rightmove over time, not just their current search
criteria.
The digitalisation of the property industry and the efficiencies
our software and tools bring help to reduce the cost per Agency
office and have also enabled the growth in the number of customers.
Over the last 12 months our membership base has grown to close to
20,500 customers.
We care about our customers' business success and building
strong partnerships is vital to support their ambitions, especially
in light of the significant digital changes that are taking place.
To that end we are spending more time with customers than ever
before and making sure that more of our conversations lead to
recommendations that our customers truly value.
In 2017 we evolved our event programme with the introduction of
'Rightmove Live'. These events brought together speakers from a
range of industries covering content applicable to all small and
medium sized businesses, with an objective of inspiring and
motivating. Speakers included Dr David Lewis, 'father of
neuromarketing'; Nicky Moffat CBE, British Army highest-ranking
female officer and Andrew McMillan, Head of Customer Service at
John Lewis. In keeping with an online culture these events are now
hosted on an 'on demand' platform, meaning our customers can
benefit from this content irrespective of whether they were able to
attend on the day.
We also recognise our role in helping our customers keep up to
date with a changing industry. Bringing together industry experts
covering a range of changes facing agents in 2018, including the
General Data Protection Regulation and lettings legislation,
'Legislation Live' was attended by over 250 agents from around the
country with a further 600 watching a live stream of the event.
In parallel with these new events we continue to run our ever
popular webinar series which allows estate agency teams to learn
how to make the most of the Rightmove platforms while also covering
industry topics and more general business practices. In 2017 we ran
170 webinars attended by over 16,500 people.
Build great teams with a culture to innovate
Rightmove is people and our people define Rightmove. Rightmove
has a culture which is both restless and focussed. We strive to
create one team of Rightmovers with as few barriers as possible to
rapid growth and innovation. We believe that this comes from a
process-light, highly connected organisation with little
constraining hierarchy and bureaucracy. It is about employing the
right people, giving them the freedom and authority to innovate and
lead, and then guiding them to succeed. In order to hear the
symphonies produced by a well-functioning team we need every
Rightmover to be both individually empowered and accountable.
A diverse Rightmove is important to us. We recognise that a
diverse team will provide a wide range of perspectives that promote
innovation and business success. Drawing on what is unique about
individuals adds value to the way we do business and helps us
anticipate and provide what our customers want from us and what
home hunters want from the Rightmove platforms.
Foremost in the design of our expanded London home, we have
taken care to create a physical environment that encourages open
and honest discussion, including social spaces for the teams to
enjoy each other's company. Our workplace is free from offices and
the usual trappings of hierarchy.
We believe in sharing often and early and reinforce this through
events such as 'townhalls' which share progress, successes and
challenges. In June 2017 the whole of Rightmove spent a day and a
summer night under canvas together building and reinforcing cross
team connections. Our culture is not solely built on events like
these, but also from the everyday small gestures, including sending
employees monkey puzzle tree seeds to celebrate National Tree week
or a 'Rightmove-versary' card to mark their first anniversary at
Rightmove. Everything together creates a unique and driven
environment that we believe results in people feeling a sense of
belonging and a passion to perform. By striving to make Rightmove a
great place to work we can attract and retain the best talent and
provide the best service for consumers and customers.
Great talent and passion to perform is not enough to make a
great Rightmover; the way in which we behave towards each other,
our customers and consumers is vital. We expect the very highest
standards of ethical behaviour from all employees. How we go about
our work is central to our recruitment, feedback and personal
development processes. We also have a scheme to allow Rightmovers
to recognise their peers who embody the behaviours we aspire
to.
The biggest influence on our culture, of course, comes from our
people. Their actions and behaviours create the sense of belonging
and connection and allow the business to continue to thrive and
attract great people. In our 2017 'Have Your Say' people survey,
90% of Rightmovers responded that they think 'Rightmove is a great
place to work.' Whilst this is a very strong result, it is below
the record high level of 95% achieved in 2016. To celebrate those
employees who have been part of the Rightmove journey for more than
ten years we have continued with our well known, although not
widely replicated, practice of creating a gnome in their image. In
the fast moving world of today, long tenures with single
organisations are becoming rarer so I'm pleased that we have
expanded our 'gnome tree' to accommodate an ever growing collection
of gnomes.
Our culture sets us apart from many organisations and is defined
by everyone of the nearly 500 people who are proud to call
themselves Rightmovers. I would like to thank them all for creating
a culture which continues to drive our business success.
Current trading and outlook
We believe the outlook for the UK online property advertising
market remains positive, despite the continuing uncertainties
stemming from the result of the EU referendum. Consumers and
customers are becoming increasingly digital and therefore spend
continues to transition from traditional advertising channels.
Our clear market leadership coupled with the value of our
products and data positions us well for the future. With Average
Revenue Per Advertiser continuing to grow from a stable membership
base the Board remains confident of making further progress in
2018.
Peter Brooks-Johnson
Chief Executive Officer
23 February 2018
(1) Before share-based payments charge of GBP4.9m (2016:
GBP4.1m) and NI charge of GBP1.2m (2016: GBP0.5m) on share-based
incentives.
(2) Source: comScore, December 2017.
(3) Source: Independent software provider to the estate agency
industry.
(4) Source: The Property Academy 2017 Home Moving Trends
Survey.
STRATEGIC REPORT - Operational key performance indicators
We use the metrics set out below to track our operational
performance.
Number of advertisers
http://www.rns-pdf.londonstockexchange.com/rn Definition
s/7131F_1-2018-2-22.pdf The total number of paid for
UK estate and lettings Agency
branches and New Home developments
advertising properties on Rightmove
2017 performance
+2%
Strategic link
The place consumers 'turn
to first' and engage with most;
and innovation to create a
simpler and more efficient
marketplace
Risks
1 2 3
-----------------------------------------------------------------------------------------
Source: Rightmove
Average Revenue Per Advertiser (ARPA in GBP per month)
http://www.rns-pdf.londonstockexchange.com/rns/7 Definition
131F_1-2018-2-22.pdf Revenue from Agency and New
Home advertisers in a given
month divided by the total
number of advertisers during
the month, measured as a monthly
average over the year
2017 performance
+10%
Strategic link
Unrivalled exposure, leads
and products for our customers
Risks
1 2 3
-----------------------------------------------------------------------------------------
Source: Rightmove
Traffic (time on site measured in billions of minutes)
http://www.rns-pdf.londonstockexchange.com/rns/713 Definition
1F_1-2018-2-22.pdf Total time measured in billions
of minutes spent on Rightmove
platforms during the year
2017 performance
Unchanged year on year
Strategic link
The place consumers 'turn
to first' and engage with
most
Risks
2 3 4
----------------------------------------------------------------------------------------
Source: Google Analytics
Employee engagement
http://www.rns-pdf.londonstockexchange.com/rns/713 Definition
1F_1-2018-2-22.pdf Based on the number of employee
respondents selecting 'agree'
or 'strongly agree' as a response
to this question in the annual
employee survey
2017 performance
-5% points
Strategic link
Build great teams with a
culture to innovate
Risks
5
-------------------------------------------------------------------------------------------
Source: Rightmove
Risks relevant to our KPIs (read more on pages 21 to 24)
1 Macroeconomic environment
2 Competitive environment
3 New or disruptive technologies and changing consumer behaviours
4 Cyber security and IT systems
5 Securing and retaining the right talent
STRATEGIC REPORT - Financial key performance indicators
We use the metrics set out below to track our financial
performance.
Revenue GBPm 2017 performance
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf +11%
Revenue grew strongly
in 2017 up 11% to GBP243.3m
(2016: GBP220.0m)
Risks
1 2 3 4 5
---------------------------------------------------------------------- -----------------------------
Underlying operating profit(1) GBPm 2017 performance
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf +11%
Underlying operating
profit(1) increased by
11% to GBP184.4m (2016:
GBP166.2m) with underlying
operating margin increasing
to 75.8% (2016: 75.5%)
Risks
1 2 3 4 5
---------------------------------------------------------------------- -----------------------------
Underlying basic EPS(2) (pence per ordinary 2017 performance
share) +14%
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
Underlying basic EPS(2)
increased by 14% to 163.3p
(2016: 142.8p). Basic
EPS grew by 14% to 156.8p
(2016:137.9p)
Risks
1 2 3 4 5
---------------------------------------------------------------------- -----------------------------
(1) Before share-based payments charge of GBP4.9m (2016:
GBP4.1m) and NI charge of GBP1.2m (2016: GBP0.5m) on share-based
incentives.
(2) Before share-based payments charge of GBP4.9m (2016:
GBP4.1m) and NI charge of GBP1.2m (2016: GBP0.5m) on share-based
incentives and no related adjustment for tax.
Cash returned to shareholders GBPm 2017 performance
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf +7%
During the year free
cash flow was returned
to shareholders in the
form of share buybacks
and dividends with cash
returns totalling GBP140.4m
(2016: GBP131.3m)
Risks
1 2 3 4 5
---------------------------------------------------------------------- -----------------------------
STRATEGIC REPORT - Financial review
Revenue
We have experienced another strong year of revenue growth with
revenue up 11% at GBP243.3m.
2017 2016 Change
GBPm GBPm
--------------- ------ ------ -------
Agency 185.2 168.3 10%
New Homes 39.5 33.9 16%
Other 18.6 17.8 4%
--------------- ------ ------ -------
Total revenue 243.3 220.0 11%
--------------- ------ ------ -------
Our Agency business was the main driver of the overall revenue
growth increasing by GBP16.9m year on year to GBP185.2m (2016:
GBP168.3m). Agency continues to be our largest business
contributing 76%
(2016: 77%) of our total revenue. The majority of the revenue
increase came from ARPA growth as a result of the further adoption
of additional advertising products together with increases to core
membership prices. Spending by agents increased across our range of
additional advertising products due to increased segmentation of
our customer base and continued adoption of higher value
packages.
The number of Agency offices was up 1% since the start of the
year to a record high of 17,626
(2016: 17,462), with the growth attributable to an increase in
resale branch numbers (including growth in the number of branch
equivalents for members operating an online or a hybrid model).
Revenue from our New Homes business grew strongly to GBP39.5m
(2016: GBP33.9m), an increase of 16% driven by the sale of
additional advertising products and by increases to core membership
prices, together with healthy growth in development numbers, up 5%
year on year to 2,801 developments (2016: 2,659) their highest
level since 2009.
Other revenue which includes Overseas, Data Services, Commercial
and Third party advertising services increased by GBP0.8m to
GBP18.6m in 2017, driven by growth in our Commercial business. The
revenue in our Overseas business, which in prior years has been a
strong contributor to growth, was flat year on year, being impacted
by the fall in Sterling and continuing uncertainties following the
result of the EU referendum.
Underlying operating profit
2017 2016 Change
GBPm GBPm
------------------------------ ------- ------- -------
Revenue 243.3 220.0 11%
Underlying operating costs (58.9) (53.8) 9%
------------------------------ ------- ------- -------
Underlying operating profit 184.4 166.2 11%
Share-based payments (4.9) (4.1) 20%
NI on share-based incentives (1.2) (0.5) 140%
------------------------------ ------- ------- -------
Operating profit 178.3 161.6 10%
------------------------------ ------- ------- -------
Underlying operating profit(1) increased by 11% to GBP184.4m
(2016: GBP166.2m) and underlying operating margin(1) increased to
75.8% (2016: 75.5%). This was due to continued strong revenue
growth coupled with a slightly lower percentage increase in
underlying operating costs(1) .
Underlying operating costs(1) increased by 9% or GBP5.1m to
GBP58.9m (2016: GBP53.8m). Of the cost increase, GBP1.5m related to
technology costs due to continued innovation in our platforms and
tools for our customers and ongoing investment in cyber threat
detection systems. Premises costs increased by GBP1.3m representing
rent and rates and office refit costs associated with additional
space at our London Soho Square offices. The balance of the
increase relates to general wage inflation and the full year impact
of additional heads recruited in 2016 together with ongoing
marketing investment in the Rightmove brand.
Underlying operating profit(1) is reported before share-based
payments, which are a significant non-cash charge driven by a
valuation model, and National Insurance on share-based incentives,
which is driven by reference to the Rightmove plc share price and
so subject to volatility, rather than operational activity. The
directors consider underlying operating profit(1) to be the most
appropriate indicator of the performance of the business and year
on year trends.
Share-based payments and National Insurance (NI)
In accordance with IFRS 2, a non-cash charge of GBP4.9m (2016:
GBP4.1m) is reflected in the income statement representing the
amortisation of the fair value of share-based incentives
granted.
NI is being accrued, where applicable, at a rate of 13.8% on the
potential employee gain on
share-based incentives granted. Based on a year on year increase
in the closing share price from GBP39.03 at 31 December 2016 to
GBP45.00 at 31 December 2017 in respect of the outstanding
share-based incentives granted, together with the realised NI cost
on share-based incentives exercised in the year, there was a charge
of GBP1.2m (2016: GBP0.5m).
Taxation
The consolidated tax rate for the year ended 31 December 2017
was 19.1% (2016: 19.8%). The effective tax rate was slightly lower
than the UK enacted rate of 19.3% due to research and development
relief claimed in relation to the prior year.
We are committed to being a responsible tax payer acting in a
straightforward and open manner in all tax matters. The total tax
payable in respect of 2017 was GBP96.6m (2016: GBP78.5m).
GBP38.6m
(2016: GBP31.6m) related to corporation tax and employer's NI
and apprenticeship levy borne by the Group while the remaining
GBP58.0m (2016: GBP46.9m) was collected in respect of payroll taxes
and VAT. The Company currently has no open tax authority enquiries
in respect of any tax and there are no known material tax risks
based on the positions adopted. The Company has therefore not
recognised any uncertain liabilities in relation to estimates of
additional tax which may be pursuant to enquiries.
Earnings per share (EPS)
Underlying basic EPS(2) increased by 14% to 163.3p (2016:
142.8p). Basic EPS also increased by 14% to 156.8p (2016: 137.9p).
The growth in EPS was mainly attributable to the increase in
profitability in the year together with the benefit of our
continued share buyback programme which reduced the weighted
average number of ordinary shares in issue to 91.9m (2016:
94.0m).
Balance sheet
Rightmove's balance sheet at 31 December 2017 showed total
equity of GBP17.2m (2016: GBP8.0m) reflecting growth in profit and
retained earnings less the continued return of capital to
shareholders in the form of share buybacks and dividends during the
year.
Trade receivables increased by 14% to GBP30.3m (2016: GBP26.6m)
reflecting the year on year growth in revenue and the timing of
cash collections over the year end. Trade and other payables
increased by GBP3.1m to GBP38.9m (2016: GBP35.8m) due to an
increase in deferred revenue in line with trading. Our deferred tax
asset, representing the future tax benefits from share-based
incentives, is lower at GBP5.7m (2016: GBP6.9m) due to the exercise
of share options during the year.
Cash flow
Rightmove continues to see strong cash generation and to return
all free cash generated to shareholders. Predictable cash flows
reflect the subscription nature of the business coupled with low
working capital requirements. Cash generated from operating
activities(3) was up 9% to GBP183.9m (2016: GBP169.3m) and
operating cash conversion was once again in excess of 100%.
Tax payments increased to GBP33.2m (2016: GBP27.8m) and GBP0.2m
(2016: GBP0.2m) was paid in relation to bank charges and bank
facility fees resulting in net cash from operating activities of
GBP150.5m (2016: GBP141.2m).
Capital expenditure of GBP2.2m (2016: GBP1.8m) includes
capitalised leasehold improvements and works in relation to our
London office refit together with investment in new servers.
Proceeds of GBP0.7m (2016: GBP0.4m) were received on the
exercise of share-based incentives and GBP0.8m (2016: GBP0.8m) was
applied to purchase shares to fund the Rightmove Share Incentive
Plan.
During 2017, GBP90.8m was spent in the repurchase of our own
shares (2016: GBP88.1m) whilst a further GBP49.6m (2016: GBP43.2m)
was paid in dividends reflecting the increased final dividend for
2016 and the 3p increase in the interim dividend this year. This
brings the total cash returned to shareholders in the year to
GBP140.4m (2016: GBP131.3m).
The closing Group cash and money market deposit balance at the
end of the year was GBP25.0m
(2016: GBP17.8m).
Dividends
Consistent with our policy of growing the dividend broadly in
line with the increase in underlying earnings per share, the
directors are recommending a final dividend of 36.0p (2016: 32.0p)
per ordinary share, which together with the interim dividend makes
a total dividend for the year of 58.0p (2016: 51.0p), an increase
of 14%. The final dividend, subject to shareholder approval, will
be paid on 1 June 2018 to all shareholders on the register on 4 May
2018.
Robyn Perriss
Finance Director
23 February 2018
(1) Before share-based payments charge of GBP4.9m (2016:
GBP4.1m) and NI charge of GBP1.2m (2016: GBP0.5m) on share-based
incentives.
(2) Before share-based payments charge of GBP4.9m (2016:
GBP4.1m) and NI charge of GBP1.2m (2016: GBP0.5m) on share-based
incentives and no related adjustment for tax.
(3) Cash generated from operating activities of GBP183.9m
compared to operating profit as reported in the profit or loss of
GBP178.3m.
STRATEGIC REPORT - Risk management
Approach to risk management
The Board has overall responsibility for ensuring that risk is
effectively managed across the Group. The primary method by which
risks are monitored and managed is through the monthly Executive
Committee meetings. The subject of risk is included on each monthly
agenda and any significant new risks or change in status to
existing significant risks is discussed and actions taken as
appropriate.
The Group operates a cautious approach to risk and its 'risk
appetite' is relatively low. The open culture which is embedded
throughout Rightmove is such that objective views are made when
assessing risks and internal controls, dialogue is encouraged, and
decisions are not made until risks have been appropriately
considered.
On a bi-annual basis, risk is reviewed by operational management
across each business area. This review includes a detailed
assessment of new and existing identified risks, the likelihood of
each risk occurring and the potential impact, together with
controls and mitigating procedures in place. This information is
combined to form a consolidated risk register which is reported to
the Executive Committee for review and challenge, ahead of final
review and approval by the Board. A nominated director has
responsibility for each risk. The Board reviewed the risk register
at both the February 2017 and November 2017 Board meetings, with a
particular focus on the principal risks identified and any new or
emerging risks.
Risk management is reinforced by the Group's continuous process
to design and embed strong internal controls across the business as
we grow, particularly in relation to smaller breadth business
areas. The Group's internal control framework is aligned to a
'three lines of defence' model. Operational management is the
organisation's first line of defence as they are primarily
responsible for the direct management of risk and ensuring that
appropriate mitigating controls are in place and that they are
operating effectively. The second line is formed by the Group's
internal compliance and oversight functions such as company
secretariat, finance, tax, treasury and legal. The third line
includes both internal and external audit reporting to the Audit
Committee.
The Audit Committee receives and analyses regular reports from
management and the outsourced internal audit function on matters
relating to risk and control and reviews the timeliness and
effectiveness of corrective action taken by management. The Audit
Committee on behalf of the Board also considers the findings and
recommendations of its external auditor throughout the year to
design and implement effective financial controls. Further detail
of these activities are included within the Audit Committee report
on pages 45 to 52.
Risk management framework
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
STRATEGIC REPORT- Principal risks and uncertainties
A description of the principal risks and uncertainties faced by
the Group in 2017, together with the potential impact and
monitoring and mitigating activities is set out in the table
below.
We recognise that the Group is exposed to risks wider than those
listed, however we have disclosed those that we believe are likely
to have the greatest impact on the Group delivering its strategic
objectives and those that have been the subject of discussion at
recent Board and Audit Committee meetings.
Change
from prior
Key risk and Impact Monitoring and mitigation year
description
--------------- ------------------------------------------------- ------------------------------------------------------------ -----------
1 Macroeconomic Substantially fewer housing Risk
environment transactions than the norm may lead * Monitoring of housing market including leading un-changed
The Group to a reduction in the number indicators and trends in Rightmove membership
derives almost of Agency branches or New Home
all its developments, a major determinant of
revenues from the Group's revenue. * Continuing to provide the
the UK and is
therefore In addition, a contraction in the
dependent volume of transactions in the UK most significant and effective exposure for customers'
on the housing market could lead brands and properties, be the largest
macroeconomic to a reduction in advertisers' source of high quality leads and offer value-adding
conditions marketing budgets which could reduce products and packages and help drive operational
surrounding the demand for the Group's efficiencies for our customers, thereby embedding the value
the UK housing property advertising products. of our membership
market and * Communicating the effectiveness of digital media
consumer versus alternative mediums such as print
confidence
which impacts
on property * Maintaining a flexible cost base that can respond to
transaction changing conditions
levels.
Specific
considerations
resulting from
the UK's
decision to
leave the
European Union
have
been outlined
on page 25.
--------------- ------------------------------------------------- ------------------------------------------------------------ -----------
2 Competitive This may impact on Rightmove's ability to grow Risk
environment revenue due to the potential loss of: * Communication of the value of Rightmove membership to un-changed
The Group * Audience advertisers
operates in a
competitive
marketplace * Advertisers * Continued investment in our account management teams
with to ensure we stay close to our customers and local
attractive markets and help our customers run their businesses
margins and * Demand for additional advertising products more efficiently
low barriers
to
entry. This * Sustained marketing investment in the Rightmove brand
may result in
increased
competition * Sustained investment and innovation in serving both
from existing home hunters and our customers
competitors or
new entrants
targeting the
Group's
primary
revenue
markets.
--------------- ------------------------------------------------- ------------------------------------------------------------ -----------
3 New or Under-performance and impact on Rightmove's Risk
disruptive ability to grow revenue due to the potential * Continual improvements to our platforms including un-changed
technologies loss ongoing investment in mobile and tablet platforms
and changing of:
consumer * Audience engagement
behaviours * Developing our product proposition to meet our
Rightmove customers' needs and evolving business models
operates in a * Advertisers
fast-moving
online * Large in-house technology team with culture of
marketplace. * Demand for additional advertising products innovation
Failure to
innovate or
adopt new * Innovation lab to develop emerging models and
technologies technologies
or failure to
adapt to
changing * Ongoing monitoring of consumer behaviour and annual
customer 'Hackathons' which allow employees to spend time
business during work hours to develop their own online
models and property related ideas
evolving
consumer
behaviour may * Regular contact with the start-up and prop-tech
impact the communities to stay abreast of innovations in the
Group's marketplace
ability to
offer the best
products and
services to
its
advertisers
and
the best
consumer
experience.
--------------- ------------------------------------------------- ------------------------------------------------------------ -----------
4 Cyber security Potential reputational damage and financial Risk
and IT systems losses arising from penalties and fines due to * Disaster Recovery and Business Continuity Plans in un-changed
The Group has loss of consumer and customer confidence in the place, subject to regular review and testing
a high Rightmove brand and platforms.
dependency on
technology and * Use of three data centres to load balance and ensure
internal IT optimal performance and business continuity
systems. capability
In today's
digital world * Regular backups of key data
there are
increased
risks * Regular testing of the security of the IT systems and
associated platforms including penetration testing and
with external distributed denial of service attack procedures
cyber attacks
which could
result in * Ongoing investment in security systems
unavailability
of our
platforms. * Ongoing monitoring of external threats through
updates from external specialists and collaboration
A security with other online organisations
breach such as
corruption or
loss of key * Regular internal security training and
data may 'spearphishing' tests to minimise risk of social
disrupt the engineering attacks
efficiency and
functioning
of the Group's
day to day
operations.
--------------- ------------------------------------------------- ------------------------------------------------------------ -----------
5 Securing and The inability to recruit and retain talented Risk
retaining the people could impact our ability to maintain our * Ongoing succession planning and development of future un-changed
right talent financial performance and deliver growth. leaders
Our continued
success is When key staff leave or retire, there is a risk
dependent on that knowledge or competitive advantage is * Payment of competitive reward, including a blend of
our ability to lost. short and long-term incentives for senior management
attract, and the ability for all employees to participate in
recruit, the success of the Group through the SIP
retain and
motivate
our highly * Regular staff communication and engagement
skilled
workforce.
* Maintaining the culture of the Group, which generates
significant staff loyalty
* Introduced a number of initiatives to improve the
gender balance across various Rightmove teams as set
out in our Gender Pay Gap Report
--------------- ------------------------------------------------- ------------------------------------------------------------ -----------
Increased risk Decreased risk Risk unchanged
STRATEGIC REPORT - The EU referendum
The result of the UK's EU referendum in 2016 increased the level
of macroeconomic uncertainty and could increase the likelihood of
the housing market macroeconomic risks set out on page 22.
During 2017 the Board has continued to assess the impact of the
EU referendum result on the Group and its potential implications
and has concluded that there has been no material change to the
severity of this risk. In particular, the directors considered the
following:
-- The Rightmove business is largely subscription based and is
therefore less susceptible to short-term shocks or variations in
the property market or wider economy;
-- Around two-thirds of our estate agency customers also provide
lettings services which may mitigate the impact of any downturn in
the property market on their business; and
-- A reduction in housing market activity increases the
propensity for advertisers to evaluate their marketing spend both
offline and on other portals and we remain confident in the
strength of the Rightmove value proposition.
The directors believe that our strong market position and
relationships with our customers, and the value embedded in our
membership continue to position us well providing that housing
transaction volumes do not take a sharp downward turn.
STRATEGIC REPORT - Viability statement
In accordance with provision C.2.2. of the Code, the directors
have assessed the viability of the Group over a three-year period,
taking into account the Group's current position and the potential
impact of the principal risks and uncertainties set out on pages 21
to 24. Based upon the robust assessment of the principal risks
facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity, the directors
have a reasonable expectation that the Group and the Company will
be able to continue in operation and meet its liabilities as they
fall due over the three-year period to 31 December 2020.
The directors have determined that a three-year period to 31
December 2020 constitutes an appropriate period over which to
provide its viability statement, as the Group operates within the
online digital marketplace, and projections looking out further
than three years become significantly less meaningful in the
context of the fast moving nature of the market. Three years is
also the period considered under the Group's current three-year
strategic plan. The three-year plan is reviewed by the directors
and is developed on a segment by segment basis using a bottom up
model. The three-year plan makes certain assumptions about Agency
and New Homes customer numbers, Average Revenue Per Advertiser
(ARPA) growth and other breadth revenue streams and considers the
Group's profitability, cash flows and dividend cover over the
period.
The plan is subject to robust downside sensitivity analysis
which involves flexing a number of the main assumptions underlying
the plan. Where appropriate, analysis is carried out to evaluate
the potential financial impact over the period of the Group's
principal risks actually occurring. Specific scenarios that have
been modelled include downside scenarios in relation to the key
drivers of revenue being customer numbers and ARPA together with
the impact of a plausible combination of these scenarios.
Furthermore, our business model is structured so that the Group is
not overly reliant on a small customer base with no single customer
constituting more than 3% of Group sales.
Also given our significant free cash flow and our ability to
adjust our discretionary share buyback programme provides long-term
comfort around viability in the face of adverse economic or
competitive conditions.
Whilst this review does not consider all the risks that the
Group may face, the directors consider that this stress-testing
based assessment of the Group's prospects is reasonable in the
circumstances of the inherent uncertainty involved.
STRATEGIC REPORT - Corporate responsibility
Our people
We believe that our people are the key to Rightmove's success
and our most valued asset. We have always strived to make Rightmove
a great place to work and embedded this into our strategic
management objectives. We are proud of the energy, talent and
experience our people bring to the business. Our culture is open
and supportive, with an encouraging and restless yet focussed
approach which fosters innovation and dedication to excellent
customer service.
Recruitment
Recruiting the right people with capability and experience to
drive growth is vital to our business plan. The highly competitive
market for technology and customer centric skills means that we are
strongly focussed on maintaining a happy, collegiate working
environment and the top benefits to attract and retain the best
people.
Referrals from existing employees are a valuable source of new
recruits, typically ensuring a higher quality candidate with a
better cultural fit. All new vacancies are advertised internally
first to give our colleagues an opportunity to apply or recommend
someone. In 2017, 8% of new employees were introduced to Rightmove
by an existing employee.
We also believe that long-term commitment from Rightmove
employees is key to our culture and success. For a relatively young
company we are proud to have 67 people who have celebrated ten or
more years' service, which represents over 14% of our employees and
contributes to our strong people survey results.
We continue to support Milton Keynes College in preparing
students for their future careers. During the year we welcomed six
students completing their Level 3 Higher National Diplomas in our
design studio and offered two students internships. In addition,
our designers have offered support and mentoring to students on
campus. We have continued to expand our intern programme across
Rightmove. Our technology teams took on four computer and data
science interns from University College London.
People development and training
Every new employee attends two office based 'How Rightmove fits
together' days to introduce them to the business and our customers.
They also attend an off-site residential induction course to
introduce them to Rightmove's culture and values.
To ensure our colleagues can work to the best of their ability,
we continue to invest in extensive training and leadership
programmes, designed to equip them with all the necessary skills to
provide exceptional service to our customers and consumers. We have
also developed a suite of internal development courses for our
employees covering both technical and non-technical skills to
improve their performance through continual professional and
personal development.
Employee Benefits
Whilst we believe that being a great place to work helps us
attract the best talent we also reward our employees with a range
of additional and competitive benefits.
Rightmove contributes towards a group stakeholder pension plan.
Opt out rates are low and currently 95% of employees are members of
the pension plan. We also offer private healthcare complemented by
a cash plan scheme for all our employees' medical needs.
It is important that our people can directly benefit from their
contribution to the success of Rightmove and we offer two
all-employee share plans. Every employee can join the Group's Save
As You Earn Scheme (Sharesave), which allows employees to save
money from their salary with the option to purchase shares at a
discount after three years. In November 2017, the Group's ninth
Sharesave contract matured allowing employees to benefit from the
Group's success and strong share price growth over the last three
years. 67% of our employees currently participate in Sharesave.
The Rightmove Share Incentive Plan was launched in 2015 with an
award of 100 free shares for all employees. Those shares were
available to sell from January 2018, with those employees
benefiting from the Rightmove share price more than doubling over
that period. Further awards of 50 free shares have been made
annually in subsequent years to all qualifying employees.
We offer flexible working arrangements, fully support part time
working and reduced hours to allow our employees to balance their
work and family commitments. In 2017, we also introduced a flexible
holiday scheme to operate from 2018, allowing employees to buy or
sell up to five days (or the part-time equivalent) of holiday each
year to suit their personal circumstances.
Engagement
We encourage employee involvement and keep colleagues informed
of the Group's activities through 'townhalls', business performance
updates with senior management and quarterly sales conferences.
We have an employee recognition scheme, based on the 'Rightmove
behaviours' which allow us to focus on how we work not just on what
we achieve. It is an opportunity to nominate colleagues who have
demonstrated the best behaviours in action and it continues to
prove popular with awards presented every two months at our
'townhalls'.
We conduct an annual 'Have your Say' people survey to gauge what
our employees think and how they feel about working for Rightmove.
The survey results are followed up by every manager and we are
never complacent about the importance of acting on colleagues'
feedback. We are proud of another set of strong results from the
survey with highlights including:
-- 90% of respondents think Rightmove is a great place to work;
-- 90% are proud to tell people they work for Rightmove; and
-- 92% enjoy working in their teams.
An employee engagement score will again form part of the senior
management bonus criteria in 2018, demonstrating the importance of
employee engagement to the continuing success of Rightmove.
The management team continues to work hard to improve the
employee experience at Rightmove. In 2017, we took on additional
space and refurbished our London office, taking employee
preferences into account; the result being a creative and welcoming
space.
Equality and diversity
Rightmove has a firm commitment to equality of opportunity in
all our employment policies and practices. Our recruitment and
selection processes focus on selecting the best candidate for a
role, regardless of their age, gender, sexuality, full or part-time
status, disability and marital status.
We recognise that a diverse workforce reflects Rightmove's broad
consumer base and our many customers. Our people have a wide range
of experience and perspectives that we believe promote innovation,
constructive challenge and success. Drawing on a wide variety of
personal attributes drives value in the way we do business and
helps us anticipate and provide what our customers need from us and
what home hunters want from Rightmove.
At 31 December 2017, female representation on the Board was 38%
and with the appointment of Lorna Tilbian in February 2018 that
proportion has risen to 44% of Board members. Following the
retirement of Ashley Martin in May 2018, we are delighted that
female representation on the Board will rise to 50%.
The Board continues to focus on succession planning and
developing potential within the senior management team to enable us
to promote internal candidates to the Board. The Group succession
plan also identifies individuals with potential to join the senior
management team in the wider organisation. As at 31 December 2017,
26% (2016: 21%) of our leadership team(1) , were female. The Board
is keen to strengthen female representation in senior roles and has
been a contributor to the Hampton-Alexander Review, a Government
sponsored initiative which aims to increase female leadership
within the FTSE350. In line with the Hampton-Alexander Review,
Rightmove has set a target for 33% female leadership by 2020.
(1) Being the Executive Committee and their direct reports as
per the Hampton-Alexander definition.
A breakdown by gender of the number of persons as at 31 December
2017 by various classifications as required by the Companies Act,
is set out below:
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
(1) The Hampton-Alexander cohort comprises members of the
Executive Committee and their direct reports.
(2) The Senior Management Team comprises the Hampton-Alexander
cohort, excluding the executive directors.
Gender Pay
Rightmove has reported its gender pay gap for 2017 and full
details can be found on the Company's website at
plc.rightmove.co.uk
We are confident that all Rightmove employees are paid equally
for working in the same jobs and we are pleased to report that men
and women are almost equally represented in our wider workforce.
The main contributor to Rightmove's gender pay gap is the mix in
Rightmove communities comprising the highest and lowest quartile
salaries. Women are underrepresented in the higher paid senior
management and technology teams and men are underrepresented in the
customer experience team.
Technology is a sector blighted by a lack of gender diversity,
but accepting the status quo is not in our DNA. Below is our gender
pay gap as at April 2017, together with a description of some of
the initiatives that we have underway for improving our gender
balance going forward.
Difference between male and female pay
Mean Median
------------------------------------- ------ -------
Difference in hourly rate of pay(1) 30.6% 37.0%
------------------------------------- ------ -------
Difference in bonus pay(2) 70.4% 36.5%
------------------------------------- ------ -------
(1) Calculated using Rightmove Group Limited pay data from April 2017.
(2) Calculated using 12 months of Rightmove Group Limited bonus pay data to 5 April 2017.
We work hard to create an environment where men and women have
the opportunity to build careers throughout the business and
believe that our open, collaborative culture is key to that
objective. We are committed to a number of actions to balance our
teams in a fair and transparent way, including:
Balance for all Addressing imbalance
------------------------------------------------------------- ---------------------------------------------------------------
* We have developed maternity and paternity workshops * We are developing a mentoring programme to support
to support Rightmovers through the changing dynamic career development and aim to exceed the
of family and work responsibilities and their return Hampton-Alexander review target of 33% of the
to work after a career break leadership team being female by 2020
* We recognise that balancing work and life commitments * We are creating an internal talent pipeline to
can make people shy away from taking the next step in promote the next generation of leaders
their career. New flexible working arrangements have
been rolled out for all employees
* We have launched a graduate programme in technology
to attract the best new talent to help create balance
in our technology teams over the longer term
* We have reviewed all job specifications and updated
the format of our recruitment days to guarantee
universal appeal and attract the best talent
------------------------------------------------------------- ---------------------------------------------------------------
Human rights
Rightmove does not have a specific human rights policy, we have
a framework of policies and statements covering equal
opportunities, dignity at work, disability, anti-slavery and
anti-bribery that adhere to internationally recognised human rights
principles.
Charitable activity
We continue to encourage our employees to raise funds for their
chosen charities. In 2017 we match funded GBP24,000 (2016:
GBP18,000), supporting charities including The Stroke Association,
The Carers Trust, Scope and many more. From breakfast mornings to
running marathons we are delighted that so many of our colleagues
devote their time and energy to such good causes. For the second
year running we have supported food banks at Christmas; this year
we delivered a car packed full of food to the Milton Keynes Food
Bank.
In 2017, we contributed GBP56,000 (2016: GBP49,000) via Agents
Giving to support our customers' charitable initiatives, which
ranged from a Mount Everest trek to Tough Mudders, triathlons and
fun runs. We contribute to the costs of setting up the fundraising
activity, which allows more of the money raised by our customers to
go directly to charities through a charitable sponsorship fund we
set up with Agents Giving. We are very proud that the fund has
raised over GBP1 million since 2014 for charitable causes supported
by our customers.
Looking ahead to 2018 we are pleased to be partnering with the
Milton Keynes marathon as headline sponsor in 2018 (the home of
Rightmove) in aid of Meningitis Now and Winter Night Shelter. These
two causes are very important to our employees and fund raising
efforts are well underway as part of our 'On The Move' campaign,
with over GBP1,200 raised in the last 4 weeks of 2017. We have set
our employees a target of raising GBP26,000, to be split equally
between both charities and Rightmove will make a significant
additional contribution. Over 50 employees will be volunteering
their time, training and being creative with their fundraising
efforts to support these charities.
We will be sponsoring the Milton Keynes College Football Academy
again in 2018. We have worked closely with the college over the
last few years, enabling the academy to create more opportunities
for their students to study for off-pitch roles in sport.
Environment
We are conscious of playing our part in tackling climate change
and always encourage the efficient use of resources that contribute
to environmental damage.
Rightmove has changed the way people search for property,
reducing the reliance on printed media and the environmental impact
that goes with it. Our platforms are designed to optimise the
information available to home hunters, giving our customers the
ability to advertise high quality photographs, floor plans and
property particulars and reducing the need for paper copies of
property particulars.
The quality of property information available on Rightmove also
reduces the amount of time home hunters waste in visiting
inappropriate properties, usually by car. We have worked hard to
improve the functionality of our platforms with better photographs
and property floor plans to comprehensive map searches and aerial
photographs, which helps to identify the specific location of a
property. We continue to add information to help home hunters
customise their property search on Rightmove including School
Checker and broadband speeds. All these innovations have helped to
reduce the carbon footprint generated by prospective buyers and
renters making unnecessary journeys to visit unsuitable
properties.
The Rightmove platforms enable our customers to display Energy
Performance Certificates which allow prospective buyers to evaluate
the energy efficiency of a property before buying and to identify
opportunities to improve the energy efficiency once they have
purchased the property.
As an internet-based business with most staff employed in two
office locations, our environmental footprint is small. We continue
to encourage our employees to minimise their use of resources and
recycle materials wherever possible. There are no individual waste
bins in our London and Milton Keynes offices to encourage and
increase the amount of recycling.
As an operator of an online property portal, our main
environmental impact is from the power usage of our data centres.
Our procurement policy is to purchase hardware with the best
computational performance which uses the least electrical
power.
We encourage our employees to use public transport rather than
driving between our two office locations in London and Milton
Keynes. We encourage participation in our Cycle to Work scheme and
have many keen cyclists. We have also introduced the option for
staff entitled to a company car to select hybrid electric cars as
an alternative to petrol or diesel engines. In 2017, our fuel card
provider Allstar, again partnered with Forest Carbon to capture the
CO(2) emissions from our fleet of company cars and turn them into
new UK woodlands.
As an online business, we tend towards a paperless environment.
However, we recognise that our responsibilities do not stop with
how we operate internally and we encourage all our customers,
business partners and suppliers to use online records and reduce
printing, especially emails. Wherever possible we have replaced
paper-based services and communications with online alternatives,
including e-communications for shareholders, online customer
membership forms, management information and marketing reports and
product documentation.
Greenhouse gas reporting
The Companies Act 2006 (Strategic Report and Directors' Report)
Regulations 2013 requires all UK quoted companies to report on
their greenhouse gas (GHG) emissions, which are classified as
either direct or indirect and which are divided further into Scope
1, Scope 2 and Scope 3 emissions.
Direct GHG emissions are emissions from sources that are owned
or controlled by Rightmove. Indirect GHG emissions are emissions
that are a consequence of the activities of the Group but that
occur at sources owned or controlled by other entities.
Scope 1 emissions: Direct emissions controlled by the Group
arising from Company cars. Whilst the cars are leased, we are
responsible for the emissions and therefore we report these under
Scope 1.
Scope 2 emissions: Indirect emissions attributable to the Group
due to its consumption of purchased electricity.
Scope 3 emissions: Other indirect emissions associated with
activities that support or supply the Group's operations, we
include emissions arising from our third party run data
centres.
The Group is required to report Scope 1 and 2 emissions for its
reporting year to 31 December 2017. Scope 3 is not mandatory,
however the Group has again chosen to report Scope 3 emissions as
it relates to electricity used in data centres, in which the Group
rents space to house and operate various servers, which host our
platforms.
Rightmove emissions by scope:
Scope Source Tonnes CO(2) e(1) Tonnes CO(2) e(1)
2017 2016
--------- --------------------------- ------------------ ------------------
Scope 1 Company cars 495 486
--------- --------------------------- ------------------ ------------------
Scope 2 Electricity 255 303
--------- --------------------------- ------------------ ------------------
Scope 3 Outsourced - data centres 257 298
--------- --------------------------- ------------------ ------------------
Total 1,007 1,087
-------------------------------------- ------------------ ------------------
(1) UK emissions factors have been used for all data. All
emission factors have been selected from the emissions conversion
factors published annually by Defra.
www.gov.uk/measuring-and-reporting-environmental-impacts-guidance-for-businesses.
Higher fuel consumption was due to increased business mileage by
employees entitled to Company cars. The reduction in electricity
use is partly due to closing one floor of our London office for
refurbishment during 2017 and lower electricity consumption on the
two new floors. We expect Scope 2 emissions to return to historic
levels in 2018.
Emissions have also been calculated using an 'intensity metric',
which will enable the Group to monitor how well we are controlling
emissions on an annual basis, independent of fluctuations in the
levels of their activity. As Rightmove is a 'people' business, the
most suitable metric is 'Emissions per Employee', based on the
average number of employees during the year. The Group's emissions
per employee are shown in the table below.
Emissions per Employee:
Scope Source Tonnes CO(2) e Tonnes CO(2) e
per employee(1) per employee(1)
2017 2016
--------- --------------------------- ----------------- -----------------
Scope 1 Company cars 1.0 1.0
--------- --------------------------- ----------------- -----------------
Scope 2 Electricity 0.5 0.7
--------- --------------------------- ----------------- -----------------
Scope 3 Outsourced - data centres 0.5 0.7
--------- --------------------------- ----------------- -----------------
Total 2.0 2.4
-------------------------------------- ----------------- -----------------
(1) Based on 479 (2016: 466) employees taken as the average
number of employees in the Group throughout the year.
Scope 2 and 3 emissions per employee have declined year on year
due in part to an increase in average headcount which has not had a
proportionate impact on emissions from running our offices or the
outsourced data centres. We will continue to monitor and look for
ways to improve energy efficiency.
Methodology
We have reported on all of the emission sources required under
the Companies Act 2006 (Strategic Report and Directors' Report)
Regulations 2013. We have used the GHG's Protocol's Operational
Control consolidation method. We do not have responsibility for any
emission sources that are not included in the above
information.
Health and safety
The Group's policy on health and safety is to provide adequate
control of the health and safety risks arising from work
activities. This is delivered through consultation with, and
training of, employees, the provision and maintenance of plant and
equipment, safe handling and use of all substances and the
prevention of accidents and causes of ill health. At Rightmove, our
approach to the effective management of health and safety is to
treat it as an integral part of business management. During the
year, we continued our fire safety, first aid and work place safety
training.
GOVERNANCE - Directors and officers
Scott Forbes
Chairman
Appointment to the Board
13 July 2005
Committee membership
Nomination (Chairman)
Current external commitments
Chairman of Ascential plc
Non-executive director of Travelport Worldwide Limited
Chairman of Innasol Group Limited
Chairman of Cars.com Inc
Previous roles and relevant experience
Chairman of Orbitz Worldwide until September 2015. Director of
NetJets Management Ltd, a subsidiary of Berkshire Hathaway until
October 2009. Scott has over 35 years' experience in operations,
finance and mergers and acquisitions including 15 years at Cendant
Corporation which was formerly the largest worldwide provider of
residential property services. Scott established Cendant's
international headquarters in London in 1999 and led this division
as Group Managing Director until he joined Rightmove.
Peter Brooks-Johnson
Chief Executive Officer
Appointment to the Board
10 January 2011
Current external commitments
None
Previous roles and relevant experience
Peter joined Rightmove in 2006 and became Chief Operating
Officer in April 2013 having been Managing Director of
rightmove.co.uk since 2011 and head of the Agency business since
2008. He was promoted to Chief Executive Officer in May 2017. Prior
to joining Rightmove, Peter was a management consultant with
Accenture and the Berkeley Partnership.
Robyn Perriss
Finance Director
Appointment to the Board
30 April 2013
Current external commitments
None
Previous roles and relevant experience
Robyn joined Rightmove in 2007 as Financial Controller with
responsibility for day to day financial operations and was promoted
to the Board as Finance Director in April 2013. She was also
Company Secretary from April 2012 to July 2014 and from June to
October 2016. Robyn qualified as a chartered accountant in South
Africa with KPMG and worked in both audit and transaction services.
Prior to joining Rightmove, Robyn was Group Financial Controller at
the online media business, Auto Trader.
Peter Williams
Senior Independent Non-Executive Director
Appointment to the Board
3 February 2014
Committee membership
Remuneration (Chairman), Audit, Nomination
Current external commitments
Chairman of DP Eurasia NV
Chairman of boohoo.com plc
Chairman of Mister Spex GmbH
Chairman of U and I plc
Previous roles and relevant experience
Peter was previously senior independent director of ASOS plc and
Sportech plc, Chairman of Jaeger, held non-executive director roles
in Cineworld Group plc, the EMI group, Blacks Leisure Group plc,
JJB Sports plc, GCap Media plc and Capital Radio Group plc. In his
executive career, Peter was Chief Executive at Alpha Group plc and
prior to that, Chief Executive of Selfridges plc where he also
acted as Chief Financial Officer for over ten years.
Ashley Martin
Non-Executive Director
Appointment to the Board
11 June 2009
Committee membership
Audit (Chairman), Nomination
Current external commitments
Non-executive director of Zegona Communications plc
Previous roles and relevant experience
Ashley qualified as a chartered accountant in 1981 and has a
career in finance spanning 35 years. He was previously Global Chief
Financial Officer of Engine Holding LLC and Group Finance Director
of Rok plc, the building services group, and Group Finance Director
of the media services company, Tempus plc.
Rakhi Goss-Custard
Non-Executive Director
Appointment to the Board
28 July 2014
Committee membership
Remuneration, Nomination
Current external commitments
Non-executive director of Kingfisher plc
Non-executive director of Schroders plc
Non-executive director of Intu Properties plc
Non-executive director of Be Heard Group plc
Previous roles and relevant experience
Rakhi was previously Director of UK Media at Amazon to June
2014. She held various other senior positions during her 11-year
tenure at Amazon including Media, Entertainment, General
Merchandise and Book divisions as well as Product Development.
Prior to Amazon, Rakhi previously advised Zappos and held strategy
roles at TomTom and Oliver Wyman.
Jacqueline de Rojas CBE
Non-Executive Director
Appointment to the Board
30 December 2016
Committee membership
Remuneration, Nomination
Current external commitments
President of techUK
Non-executive director of Costain Group plc
Non-executive director of AO World plc
Previous roles and relevant experience
Jacqueline has been employed throughout her career by global
blue-chip software companies and has held senior positions at
Citrix, CA Technologies, McAfee and Ascential Software. She was a
non-executive director of Home Retail Group from 2012 to 2016.
Jacqueline is an advisor to the Digital Leaders Technology Group
and a passionate advocate for diversity and inclusion in the
workplace with a particular focus on getting women and girls into
digital careers and studying STEM subjects. She was awarded a CBE
for services to international trade in the technology industry in
the 2018 New Year's Honours list.
Andrew Findlay
Non-Executive Director
Appointment to the Board
1 June 2017
Committee membership
Audit, Nomination
Current external commitments
Director of easyJet plc
Previous roles and relevant experience
Andrew has been the Chief Financial Officer of easyJet plc since
2015. Before joining easyJet, Andrew was Chief Financial Officer of
Halfords plc and prior to that Director of Finance, Tax and
Treasury at Marks and Spencer. He formerly held senior finance
roles at the London Stock Exchange and at Cable and Wireless, both
in the UK and US. Andrew qualified as a chartered accountant with
Coopers & Lybrand.
Lorna Tilbian
Non-Executive Director
Appointment to the Board
1 February 2018
Current external commitments
Non-executive director of Jupiter UK Growth Investment Trust
plc
Non-executive director of Proven VCT plc
Non-executive director of Finsbury Growth & Income Trust
PLC
Non-executive director of Euromoney Institutional Investor
PLC
Non-executive director M&C Saatchi PLC
Previous roles and relevant experience
Lorna was Executive Director and Head of the Media Sector in
Corporate Broking & Advisory at Numis Corporation PLC until
September 2017. She was a founder of Numis when it launched in 2001
having worked at Sheppards, as a director of SG Warburg and
executive director of WestLB Panmure. Lorna sits on the Advisory
Panel of Tech City UK's Future Fifty programme and has served as a
Cabinet Ambassador (for Creative Britain) for the Department of
Culture, Media & Sport.
Sandra Odell
Company Secretary
Appointment as officer to the Board
1 November 2016
Current external commitments
None
Previous roles and relevant experience
Sandra is a Fellow of the Institute of Chartered Secretaries and
Administrators. Prior to joining Rightmove, Sandra was Company
Secretary of Quintain, the London property developer, and before
that held various senior company secretarial positions in listed
financial services companies.
GOVERNANCE - Corporate governance report
Introduction
The following sections explain how the Company applies the main
provisions of the UK Corporate Governance Code (the Code) issued by
the Financial Reporting Council (FRC), as required by the Listing
Rules of the Financial Conduct Authority (FCA) and meets the
relevant information provisions of the Disclosure and Transparency
Rules of the FCA.
The statement of corporate governance covers:
-- the structure and role of the Board and its committees;
-- relations with the Company's shareholders and the Annual General Meeting (AGM); and
-- the reports of the Audit Committee and Nomination Committee
including Board effectiveness and evaluation.
The report of the Remuneration Committee is set out separately
in the Directors' Remuneration Report on pages 61 to 94.
The Group's risk management and internal control framework and
the principal risks and uncertainties are described on pages 20 to
24. The Directors' Report on pages 56 to 59 also contains
information required to be included in this statement of corporate
governance.
Statement of compliance
The Code sets out the principles and provisions relating to good
governance of UK listed companies and can be found on the FRC's
website at frc.org.uk.
We are pleased to confirm that, for the year under review, the
Company has complied fully with the principles and provisions of
the Code.
The Board's role
The Board is collectively responsible to shareholders for the
overall direction and control of the Group and has the powers and
duties set out in the Companies Act and the Company's Articles of
Association. The Board delegates certain matters to the Board
committees and delegates the day to day operational aspects of the
business to the executive directors.
The schedule of matters requiring Board approval includes:
-- Rightmove's business strategy;
-- the annual business plan;
-- changes to the Group's capital structure;
-- the capital management and dividend policies;
-- the annual and half year results and shareholder communications;
-- major acquisitions and disposals;
-- appointment and removal of officers of the Company; and
-- the system of internal control and risk management.
The key responsibilities and actions carried out by the Board
during the year are set out below:
Responsibility Specific actions and information received during the year
--------------- -----------------------------------------------------------------------------------------------------
Strategy The June Board Strategic initiatives The Group's Presentations
and direction meeting was identified at 2018 budget were received
devoted to the strategy and three-year in relation
Rightmove's away day were business plan to innovation
strategy and prioritised was approved in the rental
included a then monitored, market including
discussion analysed and RentLondon,
of the potential discussed at an experimental
influences, every Board app which explores
threats and meeting trends in search
opportunities to make the
to Rightmove's process of finding
business model a rental property
arising from more efficient
economic, regulatory and incorporates
and other market a messenger
changes bot and RentReady,
a tenant passport
initiative
--------------- ------------------------ ---------------------- ------------------------ -------------------------
Performance Regular market The Board regularly Senior management The Board received
monitoring updates and reviewed updates gave detailed an update on
reports were on business presentations Rightmove Discover,
received on performance on Agency and the predictive
the competitive in relation Overseas business algorithm product
landscape including to analyst consensus performance launched in
new business forecasts and and progress 2017 to Agency
models and the business against other customers, following
innovation plan business initiatives the acquisition
of The Outside
View in the
prior year
--------------- ------------------------ ---------------------- ------------------------ -------------------------
Shareholder Investor feedback Monthly reports Rightmove's The Remuneration
engagement was received are received corporate broker Committee initiated
via the executive on the shareholder UBS gave a investor correspondence
directors throughout demographic presentation, relating to
the year, particularly and analysis updating the the application
following the of significant Board on the of the Remuneration
results and changes to the key market drivers Policy for 2018
investor roadshows share register of the Group's
valuation
--------------- ------------------------ ---------------------- ------------------------ -------------------------
Governance The Board conducts Reports were The Group's Senior management
and risk a bi-annual received from regulatory results gave briefings
review of the the Audit Committee announcements and presentations
entire risk on Rightmove and Annual Report covering a wide
register with Assurance reviews, were reviewed range of topics
particular with particular in detail and including cyber
focus on principal focus on the approved and information
risks affecting Group's readiness security risks,
the business for the General corporate governance
together with Data Protection and the 2017
the consideration Regulation in insurance renewal
of new and May 2018 programme
emerging risks
--------------- ------------------------ ---------------------- ------------------------ -------------------------
People and The Board considered The Board received Group employee The Board considered
values the organisation presentations satisfaction the gender pay
strengths, from senior scores as part gap analysis
capability managers throughout of the 'Have and the proposed
requirements the year to your say' survey actions to reduce
and succession ensure exposure were monitored the gap going
for senior to the breadth across a range forward
managers as and depth of of criteria
well as skills talent supporting
and experience business growth
possessed by
its directors
relative to
those skills
and capabilities
identified
in the Board
Strategy Review
that are necessary
to help Rightmove
achieve its
strategic objectives
--------------- ------------------------ ---------------------- ------------------------ -------------------------
There are usually seven scheduled Board meetings each year
including one meeting or away day devoted to consideration of the
Group's strategy. Additional meetings can be arranged at short
notice at the request of any director, if required. In addition to
scheduled Board meetings, there is regular informal dialogue
between the directors.
Directors receive Board papers well in advance of meetings to
allow sufficient time for review and consideration. If any director
raises a concern or challenges any aspect of the business conducted
at a Board meeting, the Company Secretary will ensure their
comments are appropriately recorded in the Board minutes. In
addition to formal Board papers, directors receive monthly
management and financial reports on the operational and financial
performance of the business, setting out actual and forecast
financial performance against approved budgets and other key
performance indicators. The Board also receives copies of broker
reports and market reviews relating to Rightmove.
Board committees
The Board has established three principal committees, the Audit
Committee, the Remuneration Committee and the Nomination Committee,
to assist it in the execution of its duties. The Chairman of each
Committee reports on the respective Committee's activities at the
subsequent Board meeting.
The Committees' terms of reference are available on the
Company's corporate website, plc.rightmove.co.uk or by request from
the Company Secretary.
Each of the Committees is authorised, at the Company's expense,
to obtain legal or other professional advice to assist in carrying
out its duties. No person other than a Committee member is entitled
to attend the meetings of these Committees, except by invitation of
the Chairman of that Committee.
Current membership of the Committees is shown on page 43. The
composition of these Committees is reviewed regularly, taking into
consideration the recommendations of the Nomination Committee.
Committee Role and terms of reference Membership Minimum Committee
required number report
under the of on pages
terms of meetings
reference per year
-------------- ------------------------------------------------------------ --------------- ----------- ----------
Reviews and reports to the
Board on:
* Group financial reporting;
* the system of internal control and risk management;
* independence and effectiveness of the external audit
process; and
* the internal audit plan, results and effectiveness o
f
Rightmove Assurance, the outsourced internal audit
function.
At least
three members
who should
Recommends the appointment be
of the external auditors independent
to the Board for approval non-executive
Audit by shareholders. directors Three 45 to 52
-------------- ------------------------------------------------------------ --------------- ----------- ----------
Makes recommendations to
the Board on:
* the Remuneration Policy and strategy for executive
directors and senior managers;
* long-term incentive arrangements;
* the design and determination of targets under any
performance-related pay scheme; and
* any major changes in employee benefit structures
with the objective of ensuring
that directors and employees
are incentivised and fairly
rewarded for their individual
contributions to the Group's At least
overall performance. Careful three members
consideration is given to who should
the interests of the shareholders be
and to the financial and independent
commercial health of the non-executive
Remuneration Group. directors Two 61 to 94
-------------- ------------------------------------------------------------ --------------- ----------- ----------
Undertakes an annual review
of organisation and succession At least
planning and ensures that three
the membership and composition members,
of the Board, including the majority
the balance of skills, remains of whom
appropriate. should
be
Makes recommendations for independent
the membership of the Board, non-executive
Nomination Audit and Remuneration Committees. directors Two 53 to 55
-------------- ------------------------------------------------------------ --------------- ----------- ----------
Board composition
The Board at the date of this report comprises two executive
directors and seven non-executive directors, including the
Chairman. The two executive directors are Peter Brooks-Johnson
(Chief Executive Officer) and Robyn Perriss (Finance Director) and
the non-executive directors are Scott Forbes (Chairman), Peter
Williams (Senior Independent Director), Ashley Martin, Rakhi
Goss-Custard, Jacqueline de Rojas, Andrew Findlay and Lorna
Tilbian.
Biographical details of all directors at the date of this report
appear on pages 33 to 36 and details of Committee membership appear
on page 43.
The Board's size and composition is kept under regular review by
the Nomination Committee.
Board changes
Nick McKittrick, Chief Executive Officer, retired from the Board
on 9 May 2017 and Peter Brooks-Johnson, formerly Chief Operating
Officer, was appointed as Chief Executive Officer from that date.
Colin Kemp retired from the Board on 9 May 2017, having served nine
years as a non-executive director.
Andrew Findlay was appointed as a non-executive director on 1
June 2017 and Lorna Tilbian was appointed with effect from 1
February 2018. All other directors served throughout the year.
Division of responsibilities
The posts of Chairman and Chief Executive Officer are separate
and there are clear written guidelines to support their division of
responsibilities. The key responsibilities of the Board members are
summarised below:
Chairman Responsible for the leadership and governance
of the Board, including:
* ensuring its effectiveness by creating and managing
constructive relationships between the executive and
non-executive directors;
* ensuring there is ongoing and effective communication
between the Board and its key stakeholders; and
* with the assistance of the Company Secretary, setting
the Board's agenda and ensuring that adequate time is
available for discussion and effective decision
making, and that directors receive sufficient,
relevant, timely and clear information.
------------------------ -------------------------------------------------------------
Chief Executive Officer Responsible for the day to day management
of the Group, including:
* the operational and financial performance of the
Group;
* developing the Group's objectives and strategy and
following Board approval, the successful execution of
strategy;
* effective and ongoing communication with
stakeholders; and
* chairing the Executive Committee.
------------------------ -------------------------------------------------------------
Non-executive directors The role of the non-executive directors is
to:
* constructively challenge the executive directors; and
* monitor the delivery of the strategy within the risk
and control framework set by the Board.
The non-executive directors bring wide and
varied commercial experience and independent
judgement to the Board and the Committees'
deliberations.
The breadth of management, financial and listed
company experience of the non-executive directors
is described in the biographical details on
pages 33 to 36 and demonstrates a range of
business expertise that provides the right
mix of skills and experience given the size
of the Group.
------------------------ -------------------------------------------------------------
Senior Independent The role of the Senior Independent Director
Director is to:
* act in an advisory capacity to the Chairman;
* deputise for the Chairman if required;
* serve as an intermediary for other directors when
necessary;
* be available to shareholders if they have concerns
which they have not been able to resolve through the
normal channels of the Chairman and Chief Executive
Officer or other executive directors for which such
contact is inappropriate; and
* conduct an annual review of the performance of the
Chairman and, in the event it should be necessary,
convening a meeting of the non-executive directors.
------------------------ -------------------------------------------------------------
Company Secretary The Company Secretary:
* monitors compliance with appropriate Board
procedures;
* advises the Board on corporate governance matters;
* assists the Chairman in ensuring that all the
directors have full and timely access to relevant
information; and
* assists the Chairman by organising directors'
induction and training programmes.
The Company Secretary also acts as Secretary
to the Audit, Remuneration and Nomination
Committees.
The appointment and removal of the Company
Secretary is a matter for Board approval.
------------------------ -------------------------------------------------------------
Board diversity and experience
We are committed to a Board comprised of directors from
different backgrounds with diverse and relevant experience,
perspectives, skills and knowledge. We believe that diversity,
including gender diversity, amongst directors contributes towards a
high performing and effective Board and business, so we strive to
maintain the optimal balance. We endorse both a meritocratic Board
appointment process and balanced gender representation on the
Board.
At 31 December 2017, 38% of Board members were female and
following the appointment of Lorna Tilbian, that proportion has
risen to 44% of Board members. Following the retirement of Ashley
Martin in May the proportion of female Board members will rise to
50%. We remain committed to recruiting the best people and
appropriate talent for the business whilst seeking to maintain as
near 50:50 gender balance on the Board as possible.
The range of skills and experience the Board considers necessary
to deliver Rightmove's business strategy, and which were identified
in the Board Strategy Review, includes:
-- Finance and governance
-- Voice of the customer and property market
-- Technology and innovation
-- Voice of the consumer and retail
-- Digital marketing and online media, and
-- Corporate transactions.
Board independence
The Code provides that the Board should identify in the Annual
Report each non-executive director that it considers to be
independent. That is, to determine whether the director is
independent in character and judgement and whether there are
relationships or circumstances which are likely to affect, or could
appear to affect, the director's judgement.
The Board reviews non-executive director independence on an
annual basis taking into account such factors as their contribution
to unbiased and independent debate during meetings. The Board
considers that there is an appropriate balance between the
executive and non-executive directors and that all non-executive
directors are fully independent of management and independent in
character and judgement. Ashley Martin will have completed nine
years' service as a non-executive director in June 2018 and will
retire from the Board following the 2018 AGM. The Nomination
Committee carefully considered the independence of Lorna Tilbian
before her appointment to the Board and details of that process is
set out in the Nomination Committee report on pages 54 to 55.
To safeguard their independence, a director is not entitled to
vote on any matter in which they may be conflicted or have a
personal interest. Where necessary, directors are required to
absent themselves from a meeting of the Board while such matters
are being discussed. In cases of doubt, the Chairman of the Board
is responsible for determining whether a conflict of interest
exists.
The Chairman is also the Chairman of two other publically listed
companies. The executive directors do not hold any other
non-executive directorships or commitments requiring disclosure
under the Code.
Board tenure as at 31 December 2017 Balance of directors as at
31 December 2017
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
Re-election to the Board
Directors are appointed and may be removed in accordance with
the Articles of Association of the Company and the provisions of
the Companies Act. All directors are subject to election at the
first AGM following their appointment and in accordance with the
Code, all directors will seek re-election at the 2018 AGM with the
exception of Ashley Martin, who will retire from the Board on that
date.
Board and Committee membership and attendance
The membership of the Committees of the Board and attendance at
Board and Committee meetings for the year under review are set out
in the table below:
Remuneration Audit Nomination
Board Committee Committee Committee
---------------------- ------- ------------- ------------ -----------
Total meetings 7 6 5 3
---------------------- ------- ------------- ------------ -----------
Scott Forbes 7 - - 3
---------------------- ------- ------------- ------------ -----------
Peter Brooks-Johnson 7 - - -
---------------------- ------- ------------- ------------ -----------
Robyn Perriss 7 - -
---------------------- ------- ------------- ------------ -----------
Ashley Martin 7 - 5 3
---------------------- ------- ------------- ------------ -----------
Peter Williams 7 6 5 3
---------------------- ------- ------------- ------------ -----------
Rakhi Goss-Custard 7 6 4(1) 3(2)
---------------------- ------- ------------- ------------ -----------
Jacqueline de Rojas 7 3(3) - 2(2)
---------------------- ------- ------------- ------------ -----------
Andrew Findlay 5(4) - 3(4) 2(4)
---------------------- ------- ------------- ------------ -----------
-
(1) Rakhi Goss-Custard was a member of the Audit Committee until
9 May 2017 and attended two further meetings as a guest.
(2) Rakhi Goss-Custard and Jacqueline de Rojas joined the
Nomination Committee on 9 May 2017 and attended all meetings after
that date. Rakhi attended one meeting before that date as a
guest.
(3) Jacqueline de Rojas joined the Remuneration Committee on 9
May 2017 and attended all meetings after that date.
(4) Andrew Findlay joined the Board, Audit and Nomination
Committees on 1 June 2017 and attended all meetings after that
date.
(5)
In addition to the above meetings, the Chairman conducts
meetings with the non-executive directors without the executive
directors being present when required. Peter Williams, the Senior
Independent Director, chaired a meeting in December 2017 of the
non-executive directors at which the performance of the Chairman
was also reviewed, without the presence of the Chairman.
Indemnification of directors
The Articles of Association of the Company allow for a
qualifying third party indemnity provision between the Company and
its directors and officers, which remains in force at the date of
this report. The Group has also arranged directors' and officers'
insurance cover in respect of legal action against the directors.
Neither our indemnity nor the insurance provides cover in the event
that a director is proven to have acted dishonestly or
fraudulently.
The Group has a Dealing Code setting out the process and timing
for dealing in shares, which is compliant with the Market Abuse
Regulation. The Dealing Code applies to all directors, who are
persons discharging managerial responsibility, and other
insiders.
Shareholder relations
The Board is accountable to shareholders for the performance and
activities of the Group and welcomes opportunities to engage with
shareholders.
Within the terms of the regulatory framework, the directors have
conducted regular and open dialogue with shareholders through
ongoing meetings with institutional investors and research firms to
discuss strategy and operational and financial performance. Contact
in the UK is principally with the Chief Executive Officer and the
Finance Director. The Chairman attends selected investor meetings
in the UK and the USA. The Senior Independent Director is also
available to shareholders if they wish to supplement their
communication, or if contact through the normal channels is
inappropriate.
The Remuneration Committee proactively engaged with the
Company's top shareholders ahead of setting the Remuneration Policy
which was approved at the 2017 AGM and again in late 2017 when
setting executive director base salary levels for 2018.
The Board is kept informed of the views and opinions of those
with an interest in the Company's shares through reports from the
Chief Executive Officer and the Finance Director, as well as
reports from the Company's brokers, UBS and Numis.
Shareholders are also kept up to date with the Group's
activities through the half year results statement and Annual
Report and the investor relations section of its website, at
plc.rightmove.co.uk, which provides details of all the directors,
the financial calendar, latest news including financial results,
investor presentations and Stock Exchange announcements.
Annual General Meeting
The AGM provides an opportunity for shareholders to vote on
aspects of the Company's business, meet the directors and ask them
questions. The AGM will be held on 4 May 2018 at the offices of UBS
Limited at 5 Broadgate, London EC2M 2QS.
The Company will arrange for the Annual Report and related
papers to be available on the Company's corporate website at
plc.rightmove.co.uk or posted to shareholders (where requested) at
least 20 working days before the AGM.
The Company continues to comply with the Code with the
separation of all resolutions put to shareholders. The Company
proactively encourages shareholders to vote at general meetings by
providing electronic voting for shareholders who wish to vote
online and personalised proxy cards to shareholders electing to
receive them, ensuring that all votes are clearly identifiable. The
Company presently takes votes at general meetings on a show of
hands on the grounds of practicality, owing to the limited number
of shareholders in attendance. All proxy votes are counted and the
level of proxy votes, including votes withheld, for each resolution
are reported after each resolution and published on the Company's
website.
GOVERNANCE- Corporate governance
Audit Committee report
Dear Shareholder
I am pleased to present the 2017 report of the Audit Committee
(the Committee).
This report provides an overview of the principal activities of
the Committee and details how it has discharged its
responsibilities during the year.
The Committee is an essential part of Rightmove's governance
framework to which the Board has delegated oversight of the
accounting, financial reporting and internal control processes, the
outsourced internal audit function and the relationship with the
external auditors. The key responsibilities are set out on pages 39
to 40 of the Corporate Governance Report.
The Committee has overseen a detailed programme of work in 2017
in relation to its remit, including agreeing the scope of work
delivered by the PricewaterhouseCoopers LLP (PwC) outsourced
internal audit function, known as Rightmove Assurance. The role of
Rightmove Assurance has become well established throughout the
organisation and continues to provide insight and value in both
core financial control areas and the broader business
operations.
The Committee has given particular focus this year to the
readiness of the Group to meet the requirements of the forthcoming
General Data Protection Regulation (GDPR) which becomes effective
in May 2018. The business has established a comprehensive GDPR
programme, coordinated by a full-time project manager, and is on
track to be substantially compliant by May 2018. There has also
been continued focus on the progress of the Disaster Recovery and
Business Continuity Plans, including a planned closure of the
Milton Keynes office which took place during December 2017. The
oversight of financial controls continues to be a key area of work
of the Committee. As a result of the breadth of the reviews this
year, the Committee has had the benefit of exposure to the broader
organisation, which has brought added insight to the topics under
discussion.
Looking forward to the next 12 months, the Committee will
continue to focus on the audit, assurance and risk processes within
the Group, including a review of the control effectiveness of key
billing processes, a counter fraud workshop and an update on the
progress towards GDPR compliance.
I have greatly enjoyed my time as Chairman of the Audit
Committee over the last nine years, and thank my fellow Committee
members for their wisdom and support over this period. Andrew
Findlay will succeed me as Chairman of the Audit Committee at the
end of the 2018 Annual General Meeting.
I will be available at the AGM to answer any questions about the
work of the Committee.
Written terms of reference that outline the Committee's
authority and responsibilities are published on the investor
relations section of the Group's website at plc.rightmove.co.uk and
are available in hard copy form from the Company Secretary.
Ashley Martin
Chairman of the Audit Committee
Committee membership and meetings
All the members of the Audit Committee are Independent
Non-Executive Directors in accordance with provision C3.1 of the UK
Corporate Governance Code (the Code) and the Board has determined
that both Andrew Findlay and Ashley Martin have recent and relevant
financial experience as required by the Code. Ashley Martin is a
qualified accountant and was formerly Global Chief Financial
Officer of Engine Holding LLC and Group Finance Director of Rok
plc. Andrew Findlay and Peter Williams are also qualified
accountants and Andrew Findlay is currently Chief Financial Officer
of easyJet plc. Andrew Findlay will succeed Ashley Martin as Chair
of the Audit Committee at the end of the 2018 Annual General
Meeting. As a whole, the Committee has competence relevant to the
sector in which the Group operates through the digital experience
of Andrew Findlay and Peter Williams, and the media experience of
Ashley Martin.
Biographies of the members of the Committee are set out on pages
33 to 36.
Number of meetings
-------------------------- ------------------------------
Committee members Eligible to attend Attended
-------------------------- ------------------- ---------
Ashley Martin (Chairman) 5 5
-------------------------- ------------------- ---------
Peter Williams 5 5
-------------------------- ------------------- ---------
Andrew Findlay(1) 3 3
-------------------------- ------------------- ---------
Rakhi Goss-Custard(2) 2 4
-------------------------- ------------------- ---------
(1) Andrew Findlay was appointed to the Committee on 1 June 2017.
(2) Rakhi Goss-Custard retired from the Committee on 9 May 2017
and attended two further meetings as a guest.
The Committee met five times in 2017 and attendance of the
members is shown above. In order to maintain effective
communication between all relevant parties, the Committee invited
the Finance Director and Head of Finance, together with appropriate
members of the management team, and the external and internal
auditors, to meetings as necessary. The Committee sets aside time
periodically to seek the views of the external auditor, in the
absence of management. The external auditor has direct access to
the Chairman to raise any concerns outside formal Committee
meetings. The Committee also meets separately with the internal
auditor during the year, and in between meetings the Chairman keeps
in touch with the Finance Director and external audit partner as
well as other members of the management team.
After each meeting, the Chairman reports to the Board on the
main issues discussed by the Committee and minutes of the Committee
meetings are circulated to the Board once approved.
Audit Committee effectiveness
The effectiveness of the operation of the Committee was reviewed
in December 2017 through a questionnaire completed by all members
of the Committee which focused on areas such as the appropriateness
of the focus of the Committee, how it operates and professional
development of the members. This was supplemented with responses
from the effectiveness review of the Board and its committees where
each Board member responded to key questions on Board performance
and commented generally on the performance of Board Committees. The
feedback on the Committee was positive and confirmed that the
Committee is effective and provides appropriate challenge.
Financial reporting
The Committee is responsible for reviewing the appropriateness
of the Group's half-year reporting and annual financial statements.
The Committee does this by considering, among other things, the
accounting policies and practices adopted by the Group; the correct
application of applicable reporting standards and compliance with
broader governance requirements; the approach taken by management
to the key judgmental areas of reporting and the comments of the
external auditor on management's chosen approach.
Significant issues
The key significant issue in the context of the 2017
Consolidated Financial Statements is revenue recognition. The
Committee considers this area to be significant taking into account
the level of materiality and degree of focus given by management,
and discussed the issue in detail to ensure that the approach taken
was appropriate. In relation to the Company Financial Statements,
the key significant issue is the recoverability of the investment
by the Company in Rightmove Group Limited, due to its materiality
in the context of the total assets of the Company.
Issue Committee review
---------------------------------------- -----------------------------------------
Revenue
As more fully described on page During the year, management
111 the majority of the Group's performed data analytics procedures
revenue is derived from subscriptions on the amounts billed to the
for core listing fees and advertising two largest customer groups
products on Rightmove's platforms. (Agency and New Homes, together
The Group recognises this revenue 92% of revenue). This included
over the period of the contract investigating anomalies and
or the point at which advertising outliers identified and reporting
products are used. to the Committee in this regard.
Revenue is a prime area of audit
focus and KPMG evolved their
approach in this area this year
as a result of management performing
the revenue data analytics procedures
that had previously been part
of the audit approach. KPMG
designed and performed new data
analytics procedures which covered
all revenue streams matching
customer billings to cash, and
results of this work were reported
to the Committee.
The Committee discussed any
anomalies with management and
with KPMG in relation to the
data analytics work they performed.
The Committee was satisfied
with the explanations provided
and conclusions reached.
The approach to data analytics
performed by KPMG expands their
audit coverage to 100% of revenue,
which together with the data
analytics performed by management
has led to increased overall
assurance in this area.
The data analytics work above
is supplemented by a detailed
analytical review by management
of margins, and ARPA together
with a comprehensive analysis
on the treatment of discounted
and free member offers.
---------------------------------------- -----------------------------------------
Investment by Rightmove plc
in Rightmove Group Limited (RMGL)
The investment by the Company The Committee reviewed the assumptions
in RMGL is carried at cost, made by management, including
adjusted for subsequent additions the strong track record of profitable
to the investment. Cost was growth and cash generation by
initially assessed as at 28 Rightmove Group Limited. Furthermore,
January 2008 being the date the Rightmove plc share price
that Rightmove plc became the has increased significantly
parent company of RMGL. Share-based since 2008, resulting in a current
payment awards to RMGL employees market value of c.GBP4 billion,
are accounted for as a deemed significantly in excess of the
capital contribution by Rightmove investment carrying value of
plc to RMGL of the value of GBP0.5 billion. As Rightmove
the share-based payment charge Group Limited is the main trading
for those awards, increasing entity of Rightmove plc, we
the value of the investment. therefore see no evidence of
Further details are provided impairment. The Committee was
in note 15 to the financial satisfied with the assumptions
statements. The investment is made.
not considered at risk of material
misstatement or subject to significant
judgement, however it is considered
a significant risk due to its
size in relation to the Company
balance sheet.
---------------------------------------- -----------------------------------------
The Committee also reviewed and considered the following areas
due to their materiality and the application of judgement. However,
it considered them to be stable in nature and therefore did not
classify them as significant issues in the context of the 2017
financial statements.
Issue Committee review
-------------------------------- ---------------------------------------
Share-based payment charges The Committee reviewed the judgements,
and related deferred tax asset assumptions and estimates made
by management as part of the
review of the financial statements
to ensure that they were appropriate.
The Committee also obtained
the external auditors' assessment
of the calculations. The results
of this review were that the
Committee was satisfied with
the calculations made.
-------------------------------- ---------------------------------------
Going concern and viability In assessing the validity of
statements the statements detailed on pages
25 and 107 to 108, the Committee
reviewed the work undertaken
by management to assess the
Group's resilience to the Principal
Risks under various scenarios.
The Committee gained appropriate
assurance that sufficient rigour
was built into the process to
assess going concern and viability
over the designated periods.
-------------------------------- ---------------------------------------
Fair balanced and understandable
One of the key governance requirements is for the Annual Report
and the financial statements, taken as a whole, to be fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Group's position and performance,
business model and strategy.
The Committee was provided with an early draft of the Annual
Report in order to assess the strategic direction and key messages
being communicated. Feedback was provided by the Committee in
advance of the February Board meeting, highlighting any areas where
the Committee believed further clarity was required. The draft
report was then amended to incorporate this feedback prior to being
tabled at the Board meeting for final comment and approval.
When forming its opinion, the Committee reflected on the
information it had received and its discussions throughout the
year. In particular, the Committee considered:
Is the report
fair? * Is the whole story presented and has any sensitive
material been omitted that should have been included?
* Are key messages in the narrative aligned with the
KPIs and are they reflected in the financial
reporting?
* Are the KPIs being reported consistently from year to
year?
* Is the reporting on the business areas in the
narrative reporting consistent with the financial
reporting in the financial statements?
----------------- ------------------------------------------------------------------
Is the report
balanced? * Do you get the same messages when reading the front
end and back end of the Annual Report independently?
* Are threats identified and appropriately highlighted?
* Are the alternative performance measures explained
clearly with appropriate prominence?
* Are the key judgements referred to in the narrative
reporting and significant issues reported in this
Committee Report consistent with disclosures of key
estimation uncertainties and critical judgements set
out in the financial statements?
* How do these judgements compare with the risks that
KPMG are planning to include in their Auditors'
Report?
----------------- ------------------------------------------------------------------
Is the report
understandable? * Is there a clear and cohesive framework for the
Annual Report?
* Are the important messages highlighted appropriately
throughout the Annual Report?
* Is the Annual Report written in easy to understand
language and are the key messages clearly drawn out?
* Is the Annual Report free of unnecessary clutter?
----------------- ------------------------------------------------------------------
Following its review, the Committee is of the opinion that the
2017 Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's position, performance, business
model and strategy.
External audit
The Committee has primary responsibility for overseeing the
relationship with, and performance of, the external auditor. The
Committee approves the terms of engagement and fees of the external
auditor, ensuring they have appropriate audit plans in place and
that an appropriate relationship is maintained between the Group
and the external auditor.
The Committee is responsible for making recommendations to the
Board in relation to the appointment of the external auditor. KPMG
LLP was re-appointed as the Group's auditor in 2013 following an
audit tender, and in accordance with the EU Audit Directive
implemented in 2016, the Group will be required to put the external
audit contract out to tender by 2023. The external auditor is
required to rotate the audit partner responsible for the Group
audit every five years in order to ensure independence. The lead
audit partner, Karen Wightman has been in place for five years, and
therefore in accordance with the FRC's Ethical Standard 3
(Revised), Anna Jones will take over from Karen Wightman for the
financial year ending 31 December 2018.
The Committee approved the fees of KPMG for the year as set out
in Note 6 of the financial statements.
Independence and non-audit services
The Committee has policies and procedures in place in relation
to the provision of non-audit services by the external auditor and
the non-audit fee policy was reviewed by the Committee during the
year. The non-audit fee policy ensures that the Group benefits in a
cost-effective manner from the cumulative knowledge and experience
of its auditor, whilst also ensuring that the auditor maintains the
necessary degree of independence and objectivity.
Non-audit service Policy
------------------------------------------ -----------------------------------
Assurance-related services directly The half year review is approved
related to the audit for example, by the Committee as part
review of the half-year financial of the annual Audit Plan.
statements. Management is given the authority
to incur additional non-audit
services of up to GBP15,000
in any financial year without
prior approval of the Committee.
Thereafter all additional
fees are to be referred to
the Audit Committee in advance,
subject to a cap on permitted
non-audit fees of 70% of
the average audit fees over
the three preceding financial
years.
------------------------------------------ -----------------------------------
Permitted non-audit services
Including but not limited to: accounting
advice, work related to mergers,
acquisitions, disposals, joint
ventures or circulars; and corporate
governance advice.
------------------------------------------ -----------------------------------
Prohibited services Prohibited, in accordance
In line with the EU Audit Reform, with the EU Audit Reform.
these are services where the auditor's
objectivity and independence may
be compromised. Prohibited services
are detailed in the FRC Revised
Ethical Standard 2016 and include
tax services, accounting services,
internal audit services and valuation
services.
------------------------------------------ -----------------------------------
The level of non-audit fees as a proportion of the audit fee has
typically been low at Rightmove. During the year, KPMG charged the
Group GBP30,000 for non-audit services, representing less than 21%
of the 2017 audit fee. Of this, GBP18,000 relates to the half year
review, and GBP10,000 for a review of the Group's gender pay gap
calculations and methodology. Further details of these services can
be found in Note 6 to the financial statements.
Effectiveness and reappointment
The Committee considered the quality and effectiveness of the
external audit process, in light of the FRC's Practice Aid for
Audit Committees (May 2015). The effectiveness of the external
audit process is dependent on a number of factors. These include
the quality, continuity, experience and training of audit
personnel, business understanding, technical knowledge and the
degree of rigour applied in the review processes of the work
undertaken, communication of key accounting and audit judgements,
together with appropriate audit risk identification at the start of
the audit cycle.
The Committee reviewed the report of the FRC's Audit Quality
Review team relating to KPMG as a firm and discussed the actions
taken by KPMG in light of the recommendations, including in
relation to the firm's approach to the audit of revenue.
The Committee evaluated the effectiveness of the audit process
together with input from management. Areas the Committee considered
in this review included the quality of audit planning and
execution, engagement with the Committee and management, quality of
reporting and capability and experience of the audit team. For the
2017 financial year, the Committee was satisfied that there had
been appropriate focus and challenge on the primary areas of audit
risk and concluded that the performance of KPMG remained efficient
and effective.
Internal audit
The Group has an Internal Audit function, known as Rightmove
Assurance which is fully outsourced to PwC. The aim of Rightmove
Assurance is to provide independent and objective assurance on the
adequacy and effectiveness of internal control, risk management and
governance processes. This includes assurance that underlying
financial controls and processes are working effectively, as well
as specialist operational and compliance reviews that focus on
emerging risks in new and evolving areas of the business. The
Rightmove Assurance plan for 2017 was approved by the Audit
Committee and covered a broad range of core financial and
operational processes and controls, focusing on specific risk
areas. Specialist reviews were undertaken in the following
areas:
-- Data privacy, including a readiness assessment in relation to GDPR;
-- Cyber maturity assessment, covering technical, process and
people controls. The review also included particular focus on data
loss management, Bring Your Own Device (BYOD) and end point
management, corporate network management and identity and access
management;
-- Employment taxes;
-- Procure to pay cycle and cash management;
-- Pre-implementation review of a new HR system; and a
-- Payroll controls review.
Reports setting out the principal findings of the Rightmove
Assurance reviews and agreed management actions were discussed by
the Committee. The Committee also reviewed open actions from
previous reviews, together with monitoring the progress by
management in completing these actions.
Effectiveness of the internal audit process
The work of Rightmove Assurance provides a key additional source
of assurance and support to management and the Audit Committee on
the effectiveness of internal controls as well as providing
guidance and recommendations to further enhance the internal
control environment, and provide specialist insight into areas of
change in the business.
During the year, the Audit Committee undertook a review of the
effectiveness of the Rightmove Assurance function. The evaluation
was led by the Committee Chairman and involved issuing tailored
evaluation questionnaires which were completed by Rightmove
management, the external auditors, KPMG, the Committee and PwC
themselves. The evaluation concluded that the Rightmove Assurance
function had an appreciation of the key issues facing the business,
was realistic and robust with audit suggestions and added value to
the business. It included a number of recommendations which were
incorporated into the 2017 Rightmove Assurance plan.
Whistleblowing
The Group has a whistleblowing process (including an external
confidential reporting hotline) which enables employees of the
Group to raise concerns on an entirely confidential basis. The
Committee receives reports on the communication within the business
of the whistleblowing policy and external confidential reporting
arrangements, and the use of the service including any
whistleblowing incidents and their outcomes.
Internal controls
The Board has overall responsibility for the Group's system of
internal controls and has established a framework of financial and
other controls which is periodically reviewed in accordance with
the FRC Internal Control: Guidance to Directors publication for its
effectiveness.
The Board has taken, and will continue to take, appropriate
measures to ensure that the chances of financial irregularities
occurring are reduced as far as reasonably possible by improving
the quality of information at all levels in the Group, fostering an
open environment and ensuring that the financial analysis is
rigorously applied. Any system of internal control is designed to
manage rather than eliminate the risk of failure to achieve
business objectives and can only provide reasonable and not
absolute assurance against material misstatement or loss.
The Group's management have established the procedures necessary
to ensure that there is an ongoing process for identifying,
assessing and managing the significant risks to the Group. These
procedures have been in place for the whole of the financial year
ended 31 December 2017 and up to the date of the approval of these
financial statements and they are reviewed regularly.
Rightmove has an internal audit function, known as Rightmove
Assurance, which is fully outsourced to PwC. Rightmove Assurance
provides the Group with additional independent assurance on the
effectiveness of internal controls.
The key elements of the system of internal control are:
-- Major commercial, strategic, competitive and financial risks
are formally identified, quantified and assessed, discussed with
the Executive Committee, after which they are considered by the
Board;
-- A comprehensive system of planning, budgeting and monitoring
Group results. This includes monthly management reporting and
monitoring of performance against both budgets and forecasts with
explanations for all significant variances;
-- Clearly defined policies for capital expenditure and
investment exist, including appropriate authorisation levels, with
larger capital projects, acquisitions and disposals requiring Board
approval;
-- A treasury function which manages cash flow forecasts and
cash on deposit (including counterparty risk);
-- An organisational structure with clearly defined lines of
responsibility and delegation of authority, and an embedded culture
of openness where business decisions and their associated risks and
benefits are discussed and challenged;
-- A comprehensive disaster recovery plan and business continuity plan based upon:
-- co-hosting of the Rightmove platforms across three separate
locations, which is regularly tested and reviewed;
-- the ability of the business to maintain business critical
activities in the event of an incident;
-- the capability for employees to work remotely from home or a
third party location in the event of a loss of one of our premises.
This was tested for the Milton Keynes office during the year
through a planned full office closure.
-- Regular testing of the security of the IT systems and
platforms, regular backups of key data and ongoing threat
monitoring to protect against the risk of cyber-attack; and
-- Whistleblowing and bribery policies of which all employees
are made aware, to enable concerns to be raised either with line
management or, if appropriate, confidentially outside the line
management.
Through the procedures outlined above, the Board, with advice
from the Audit Committee, has considered all significant aspects of
internal control for the year and up to the date of this Annual
Report. No significant failings or weaknesses were identified
during this review. However, had there been any such failings or
weaknesses, the Board confirms that necessary actions would have
been taken to remedy them.
GOVERNANCE - Corporate governance report
Nomination Committee report
Dear Shareholder
I am pleased to present the report of the Nomination Committee
(the Committee) for 2017.
The Committee's role is to keep the structure, size and
composition of the Board under review with the objective of
matching the skills, knowledge and experience of directors to
business requirements. Our priority is to optimise the Board's
performance to enable the Group to prosper, compete effectively and
manage risk in an evolving market.
A copy of the terms of reference of the Committee can be found
on the Company's website at: plc.rightmove.co.uk. These were
reviewed and updated with minor changes during the year.
The Committee fulfilled its terms of reference during 2017
by:
-- reviewing the Group organisation and succession plans;
-- recommending the appointment of new non-executive directors; and
-- conducting internal Board and Committee evaluations. Further
details of the Board evaluation can be found on page 55.
The Committee continued to review Board succession and Andrew
Findlay was appointed as a non-executive director on 1 June 2017,
following an external search by Korn Ferry International (Korn
Ferry). Andrew will succeed Ashley Martin as our Audit Committee
Chairman following the 2018 AGM. Lorna Tilbian joined the Board on
1 February 2018, following her retirement from Numis Corporation
PLC.
The Board currently consists of nine directors including seven
non-executive directors, six of which are considered to be
independent. Following the retirement of Ashley Martin
(non-executive director) at the 2018 AGM, the Board will comprise
eight directors (two executive and six non-executive directors) and
equal representation of men and women directors at both executive
and non-executive levels.
I will be available at the AGM to answer any questions about the
work of the Committee.
Scott Forbes
Chairman of the Nomination Committee
Composition and attendance at meetings
The Chairman and all the non-executive directors are members of
the Committee. Peter Brooks-Johnson and Robyn Perriss attended
meetings by invitation.
The Committee met three times during the year and attendance at
the meetings is shown on page 43.
Membership
The Committee is comprised entirely of non-executive directors,
whose biographical details can be found on pages 33 to 36. As at 31
December 2017, all the non-executive directors (five out of six
members of the Committee) were considered by the Board to be
independent. The quorum for meetings of the Committee is two
members. At the request of the Committee Chairman, the Chief
Executive Officer is normally invited to attend the meeting to
discuss the annual organisation and succession plan.
The Chairman of the Company may not chair the Committee in
connection with any discussion about the appointment of his
successor. In these circumstances, the Senior Independent Director
will take the chair.
Appointments are for a period of up to three years, extendable
by no more than two additional three-year periods, so long as
Committee members continue to be independent.
Principal activities of the Committee during 2017
During the year the Committee has:
-- reviewed the composition and diversity of the Board;
-- reviewed the Board committees' composition;
-- approved the plans for the organisation and succession of the
executive directors and senior management;
-- recommended the implementation of the Board succession plan
and the appointment of Peter Brooks-Johnson as Chief Executive
Officer following the retirement of Nick McKittrick;
-- recommended the appointment of two non-executive directors
including consideration of independence in relation to the
Code;
-- agreed the process for and considered actions based upon the
findings of the Board evaluation;
-- considered potential conflicts of interest for non-executive
directors appointed to other boards;
-- reviewed and considered actions to address the Group's gender pay gap; and
-- conducted an annual review of its terms of reference.
Board induction and training
All new non-executive directors joining the Board undertake a
tailored induction including meetings with key members of the
management team. Directors are also encouraged to spend a day on
the road with a sales director meeting our customers. New directors
receive a comprehensive induction pack of corporate information and
a briefing from the Company Secretary covering corporate
governance, Group policies and relevant regulations.
Individual Board members have access to training and can seek
advice from independent professional advisers, at the Group's
expense, where specific expertise or training is required in
furtherance of their duties.
Board succession and independence
At the end of 2016, the Committee confirmed the candidate
profile identified through the Board Strategy review process and
initiated the search for a non-executive director with suitable
skills and experience to replace Ashley Martin, when he retires
from the Board and as Audit Committee Chairman in May 2018.
Following an external search, facilitated by Korn Ferry, the
Committee recommended the appointment of Andrew Findlay as an
experienced Finance Director with suitable financial skills and
experience to Chair the Audit Committee.
With due consideration to the conclusions of the Board Strategy
Review (externally facilitated by Korn Ferry in 2015), the current
Board composition and the Group's strategic plan, the Committee
agreed that a director with a broader media industry background
would benefit the business. Following a process including Korn
Ferry, the Board recruited and then agreed to appoint Lorna Tilbian
as an independent non-executive director, following her retirement
from Numis Corporation PLC (Numis) in December 2017.
As Numis is Rightmove's joint corporate broker together with
UBS, the Board is aware that there may be a perception that a
material relationship could exist or continue to exist that might
impair Lorna's independence. Therefore, Rightmove not only
conducted a rigorous review to evaluate Lorna's independence, as it
does for every director, but the Board also sought independent
legal advice to ensure compliance with Code requirements. The
Committee concluded that no material relationship existed with
Numis over the past three years, no material ongoing relationship
exists and that Lorna is independent in character and judgment. In
addition to Lorna's media sector experience, her capital markets
experience will be a great asset to Rightmove and the Board.
The Board considered the primary tests under the Code: whether
there is a material financial relationship between Numis and
Rightmove and whether that relationship would influence Lorna's
judgement. Numis Securities receives a standard commission from
Rightmove for the share buyback programme and there is no retainer
or special fees agreement in relation to brokerage or research; the
commission payments of cGBP100,000 per annum are immaterial to
Rightmove. Lorna retired from the Numis Board in September 2017.
The Board carefully considered Lorna's prior dealings with the
Rightmove management team, which were meetings in the ordinary
course of business with our former Chief Executive Officer. The
Board therefore determined that Lorna is independent in character
and judgement and there are no other factors that are likely to
impair her judgement or prevent her from fulfilling her duties and
responsibilities as a non-executive director effectively.
Board effectiveness and evaluation
The Board is committed to undertaking annual reviews of its own
performance and also the performance of its Committees and
individual directors.
The Board again completed an internal self-assessment during
2017. Directors were invited to provide feedback via the Company
Secretary on Board and Committee performance and answer key
questions relating to the Board's strengths, improvements during
the year and which business risks and development opportunities
should receive more focus. The whole Board discussed the feedback
at the Committee meeting in December 2017 and concluded that the
Board and its Committees continue to operate effectively with an
open and effective Board dynamic resulting in effective challenge
and collaboration between non-executive and executive directors.
The Board also agreed initiatives to further improve board
effectiveness including a greater variety of business presentations
from senior management covering a wide range of company business
operations.
An externally facilitated review of the performance of the Board
and its Committees will be conducted in 2018.
GOVERNANCE - Directors' report
The directors submit their report together with the audited
financial statements for the Company and its subsidiary companies
(the Group) for the year ended 31 December 2017.
Pages 56 to 59, comprise the Directors' Report, which has been
drawn up and presented in accordance with English company law and
the liabilities of the directors in connection with the report
shall be subject to the limitations and restrictions provided by
such law.
Rightmove plc (the Company) is incorporated as a public limited
company registered in England number 6426485 with a registered
office at Turnberry House, 30 Caldecotte Lake Drive, Caldecotte,
Milton Keynes MK7 8LE.
Strategic Report
The Strategic Report can be found on pages 1 to 32. This report
sets out the development and performance of the Group's business
during the financial year, the position of the Group at the end of
the year and a description of the principal risks and uncertainties
facing the Group.
Dividend
An interim dividend of 22.0p (2016: 19.0p) per ordinary share
was paid in respect of the half year period on 3 November 2017, to
shareholders on the register of members at the close of business on
6 October 2017. The directors are recommending a final dividend for
the year of 36.0p (2016: 32.0p) per ordinary share, which together
with the interim dividend, makes a total for the year of 58.0p
(2016: 51.0p), amounting to GBP32,758,000 (2016: GBP29,696,000).
Subject to shareholders' approval at the Annual General Meeting
(AGM) on 4 May 2018, the final dividend will be paid on 1 June 2018
to shareholders on the register of members at the close of business
on 4 May 2018.
Share capital
The shares in issue, including 1,892,456 shares held in treasury
(2016: 2,271,725) at the year-end amounted to 93,266,207 (2016:
95,490,266) ordinary shares of GBP0.01, with a nominal value of
GBP932,662 (2016: GBP954,902). The holders of ordinary shares are
entitled to receive dividends as declared from time to time, and
are entitled to one vote per share at general meetings of the
Company. Movements in the Company's share capital and reserves in
the year are shown in Note 22 and Note 23 to the financial
statements. Information on the Group's share-based incentive
schemes is set out in Note 24 to the financial statements. Details
of the share-based incentive schemes for directors are set out in
the Directors' Remuneration Report on pages 61 to 94.
Share buyback
The Company's share buyback programme continued during 2017. Of
the 10% authority given by shareholders at the 2017 AGM, a total of
2,224,059 (2016: 2,251,711) ordinary shares of GBP0.01 each were
purchased in the year to 31 December 2017, being 2.4% (2016: 2.4%)
of the shares in issue (excluding shares held in treasury) at the
time the authority was granted. The average price paid per share
was GBP40.83 (2016: GBP39.12) with a total consideration paid
(excluding all costs) of GBP90,809,000 (2016: GBP88,083,000). Since
the introduction of the new parent company in January 2008, a total
of 38,639,201 shares had been purchased as at 31 December 2017 of
which 1,892,456 are held in treasury with the remainder having been
cancelled. A resolution seeking to renew this authority will be put
to shareholders at the AGM on 4 May 2018.
Shares held in trust
As at 31 December 2017, 263,767 (2016: 343,275) ordinary shares
of GBP0.01 each in the Company were held by The Rightmove
Employees' Share Trust (EBT) for the benefit of Group employees.
These shares had a nominal value at 31 December 2017 of GBP2,638
(2016: GBP3,433) and a market value of GBP11,870,000 (2016:
GBP13,398,000). The shares held by the EBT may be used to satisfy
share-based incentives for the Group's employee share plans. During
the year, 77,008 (2016: 50,082) shares were transferred to Group
employees following the exercise of share-based incentives.
Additionally, 17,500 shares were purchased by the EBT for transfer
to the Rightmove Share Incentive Plan Trust (SIP). The terms of the
EBT provide that dividends payable on the shares held by the EBT
are waived.
As at 31 December 2017, 67,700 (2016: 50,150) ordinary shares of
GBP0.01 each in the Company were held by the SIP for the benefit of
Group employees. These shares had a nominal value at 31 December
2017 of GBP677 (2016: GBP502) and a market value of GBP3,047,000
(2016: GBP1,957,000). The shares held by the SIP are awarded as
free shares to eligible employees in January of each year and are
held in trust for a period of three years before an employee is
entitled to take ownership of the shares. During the year, 2,450
(2016: 600) shares were released early from the SIP in relation to
good leavers and retirees under the SIP rules.
Substantial shareholdings
As at the date of this report, the following beneficial
interests in 3% or more of the Company's issued ordinary share
capital (excluding shares held in treasury) on behalf of the
organisations shown in the table below, had been notified to the
Company pursuant to Rule 5.1 of the Disclosure Guidance and
Transparency Rules. The information provided below was correct as
at the date of notification, where indicated this was not in the
2017 financial year. It should be noted that these holdings are
likely to have changed since notified to the Company. However,
notification of any change is not required until the next
applicable threshold is crossed.
Shareholder Nature of holding Total voting % of total
rights voting rights(1)
----------------------- --------------------------- ------------- ------------------
BlackRock Inc Indirect 5,068,243 5.57%
(3)
Contracts for difference 1,668,080 1.83%
(CFD)
Stock Lending 1,025,280 1.13%
----------------------- --------------------------- ------------- ------------------
Marathon Asset
Management LLP(2) Indirect 5,930,755 6.52%
----------------------- --------------------------- ------------- ------------------
Baillie Gifford
& Co(2) Indirect 5,873,614 6.45%
----------------------- --------------------------- ------------- ------------------
Caledonia (Private)
Investments Pty
Limited(3) Direct 4,561,397 5.01%
----------------------- --------------------------- ------------- ------------------
Generation Investment
Management LLP Indirect 4,583,127 5.04%
----------------------- --------------------------- ------------- ------------------
Axa Investment Indirect 4,441,378 4.88%
Managers SA
Contracts for difference 37,662 0.04%
(CFD)
--------------------------------------------------- ------------- ------------------
Standard Life Indirect 4,356,376 4.79%
Investments
Stock Lending 362,089 0.40%
--------------------------------------------------- ------------- ------------------
UBS Investment Indirect 2,572,737 2.83%
Bank
UBS Group AG(3) Equity Swaps 2,916,519 3.21%
Stock Lending 1,021 0.00%
--------------------------------------------------- ------------- ------------------
(1) The above percentages are based upon the voting rights share
capital (being the shares in issue less shares held in treasury) of
90,995,551 as at 22 February 2018.
(2) Date of notification preceded the 2017 financial year.
(3) Date of notification followed the 2017 financial year
end.
Directors
The directors of the Company as at the date of this report are
named on pages 33 to 36 together with their profiles.
The Articles of Association of the Company require directors to
submit themselves for re-appointment where they have been a
director at each of the preceding two AGMs and were not appointed
or re-appointed by the Company at, or since, either such meeting.
Following the provisions of the UK Corporate Governance Code, all
directors who have served during the year and remain a director as
at 31 December 2017 will retire and offer themselves for
re-election at the forthcoming AGM with the exception of Ashley
Martin, who has notified the Company of his retirement from the
Board as at this date.
Andrew Findlay and Lorna Tilbian will offer themselves for
election, this being the directors' first AGM following their
appointments to the Board as non-executive directors on 1 June 2017
and 1 February 2018 respectively.
The Board is satisfied that the directors retiring and standing
for re-election are qualified for re-appointment by virtue of their
skills, experience and contribution to the Board. The executive
directors have service contracts with the Company which can be
terminated on 12 months' notice. The appointments for the
non-executive directors can be terminated on three months'
notice.
The interests of the directors in the share capital of the
Company as at the date of this report, the directors' total
remuneration for the year and details of their service contracts
and Letters of Appointment are set out in the Directors'
Remuneration Report on pages 61 to 94. At the date of this report,
the executive directors were deemed to have a non-beneficial
interest in 245,441 ordinary shares of GBP0.01 each held by the
EBT.
Research and development
The Group undertakes research and development activity in order
to develop new products and to continually improve the existing
property platforms. Further details are disclosed in Note 2 to the
financial statements on page 109.
Political donations
During the year the Group did not make any donations to any
political party or other political organisation and did not incur
any political expenditure within the meanings of sections 362 to
379 of the Companies Act 2006.
Annual General Meeting
The AGM of the Company will be held at the offices of UBS
Limited at 5 Broadgate, London, EC2M 2QS on 4 May 2018 at 10am. The
Notice of Annual General Meeting will be published in March
2017.
The resolutions being proposed at the 2018 AGM are general in
nature, including the renewal for a further year of the limited
authority of the directors to allot the unissued share capital of
the Company and to issue shares for cash other than to existing
shareholders (in line with the Pre-Emption Group's Statement of
Principles). A resolution will also be proposed to renew the
directors' authority to purchase a proportion of the Company's own
shares. The Company will again seek shareholder approval to hold
general meetings (other than AGMs) at 14 days' notice. Resolutions
will be proposed to renew these authorities, which would otherwise
expire at the 2018 AGM.
Auditor
KPMG LLP has confirmed its willingness to continue in office as
auditor of the Group. In accordance with section 489 of the
Companies Act 2006, separate resolutions for the re-appointment of
KPMG LLP as auditor of the Group and for the Audit Committee to
determine the auditor's remuneration will be proposed at the 2018
AGM.
Audit information
So far as the directors in office at the date of signing of the
report are aware, there is no relevant audit information of which
the auditor is unaware and each such director has taken all
reasonable steps to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that
information.
Greenhouse gas emissions
Our report of greenhouse gas emissions in line with UK mandatory
reporting regulation is provided in the Corporate Responsibility
section of the Strategic Report on pages 31 to 32.
Fair, balanced and understandable
The Board has concluded that the 2017 Annual Report is fair,
balanced and understandable and provides the necessary information
for shareholders and other readers of the accounts to assess the
Group's position and performance, business model and strategy.
Responsibility statement of the directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- the management report required by DTR 4.1.8R (contained in
the Strategic Report and the Directors' Report) includes a fair
review of the development and performance of the business and the
position of the Company and the undertakings included in the Group
taken as a whole, together with a description of the principal
risks and uncertainties they face.
We consider the annual report and accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's position and
performance, business model and strategy.
Signed on behalf of the Board:
Peter Brooks-Johnson Robyn Perriss
Chief Executive Officer Finance Director
23 February 2018
GOVERNANCE- Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report
and the Group and parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare Group and parent
Company financial statements for each financial year. Under that
law they are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU) and
applicable law and have elected to prepare the parent company
financial statements on the same basis.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and parent Company and of
their profit or loss for that period. In preparing each of the
Group and parent Company financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with IFRSs as adopted by the EU;
-- assess the Group and parent Company's ability to continue as
a going concern disclosing, as applicable, matters related to going
concern; and
-- use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the parent Company and enable them
to ensure that its financial statements comply with the Companies
Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
GOVERNANCE - Directors' Remuneration Report
Annual statement by the Chairman of the Remuneration
Committee
Dear Shareholder
I am pleased to present our Directors' Remuneration Report for
Rightmove (the Company) together with its subsidiary companies (the
Group) for the year ended 31 December 2017.
The report is divided into two sections, the Remuneration Policy
Report and the Annual Report on Remuneration, both of which are
summarised in 'Remuneration at a glance' on pages 63 to 64. We do
not propose any changes to the Directors' Remuneration Policy,
which received overwhelming support from our shareholders at our
2017 AGM.
Performance and reward
The Committee considers that it is vital for the executive
directors' remuneration to fairly reflect the overall performance
of the Group. As described in the Strategic Report, Rightmove's
2017 results again show healthy growth in revenue and underlying
operating profit(1) , demonstrating the strength of the Rightmove
business model and the effectiveness of our management team.
In accordance with the Remuneration Policy, the Committee has
reviewed achievement against the bonus plan objectives for 2017 and
recommended an annual bonus payment of 60%. This reflects the
growth in revenue and underlying operating profit(1) of 11% and
continued employee engagement with 90% of Rightmovers(2) thinking
that Rightmove is a great place to work. Our audience growth,
measured on a time basis in absolute terms, did not outstrip the
total of Rightmove's closest competitors and other revenue from
non-core businesses was not sufficiently strong to merit a bonus
payout. Achievement against these performance targets is set out on
pages 86 to 87 and reflected in the lower bonus payout for 2017,
relative to 2016. Overall, performance for the year outperformed
the baseline business plan and the Committee was therefore
satisfied that it was appropriate to pay 60% of the maximum
bonus.
The Group's longer-term performance reflects strong organic
growth over the last three financial years. The 2015 Performance
Share Plan awards (measuring performance from 1 January 2015 to
31 December 2017) will vest in full in March 2018 as a result of
delivering underlying basic EPS(3) growth of 63% and TSR growth of
109% over the performance period, which exceeded the respective
growth targets set of 60% and FTSE 250 Index +25% over the
three-year period. The Committee tested the performance conditions,
which were set at the beginning of the performance period, and
determined that the Group had outperformed the maximum targets and
was therefore satisfied that the awards should vest in full.
Chief Executive Officer retirement
Following the AGM on 9 May 2017, Nick McKittrick retired as
Chief Executive Officer (CEO) and as a director of Rightmove. He
was succeeded by Peter Brooks-Johnson, former Chief Operating
Officer and a Board director since 2011, who has had a successful
year in his new role as CEO and delivered a strong set of financial
results in 2017. A summary of the remuneration arrangements
relating to Nick's retirement and Peter's promotion were announced
in May 2017 and are detailed on pages 88 to 90 of the Annual Report
on Remuneration.
Remuneration Policy
In 2017, following consultation with Rightmove's major
investors, the Committee proposed the Remuneration Policy, set out
in the Remuneration Policy Report on pages 65 to 77. The Policy was
approved with overwhelming support from our shareholders.
The Policy addresses the significant shortfall in executive
directors' base salaries compared with the Committee's assessment
of an appropriate salary for each role and the performance of the
current directors. Increases of 3% in excess of the average
workforce rise have been awarded to the CEO and Finance Director
from January 2018, recognising the size and complexity of each role
and the present incumbents' experience and capabilities.
The Committee's objective is to retain a remuneration framework
that rewards and incentivises our management team to deliver
Rightmove's longer-term strategy with a clear emphasis on
performance-related pay to reflect the culture of the Group. The
Remuneration Policy continues to provide below market levels of
fixed pay with above market levels of variable pay opportunity,
subject to the achievement of challenging performance measures
linked to the Group KPIs. Variable pay is geared towards long-term
sustainable performance, with a high level of annual bonus deferral
into shares, long-term incentive awards and appropriate share
ownership guidelines.
We are committed to maintaining an open and transparent dialogue
with shareholders. We have valued the engagement with and support
of our shareholders and we remain focused on disclosing clearly how
much our executive directors earn and how this links to the Group's
performance.
Peter Williams
Chairman of the Remuneration Committee
(1) Before share-based payments and NI on share-based
incentives.
(2) Percentage of employees responding to the annual employee
survey.
(3) Before share-based payments and NI on share-based incentives
with no related adjustment for tax.
Remuneration at a glance
2017 Financial Performance Revenue Underlying operating profit Returns to shareholders
(1) GBP140.4m
+11% +11%
---------------------------- ---------------------------- ---------------------------- ----------------------------
Long-term incentive plan - outcome against maximum targets: 100%
----------------------------------------------------------------------------------------------------------------------
Underlying basic EPS(2) Total Shareholder Return
---------------------------------------------------------- ----------------------------------------------------------
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-20 http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-20
18-2-22.pdf 18-2-22.pdf
Source: Thomson Reuters
75% of 2015 Performance Share Plan (PSP) awards vest on 25% of 2015 PSP awards vest in line with upper quartile
achievement of three-year EPS growth relative TSR performance.
of 63%.
---------------------------------------------------------- ----------------------------------------------------------
Annual bonus plan - outcome against maximum targets: 60%
----------------------------------------------------------------------------------------------------------------------
Underlying operating profit Growth in absolute time on Growth in Other revenue(3) Employee survey respondents
(1) site in minutes relative to who think 'Rightmove is a
our nearest competitors great place to work'
Threshold target: GBP175.2m Threshold target: same Threshold target: 16% Threshold target: 90%
Actual: GBP184.4m absolute growth in time growth
onsite in minutes as our Actual: 4% growth
nearest competitors Actual: 90%
Actual: Lower growth in
time in minutes year on
year than our nearest
competitors
---------------------------- ---------------------------- ---------------------------- ----------------------------
Pay and performance for 2017
----------------------------------------------------------------------------------------------------------------------
Nick McKittrick Peter Brooks-Johnson Robyn Perriss
----------------------------------------------- -------------------- --------------------------- ------------------
Salary GBP159,120 GBP420,103 GBP320,000
----------------------------------------------- -------------------- --------------------------- ------------------
Benefits GBP666 GBP1,852 GBP1,406
----------------------------------------------- -------------------- --------------------------- ------------------
Cash Bonus - GBP126,031 GBP96,000
----------------------------------------------- -------------------- --------------------------- ------------------
Deferred Share Bonus - GBP189,046 GBP144,000
----------------------------------------------- -------------------- --------------------------- ------------------
Long-term incentives GBP1,063,657 GBP1,155,196 GBP925,763
----------------------------------------------- -------------------- --------------------------- ------------------
Total remuneration GBP1,223,443 GBP1,892,228 GBP1,487,169
----------------------------------------------- -------------------- --------------------------- ------------------
Shareholder alignment
----------------------------------------------------------------------------------------------------------------------
Shareholding guidelines: Proportion of variable awards received in shares:
85% of performance-related pay is awarded in Rightmove shares
200% of salary for all executive directors
------------------------------------------------- -------------------------------------------------------------------
Remuneration Policy key elements
----------------------------------------------------------------------------------------------------------------------
Fixed pay below comparative market median and variable incentive opportunity above median
----------------------------------------------------------------------------------------------------------------------
Base salaries executive directors receive inflationary adjustments to salaries capped at 3%
above wider workforce increases
----------------------------------------------------------------------------------------------------------------------
Pension contributions up to 6% of base salary in line with the wider workforce
----------------------------------------------------------------------------------------------------------------------
Annual bonus maximum 125% of salary, with 40% cash and 60% deferred into Company shares for
two years
----------------------------------------------------------------------------------------------------------------------
Performance Share Plan awards granted at 200% of salary. No post-vesting holding period for
current executive directors
----------------------------------------------------------------------------------------------------------------------
Clawback applies to deferred annual bonus awards and Performance Share Plan awards
----------------------------------------------------------------------------------------------------------------------
(1) Before share-based payments and NI on share-based
incentives.
(2) Before share-based payments and NI on share-based incentives
with no related adjustment for tax.
(3) Other revenue is all revenue excluding Agency and New
Homes.
Remuneration Policy Report (unaudited)
Introduction
This report sets out the Company's Policy on directors'
remuneration for the forthcoming year and for subsequent years, as
well as information on remuneration paid to directors for the
financial year ended
31 December 2017. The report has been prepared in accordance
with the Companies Act 2006, the Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2013
(together the Act) and the UK Corporate Governance Code (the
Code).
In accordance with the Act this report comprises a Policy Report
and an Annual Report on Remuneration. The Remuneration Policy was
approved by shareholders at the 2017 AGM with 95.8% voting for the
new Policy. The Annual Report on Remuneration will be subject to an
advisory vote at the 2018 AGM. The parts of the report which have
been audited have been highlighted.
Remuneration Policy Report (the Policy Report)
This part of the Directors' Remuneration Report sets out the
Remuneration Policy for the Company and has been prepared in
accordance with the Act.
The Policy was developed in line with Rightmove's approach, that
our executive directors should be rewarded with demonstrably lower
than market base salaries and benefits and higher than market
equity rewards subject to the achievement of challenging
performance targets. This approach accords with the views of our
major shareholders and with 'best practice' principles set out in
the Code.
The key principles of the Committee's policy are that executive
remuneration should:
-- allow the Company to attract and retain talented individuals
who are critical to the success of the business;
-- be simple to explain, understand and administer;
-- be regarded as fair by both other employees and shareholders;
-- be below market levels for base salary with minimal benefits
(which are made available on the same basis to all Rightmove
employees) and above market levels of variable pay potential;
-- provide directors with the opportunity to receive a share in
the future growth and development of the Group;
-- align the interests of the executive directors with the
interests of shareholders and reflect the dynamic,
performance-driven culture of the Group;
-- principally reward individuals for the overall success of the
business, measuring and incentivising directors against key
short-term and medium to long-term goals;
-- not enable executive directors to gain significantly from
short-term successes, which subsequently prove not to be consistent
with growing the overall value of the business. Hence the majority
of any bonus payable in relation to short-term strategic goals in
relation to the Deferred Share Bonus Plan is required to be taken
in the form of shares in the Company which are deferred for a
further two years after the bonus target has been achieved; and
-- normally be reviewed against the market every three years,
with intervening pay reviews for executive directors directly
linked to the policies applied to all employees, specifically with
regard to cost of living rises in base salary and changes in
benefits.
The following table provides an overview of the Committee's
Remuneration Policy, which has been designed to reflect the
principles described above:
Remuneration Policy
Purpose and
Element of link to Maximum Performance
remuneration strategy Operation opportunity criteria
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
Salary To provide a Base salaries are normally reviewed annually. The Directors' The Committee
base salary timing of any change is at the Committee's current salaries considers both
which will discretion and will usually be effective from 1 are set out on individual and
attract and January. page 79. Group
retain high performance in
calibre When considering the executive's eligibility for a These salary a broad context
executives to salary increase, the Committee considers levels will be when
execute the following points: eligible for determining
the Group's * size and responsibilities of the role; increases during base salary
business the period that increases.
strategy. the Remuneration
* individual and Group performance; Policy operates
from the
effective date.
* increases awarded to the wider workforce; and During this time,
salaries may be
increased each
* broader economic and inflationary conditions. year (in
percentage of
salary terms) in
line
Executive directors' remuneration is benchmarked with those of the
against external market data periodically wider workforce
(generally every three years). Relevant market and will be
comparators are selected for comparison, which capped at the
include other companies of a similar size and average workforce
complexity. The Committee considers benchmark increase plus
data, alongside a broad review of the individual's 3%, subject to
skills and experience, performance and the Committee's
internal relativities. consideration of
the overall
salary budget,
individual and
Group performance
and factors in
the wider economy
including
inflation.
Increases beyond
those linked to
the workforce (in
percentage of
salary terms)
will only be
awarded where
there is a change
of incumbent, in
responsibility,
experience or a
significant
increase in the
scale of the role
and/or size,
value and/or
complexity of the
Group.
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
Benefits To provide The executive directors are enrolled in the Group's The value of Not applicable
simple, private medical insurance scheme and receive benefits may vary
cost-effective, life assurance cover equal to four times base from year to year
employee salary. depending on the
benefits which Additionally, all executive directors are members cost to the
are the same as of the Group's medical cash plan. Company from
those offered third party
to Executive directors will be entitled to receive new providers.
the wider benefits on the same terms as those introduced
workforce. for the whole workforce.
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
Pension To provide a The Group operates a stakeholder pension plan for 6% of base salary Not applicable
basic, employees under which the employer contributes
cost-effective, 6% of base salary subject to the employee
long-term contributing a minimum of 3% of base salary. The
retirement Company does not contribute to any personal pension
benefit. arrangements.
The Company may introduce a cash alternative to a
pension contribution where this would be
more tax efficient for the individual.
Whilst executives are not obliged to join, the
Company operates a pension salary exchange
arrangement whereby executives can exchange part of
their salary for Company paid pension
contributions. Where executives exchange salary and
this reduces the Company's National Insurance
Contributions the Company credits the full saving
to the executive's pension.
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
Annual bonus To incentivise The annual bonus comprises a cash award (40% of any Maximum (% The bonus is
including and recognise bonus earned) and a DSP award (60% of salary): determined by
Deferred Share execution of any bonus earned). A greater proportion of the 125% of base and based on
Bonus Plan the business annual bonus may be deferred in future years salary performance
(DSP) strategy on an at the Committee's discretion. against a range
annual basis. Deferred shares will vest after two years and be of key
potentially forfeitable during that period. performance
Rewards the Payments under the annual bonus plan may be subject indicators
achievement of to clawback in the event of a material which will be
annual misstatement of the Group's financial results or selected and
financial and misconduct. weighted to
operational support
objectives. delivery of the
business
strategy.
The primary
bonus metric
will be
profit-based
(e.g.
underlying
operating
profit) with
targets
set in relation
to a carefully
considered
business plan
and requiring
significant
out-performance
of that plan to
trigger maximum
payments.
A minority of
bonus will also
be earned based
on pre-set
targets drawn
from the
Group's other
key performance
indicators
relating to
underlying
drivers of
long-term
revenue growth.
Details of the
performance
measures used
for the current
year and the
targets set for
the
year under
review and
performance
against them is
provided on
pages 80 and 86
to 87.
25% of the
awards vest for
achieving the
threshold
performance
target. Bonus
is earned on
a linear basis
from threshold
to maximum
performance
levels.
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
Performance To incentivise The PSP was established in 2011 and permits annual Maximum (% Awards vest
Share Plan and reward awards of nil cost options, contingent salary): 200% of based on
(PSP) executives for shares and forfeitable shares which vest after base salary three-year
the achievement three years subject to continued service and performance
of superior the achievement of challenging performance against
returns to conditions. challenging
shareholders financial
over a The Committee has discretion to introduce a targets for EPS
three-year two-year post-vesting holding period for future and relative
period, and to executive appointments to the Board. TSR
retain key performance.
individuals and A dividend equivalent provision operates enabling
align interests dividends to be paid (in cash or shares) Financial
with on shares at the time of vesting. targets will
shareholders. PSP awards may be subject to clawback in the event determine
of a material misstatement of the Group's vesting in
financial results or misconduct. relation to at
least half of
an award.
25% of the
awards vest for
achieving the
threshold
performance
target. Awards
vest on a
linear
basis from
threshold to
maximum
performance
levels.
The performance
period for
financial
targets and
relative TSR
targets is
three financial
years,
starting with
the year in
which the award
is granted.
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
All-employee Provides all Executive directors are entitled to participate on Participation None
Sharesave Plan employees with the same terms as all other employees in limits are set by
the opportunity the Group's Sharesave Plan, which has standard HMRC from time to
to become terms. time.
owners in the
Company on
similar terms.
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
Share Incentive To provide all Executive directors are entitled to participate in Participation in None
Plan (SIP) employees the the SIP on the same terms as all other the SIP is based
opportunity to employees. The SIP has standard terms and currently on HMRC rules.
own shares in only free shares are offered. However, Share awards are
the Company on executive directors routinely forfeit their discretionary and
equal terms. entitlement to any free share awards. made within
the SIP rules.
The Committee may award free shares to employees,
subject to the continued strong Group performance.
Share awards will typically be made annually in
January and will be modest in value, historically
50 shares per employee, although this will differ
with the market value of the shares.
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
Share ownership To provide Executive directors are required to retain at least Shareholding Not applicable
guidelines alignment half of any share awards vesting or exercised guideline: 200%
between the (after selling sufficient shares to meet the of base salary
executive exercise price and to pay any tax liabilities for all executive
directors due) until they have met the shareholding directors.
and guideline.
shareholders.
The Committee will regularly monitor progress
towards the guideline.
---------------- ---------------- ---------------------------------------------------- ------------------ ----------------
Non-executive To provide a The fees for non-executive directors (including the Fees for the None
directors competitive fee Company Chairman) are reviewed periodically Chairman and
which will (generally every three years). non-executive
attract and The Committee will consider the Chairman's fee, directors were
retain high whilst the non-executive directors' fee is last reviewed in
calibre considered by the wider Board, excluding the 2015 and are set
individuals and non-executives. out
reflects on page 81.
their relevant Fee levels for each role are determined after
skills and considering the responsibility of the role, Fee increases may
experience. the skills and knowledge required and the expected take place if fee
time commitments. levels are
Periodic benchmarking against relevant market considered to
comparators, reflecting the size and complexity have become out
of the role, is used to provide context when of line with
setting fee levels. the
responsibilities
In exceptional circumstances, where the normal time and time
commitment has been substantially exceeded, commitments of
an additional fee may be paid at the Board's individual roles.
discretion.
Flexibility is
retained to
increase the
above fee levels
in the event that
it is necessary
to recruit a new
Chairman or
non-executive
director of an
appropriate
calibre in future
years.
-------------- ------------------ ---------------------------------------------------- ------------------ ----------------
Business To reimburse Directors may claim reasonable business expenses Expenses vary Not applicable
expenses directors for within the terms of the Group's expenses from year to year
reasonable policy and be reimbursed on the same basis as all according to each
business employees. The Group may reimburse business director's
expenses. expenses which are in future classified as taxable responsibilities,
benefits by HMRC. business activity
and location.
-------------- ------------------ ---------------------------------------------------- ------------------ ----------------
Discretions maintained by the Committee in operating the
incentive plans
The Committee will operate the annual bonus plan, PSP, Sharesave
Plan and SIP according to their respective rules and in accordance
with the Listing Rules and HMRC rules where relevant.
The Committee retains discretion, consistent with market
practice, in a number of regards to the operation and
administration of these plans. These discretions include, but are
not limited to, the following:
-- the selection of participants in the respective plan;
-- the timing of grant of an award (if any) and payments;
-- the size of an award and/or a payment (with limits as described in the table above);
-- the extent of vesting based on the achievement of performance
targets and applicable exercise periods where relevant;
-- how to deal with a change of control (e.g. the timing of
testing performance targets) or restructuring of the Group;
-- determination of a 'good'/'bad' leaver for incentive plan
purposes based on the rules of each plan and the appropriate
treatment chosen including the timing of the delivery of
shares;
-- adjustments (if any) required in certain circumstances (e.g.
rights issues, corporate restructuring events and special
dividends); and
-- the annual review of performance measures, targets and
weightings for the annual bonus plan and PSP from year to year.
The Committee also retains the ability to adjust the targets
and/or set different measures for the annual bonus plan and PSP if
events occur (e.g. a material divestment or acquisition) which
cause it to determine that the conditions are no longer appropriate
and an amendment is required so that the conditions achieve their
original purpose and are not materially less difficult to
satisfy.
Any use of the above discretions would, where relevant, be
detailed in the Annual Report on Remuneration and if appropriate,
the subject of prior communication with the Company's major
shareholders.
For the avoidance of doubt, all previous commitments or
entitlements agreed prior to the approval of this Policy or
appointment to the Board will be permitted to payout on their
original terms or in line with the Policy in force at the time they
were agreed.
Selection of performance measures and how targets are set
The performance metrics that are used for annual bonus and
long-term incentive plans are a subset of the Group's key
performance indicators.
For the annual bonus, underlying operating profit is the primary
performance metric used as it is aligned to the Group's strategy of
delivering profitable growth and is a key financial performance
indicator used within the business. Consistent with previous years,
operating profit is measured on an underlying basis, to exclude any
volatility in relation to the Company's share price in connection
with the IFRS 2 valuation and National Insurance charge on
share-based incentives granted. The underlying operating profit
target is set on a sliding scale based around the business plan for
the year, with 25% payable for threshold performance.
The annual bonus also considers performance against other
operational metrics, including a traffic market share target,
growth in Other revenue and an employee engagement target, for a
minority of the bonus, with a sliding scale used to determine
performance against each measure.
Market share is a measure of the size and engagement of our
audience and the value which Rightmove brings to our customers and
therefore a challenging target to increase Rightmove's share of
this audience is considered appropriate by the Committee.
The Other revenue target measures growth in revenue from
businesses other than Agency and New Homes. Since some of these
businesses will be at an early stage of development, we consider
growth in revenue rather than in operating profit to be the
appropriate measure and note that this element of the bonus is only
a small proportion of the total bonus opportunity.
For the PSP, awards are subject to a combination of underlying
basic earnings per share (EPS) and relative TSR performance
conditions. EPS is considered the most appropriate financial metric
for Rightmove at this stage in its development (since it is the
measure of profitability that is most closely aligned with
shareholders' interests and monitored on an ongoing basis within
the business). The Policy also recognises that relative TSR should
also be a performance measure in order for there to be a clear
alignment of executive directors' and shareholder interests. EPS
targets are set based on sliding scales that take account of
internal financial planning and external analyst forecasts. Only
25% of the EPS element will payout for threshold performance
levels, with the maximum award requiring substantial
out-performance. For TSR, the range of targets measure how
successful the Company is in out-performing the FTSE 350 Index with
25% of this part of the award vesting at the threshold performance
level, through to full vesting for 25% out-performance of the Index
over the three-year performance period. For historic PSP awards,
performance against the FTSE 250 Index was the selected measure,
however, the Company has resided in the top quartile of the FTSE
250 for some time and the wider index is now considered more
appropriate for comparison purposes.
Performance targets do not apply to Sharesave or SIP awards
since these awards are structured to encourage employees to become
share-owners and to maintain tax-favoured status the awards must
operate on a consistent basis for all employees.
The Company does not at the present time take account of the
ratio of CEO to employee pay but will keep this under review as
market and best practice develops and as regulations evolve.
How the views of employees are taken into account
The Company has not to date felt it necessary to consult
directly with employees on executive remuneration matters. However,
the Committee is kept aware of pay and employment conditions within
the wider workforce when setting executive directors' remuneration
Policy.
Remuneration Policy for executive directors compared to other
employees
The Committee will consider the proposed salary budget for the
whole Group when it is deciding on salary increases for executive
directors specifically.
In line with the Company's strategy to keep remuneration simple
and consistent, benefits and pension arrangements provided to
executive directors are the same as those offered to all Group
employees.
The extent to which annual bonuses are offered varies by level
of employee within the Group, with the quantum and performance
metrics used determined by the nature of the role and
responsibilities and market rates at that level.
Long-term incentive awards such as the DSP, are only offered to
senior management as those awards are more heavily weighted towards
performance-related pay and have a stronger visibility on the value
created for shareholders and the reward for participants.
Shareholders' views
The Committee considers it vitally important to maintain open
and transparent communication with the Company's shareholders. The
Committee consulted major shareholders representing over 50% of the
Company's share ownership on proposed changes and continued
suitability of the Remuneration Policy. The shareholders who were
consulted were overwhelmingly supportive of the Policy proposals
and commented constructively in relation to several areas,
including future rises in basic salary and post-vesting holding
periods for long-term incentives. Shareholder feedback was
considered by the Committee and contributed to the development of
the overall Remuneration Policy.
Most recently, in late 2017, the Committee engaged with
shareholders regarding the salary increases awarded to the
executive directors in 2018.
Reward scenarios
The Company's Remuneration Policy (as previously outlined) is
illustrated below using three different performance scenarios:
minimum, on-target and maximum:
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
Assumptions:
1. Minimum = fixed pay only (salary + benefits + pension).
2. On-target = 55% payable of the 2018 annual bonus and 62.5%
vesting of the 2018 PSP awards being the midpoint between threshold
vesting of 25% and maximum vesting of 100%.
3. Maximum = 100% payable of the 2018 annual bonus and 100%
vesting of the 2018 PSP awards.
Base salary is as set at 1 January 2018. The value of taxable
benefits is based on the cost of supplying those benefits (using
the cost as disclosed on page 85) for the year ended 31 December
2017. The executive directors have elected not to participate in
the Company's pension arrangements.
The executive directors can participate in the Sharesave Plan
and SIP on the same basis as other employees. The value that may be
received under these schemes is subject to tax approved limits. For
simplicity, the value that may be received from participating in
these schemes has been excluded from the above charts.
As required by the regulations no assumption is made as to
future share price growth for reward elements (deferred bonus and
long-term incentives) that are delivered in shares.
Amounts have been rounded to the nearest GBP1,000.
Recruitment and promotion policy
The Committee proposes an executive director's remuneration
package for new appointments in line with the principles outlined
in the table below:
Element of remuneration Policy
------------------------ --------------------------------------------------------------------------------------------
Base salary Base salary levels will be set based on the roles and responsibilities of the individual
together
with their relevant skills and experience, taking into account the market rates for
companies
of comparable size and complexity and internal Company relativities. In some circumstances
(e.g. to reflect an individual's limited experience at a PLC board level) it may be
considered
appropriate to set initial salary levels below the perceived market competitive rate.
Phased
increases, potentially above inflation, may then be offered to achieve the desired market
positioning over time, subject to an individual's continued performance and development in
the role.
------------------------ --------------------------------------------------------------------------------------------
Benefits Benefits as provided to current executive directors. Where necessary the Committee may
approve
the payment of relocation expenses to facilitate recruitment, and flexibility is retained
for the Company to pay legal fees and other costs incurred by the individual in relation to
their appointment.
------------------------ --------------------------------------------------------------------------------------------
Pension Defined contributions or a cash alternative at the level provided to current executive
directors.
------------------------ --------------------------------------------------------------------------------------------
Annual bonus An annual bonus would operate in the same manner as outlined for the current executive
directors
(as described above and in the Annual Report on Remuneration), although it would be
pro-rated
to reflect the employment period during the bonus year. Flexibility will be retained to set
equivalent objectives for any new executive joining part way through a year.
The maximum bonus potential would not exceed 125% of base salary.
It would be expected that the bonus for a new appointment would be assessed on the same
performance
metrics as that for the current executive directors on an ongoing basis. However, depending
on the timing and nature of appointment it may be necessary to set tailored performance
criteria
for their first bonus plan.
------------------------ --------------------------------------------------------------------------------------------
Long-term incentives A new appointment will be eligible to receive PSP awards as outlined in the Policy table.
Share awards may be granted shortly after an appointment (subject to the Company not being
in a closed period) and would be measured against the same performance criteria as the
current
executives. However, any award granted outside the normal award and performance cycle may
be pro-rated at the Committee's discretion. The Committee may introduce post-vesting
holding
periods under the PSP for new executives if it considers this an appropriate commitment in
conjunction with the shareholding guidelines.
The ongoing maximum award would not exceed 200% of base salary.
For an internal hire, existing awards would continue over their original vesting period and
remain subject to their terms as at the date of grant.
The new appointment would be eligible to participate in the Sharesave Plan and the SIP
under
the same terms as all other employees.
------------------------ --------------------------------------------------------------------------------------------
Buy-out awards To facilitate an external recruitment, it may be necessary to buy-out remuneration which
would
be forfeited on leaving their previous employer. When determining the quantum and structure
of any buy-out awards the Committee will, as a minimum, take into account the following
factors:
* the form of remuneration (cash or shares);
* timing of expected payment/vesting; and
* expected value (i.e. taking into account the
likelihood of achieving the existing performance
criteria).
Buy-out awards, if used, will be granted using the Company's existing share plans to the
extent
possible, although awards may also be granted outside of these schemes if necessary and as
permitted under the Listing Rules.
------------------------ --------------------------------------------------------------------------------------------
Directors' service contracts and non-executive directors' terms
of appointment
The Committee's policy on service agreements for executive
directors is that they should provide for 12 months' notice of
termination by the Company and by the executive. Any proposals for
the early termination by the Company of the service agreements of
directors are considered by the Committee.
The service agreements for the executive directors allow for
lawful termination of employment by making a payment in lieu of
notice or by making phased payments over any remaining unexpired
period of notice. The phased payments may be reduced if, and to the
extent that, the executive finds an alternative remunerated
position.
In addition, any statutory entitlements or sums to settle or
compromise claims in connection with the termination would be paid
as necessary. The Company may also provide a contribution toward
reasonable legal fees or outplacement services.
Peter Brooks-Johnson and Robyn Perriss are entitled to a payment
in lieu of notice, restricted to base salary and benefits. In good
leaver circumstances a bonus may be paid at the normal time subject
to achievement of the performance conditions and pro-rating for the
period worked in the year.
For awards granted under the PSP 'good leaver' status may be
determined, in certain prescribed circumstances, such as death, ill
health, disability, redundancy, transfer or sale of the employing
company, or other circumstances at the discretion of the Committee.
If defined as a 'good leaver', awards will remain subject to
performance conditions, which will be measured over the performance
period from grant to the original vesting date, unless the
Committee determine to assess performance from grant to the date of
cessation, and which will be reduced pro-rata to reflect the
proportion of the performance period actually served. The Committee
retains the discretion to disapply time pro-rating in exceptional
circumstances and to accelerate the vesting of awards for 'good
leavers' in the event of death.
For awards granted under the DSP, 'good leaver' status may be
determined for reasons of death, injury, disability, redundancy,
transfer or sale of the employing company or other circumstances at
the discretion of the Committee. If defined as a 'good leaver',
awards will be retained and vest on the original vesting date, save
as above in the event of death, when the Committee has the
discretion to accelerate vesting.
Scott Forbes' appointment may be terminated by either party
giving to the other not less than three months' notice in writing.
The Company may also terminate by making a payment in lieu of
notice. Scott Forbes is not contractually entitled to any other
benefits on termination of his contract.
The Letters of Appointment for the non-executive directors
provide for a term of up to two three-year periods and a possible
further three-year term (subject to re-election by shareholders and
subject to the director remaining independent). The appointments
may be terminated with a notice period of three months on either
side and the Letters of Appointment set out the time commitments
required to meet the expectations of their roles.
Copies are available for inspection on request to the Company
Secretary.
Further details of all directors' contracts and Letters of
Appointment are summarised below:
Date of
Date of appointment contract/Letter of Notice (months) Length of service at
Appointment 23 February 2018
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Executive directors
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Peter Brooks-Johnson(1) 10 January 2011 22 February 2011 12 7 years 1 month
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Robyn Perriss(2) 30 April 2013 1 May 2013 12 4 years 10 months
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Non-executive directors
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Scott Forbes (Chairman) 13 July 2005 21 February 2006 3 12 years 7 months
(3)
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Ashley Martin 11 June 2009 9 June 2009 3 8 years 8 months
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Peter Williams 3 February 2014 3 February 2014 3 4 years 1 month
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Rakhi Goss-Custard 28 July 2014 28 July 2014 3 3 years 7 months
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Jacqueline de Rojas 30 December 2016 10 October 2016 3 1 year 2 months
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Andrew Findlay 1 June 2017 11 May 2017 3 9 months
------------------------ ----------------------- ----------------------- ----------------- -----------------------
Lorna Tilbian 1 February 2018 19 January 2018 3 1 month
------------------------ ----------------------- ----------------------- ----------------- -----------------------
(1) Peter Brooks-Johnson joined the Group on 9 January 2006 and
was appointed to the Board on 10 January 2011. His service with the
Group at the date of this report is 12 years and 1 month.
(2) Robyn Perriss joined the Group on 1 July 2007 and was
appointed to the Board on 30 April 2013. Her service to the Group
at the date of this report is 10 years and 8 months.
(3) The Chairman's letter of appointment was transferred from
Rightmove Group Limited to Rightmove plc with effect from 28
January 2008 on completion of a Scheme of Arrangement.
External appointments
With the approval of the Board in each case, executive directors
may accept one external appointment as a non-executive director of
another listed or similar company and retain any fees received.
Neither of the executive directors currently hold any outside
directorships.
Annual Report on Remuneration
Remuneration Committee role and membership
Terms of reference
The primary role of the Committee is to make recommendations to
the Board as to the Company's overall policy and framework for the
remuneration of the executive directors and the Chairman of the
Board. The remuneration and terms of appointment of the
non-executive directors are determined by the Board as a whole.
In accordance with the Code, the Committee also recommends the
structure and monitors the level of remuneration for the first
layer of management below Board level. The Committee is also aware
of, and advises on, the employee benefit structures throughout the
Group and ensures that it is kept aware of any potential business
risks arising from those remuneration arrangements.
The Committee has formal terms of reference which are reviewed
annually and updated as required. These are available on the
Company's website at plc.rightmove.co.uk or on request from the
Company Secretary.
Membership
The following independent non-executive directors were members
of the Committee during 2017:
Peter Williams (Chairman of the Committee)
Rakhi Goss-Custard
Jacqueline de Rojas (from 9 May 2017)
Colin Kemp (to 9 May 2017)
During the year the Committee met six times and attendance at
the meetings is shown in the Corporate Governance Report on page
43.
The quorum for meetings of the Committee is two members. The
Committee will meet at such times as may be necessary but will
normally meet at least five times a year. The Company Secretary
acts as Secretary to the Committee.
Only members of the Committee have the right to attend Committee
meetings. The Chairman of the Committee has requested that the
Chairman of the Board attend the meetings except during discussions
relating to his own remuneration. The Chief Executive Officer may
also be invited to meetings and the Committee takes into
consideration his recommendations regarding the remuneration of
executive colleagues and management below Board level. No executive
director is involved in
deciding their own remuneration.
External advisors
New Bridge Street (NBS), a trading name of Aon Hewitt (part of
Aon plc), which is a member of the Remuneration Consultants Group
and has signed up to its Code of Conduct, has been retained as the
Committee's remuneration advisor since 2011. The terms of
engagement between the Company and NBS are available from the
Company Secretary on request.
The total fees paid to NBS in respect of services to the
Committee during the year were GBP31,000.
During 2017 NBS also provided services to the Company in
connection with the valuation of share-based incentives (as
required by IFRS 2) and confirmed that, in its view, these services
did not present a conflict of interest with the other services
provided to the Committee. The Committee reviews its relationship
with external advisors on a regular basis and continues to believe
that there are no conflicts of interest.
What has the Committee done during the year?
The Committee met six times during the year to consider and,
where appropriate, approve key remuneration items including:
Pay and incentive plan reviews
-- annual review and approval of executive directors' base salaries and benefits;
-- approval of remuneration arrangements for Nick McKittrick on
his retirement as Chief Executive Officer;
-- approval of a salary increase and additional award under the
Rightmove Performance Share Plan (PSP) for Peter Brooks-Johnson on
his promotion to Chief Executive Officer;
-- review of 2017 business performance against relevant
performance targets to determine annual bonus payouts and vesting
of long-term incentives;
-- review and approval of appropriate benchmarks and performance
measures for the annual performance-related bonus and 2018 PSP
awards to ensure measures are aligned with strategy and that
targets are appropriately stretching;
-- approval of share awards granted in March 2017 under the
Deferred Share Bonus Plan (DSP) and the PSP; and
-- ongoing monitoring of senior management remuneration.
Governance and strategy
-- review and approval of the Directors' Remuneration Report;
-- submitting the Remuneration Policy for executive directors
for shareholder approval at the 2017 AGM;
-- review of the 2017 AGM voting and feedback from institutional investors;
-- evaluation of the Committee's performance during the year; and
-- review of the Committee's terms of reference.
Application of Policy for the year ending 31 December 2018
Salaries
The executive directors' salaries for the 2018 financial year
are set out in the table below:
Salary Salary Workforce increase plus
1 January 2018 31 December 2017 Change
---------------------- ----------------- ------------------- ------------------------ --------
Executive directors
---------------------- ----------------- ------------------- ------------------------ --------
Peter Brooks-Johnson GBP472,268 GBP445,536(1) 3% 6%
---------------------- ----------------- ------------------- ------------------------ --------
Robyn Perriss GBP339,200 GBP320,000 3% 6%
---------------------- ----------------- ------------------- ------------------------ --------
(1) On 9 May 2017, Nick McKittrick stepped down from the Board
as Chief Executive Officer and retired from Rightmove on 30 June
2017. No payment was made in lieu of any unexpired period of
notice. The Board approved the promotion of Peter Brooks-Johnson to
Chief Executive Officer and the Committee approved an increase in
his base salary from GBP373,136 to GBP445,536, in line with his
predecessor and our 2017 Remuneration Policy, with effect from 9
May 2017.
The 6% increase in base salaries for the executive directors
represents an increase of 3% above the average workforce rise of 3%
for 2018, primarily to recognise the scale and complexity of those
roles and to address the relatively low pay of these executives
compared with market norms. The salaries remain well below the
market median for executives in comparable companies.
Pension and other benefits
The Group operates a stakeholder pension plan for all employees
under which the employer contributes 6% of base salary, subject to
the employee contributing a minimum of 3% of base salary. Peter
Brooks-Johnson and Robyn Perriss elected not to participate in the
pension plan during the year. The Company does not contribute to
any personal pension arrangements.
The executive directors are enrolled in the Group's private
medical insurance scheme and receive life assurance cover equal to
four times base salary. Additionally, the executive directors are
members of the Group's medical cash plan.
Annual bonus
The annual bonus for the 2018 financial year will be consistent
with the policy detailed on pages 68 to 69 of the Remuneration
Policy section of this report in terms of maximum bonus
opportunity, deferral and clawback provisions. The mechanism
through which the clawback can be implemented (enabling both the
recovery and withholding of incentive pay) enables the Committee to
(i) reduce the cash bonus earned in a subsequent year and/or reduce
outstanding DSP/PSP share awards (i.e. withholding provisions may
be used to effect a recovery) or (ii) for the Committee to require
that a net of tax balancing cash payment be made to the Company.
The performance measures have been selected to reflect a range of
financial and strategic targets that continue to support the key
objectives of the Group.
The performance measures and weightings will be as follows:
Measure As a % of maximum bonus opportunity
---------------------------------- ------------------------------------
Financial targets
Underlying operating profit (1) 65%
---------------------------------- ------------------------------------
Strategic targets
Traffic market share(2) 15%
Other revenue(3) 15%
Employee engagement(4) 5%
---------------------------------- ------------------------------------
(1) Operating profit before share-based payments and NI on
share-based incentives.
(2) Measured on a time on site basis by reference to
comScore.
(3) Revenue excluding Agency and New Homes.
(4) Based on the results of the annual employee survey.
In relation to the financial target a challenging sliding scale
will operate with 25% of the maximum bonus opportunity payable at
the threshold underlying operating profit target relative to the
2018 business plan through to 100% becoming payable for significant
outperformance relative to the plan. A greater proportion of the
award will be paid for exceeding threshold performance.
The weighting of all performance measures are unchanged from
2017.
The targets themselves, as they relate to the 2018 financial
year, are deemed to be commercially sensitive. However,
retrospective disclosure of the targets and performance against
them will be provided in next year's Annual Report on Remuneration
to the extent that they do not remain commercially sensitive at
that time.
Long-term incentives
The award levels under the PSP, approved in 2017, remain at 200%
of base salary for both executive directors.
Consistent with current market practice and previous years,
awards to the executive directors under the PSP in 2018 will be
subject to a mixture of EPS (75% of awards) and relative TSR (25%
of the awards) performance conditions. The 2018 targets are as
follows:
EPS performance condition
The Group's EPS growth will be measured over the period of three
financial years (2018 to 2020). The EPS figure used will be
equivalent to the Group's basic underlying EPS (before share-based
payments, National Insurance on share-based incentives and no
related adjustment for tax). With a view to ensuring appropriately
stretching but achievable targets are set in light of market
expectations for the Group, the following range of targets will
apply to the 2018 awards:
Underlying basic EPS growth % of award vesting
from 2018 to 2020(1) (maximum 75%)
---------------------------- ----------------------
Less than 20% 0%
---------------------------- ----------------------
20% 18.75%
---------------------------- ----------------------
50% 75%
---------------------------- ----------------------
Between 20% and 50% Straight-line vesting
---------------------------- ----------------------
(1) The benchmark underlying basic EPS for the financial year
2017 from which these targets will be measured is 163.3p.
As in prior years, the targets that are intended to operate for
the 2018 PSP awards were set to be appropriately demanding in light
of the Group's internal planning, external market expectations for
future growth and the current trading environment, the targets are
considered to provide a realistic incentive at the lower end of the
performance range but require exceptional performance to achieve
full vesting. On this basis, the Committee is satisfied that the
range of targets are appropriately demanding, and no less
challenging than the range of targets set for the 2017 awards.
Relative TSR performance condition
The vesting schedule for the relative TSR element of executive
directors' 2018 PSP awards is set out below. Relative TSR will be
assessed against the FTSE 350 Index, reflecting the Company's size
in terms of market capitalisation. Performance will be measured
over three financial years.
TSR performance of the Company relative to the FTSE 350 Index(1) % of award vesting
(maximum 25%)
------------------------------------------------------------------ ----------------------
Less than the Index 0%
------------------------------------------------------------------ ----------------------
Equal to the Index 6.25%
------------------------------------------------------------------ ----------------------
25% higher than the Index 25%
------------------------------------------------------------------ ----------------------
Intermediate performance Straight-line vesting
------------------------------------------------------------------ ----------------------
(1) If the FTSE 350 Index's TSR was 50% over the three-year
performance period, then the Company's TSR would have to be at
least 75% for all 25% of the PSP shares to vest.
Chairman and non-executive directors' fees
The Chairman and non-executive directors' fees were last
reviewed in a market context in 2015 and increased to current
levels. In line with our Policy they are benchmarked and reviewed
periodically, usually every three years. The next review is
scheduled for 2018 with any increase taking effect in 2019.
The basic non-executive fee is GBP50,000 with an additional
GBP10,000 fee per annum paid for the chairing of the Audit and
Remuneration Committees and a further GBP5,000 fee paid to the
Senior Independent Director as detailed in the table below:
Annual fee 1 January 2018 Annual fee 31 December 2017
------------------------ -------------------------- ----------------------------
Scott Forbes (Chairman) GBP170,000 GBP170,000
------------------------ -------------------------- ----------------------------
Ashley Martin GBP60,000 GBP60,000
------------------------ -------------------------- ----------------------------
Peter Williams GBP65,000 GBP65,000
------------------------ -------------------------- ----------------------------
Rakhi Goss-Custard GBP50,000 GBP50,000
------------------------ -------------------------- ----------------------------
Jacqueline de Rojas GBP50,000 GBP50,000
------------------------ -------------------------- ----------------------------
Andrew Findlay GBP50,000 GBP29,166(1)
------------------------ -------------------------- ----------------------------
(1) Fee for seven months, from 1 June 2017.
Statement of shareholder voting at AGM
At the AGM on 9 May 2017, shareholders overwhelmingly voted in
favour of the Directors' Remuneration Report and the new Directors'
Remuneration Policy. The Committee believes this illustrates the
strong level of shareholder support for the remuneration framework.
The table below shows full details of the voting outcomes for the
Directors' Remuneration Report and the Policy:
Votes for % Votes Votes against % Votes Votes withheld(1)
for against
------------------------- ----------- -------- -------------- --------- ------------------
Directors' Remuneration
Report 72,340,405 98.54 1,075,197 1.46 17,491
------------------------- ----------- -------- -------------- --------- ------------------
Directors' Remuneration
Policy 70,332,275 95.83 3,064,143 4.17 36,674
------------------------- ----------- -------- -------------- --------- ------------------
(1) A vote withheld is not a vote in law and is not counted in
the calculation of the proportion of votes cast 'For' and 'Against'
a resolution.
In line with the Company's commitment to ongoing dialogue with
its shareholders, the Committee corresponds with major shareholders
and meetings are offered, where appropriate, to understand the
reasons for any potential or actual opposition to the Company's
Remuneration Policy. Changes are made to our Policy where it is
considered appropriate to do so.
Review of past performance
Share price performance
In 2017, the Company's share price ended the year at GBP45.00 up
15% year on year (the FTSE 250 Index was up 18% and the FTSE 350
Index was up 13%). On a three-year basis the share price has
increased by 100% and has continued to outperform both the FTSE 250
and FTSE 350 Indices over that period as shown in the graphs on
page 83.
Total shareholder return (TSR)
The first graph below compares the TSR of Rightmove's shares
against the FTSE 250 Index and the FTSE 350 Index for the
three-year period from 1 January 2015 to 31 December 2017. TSR is
the product of movements in the share price plus dividends
reinvested on the ex-dividend date. TSR provides a useful, widely
used benchmark to illustrate the Company's performance over the
last three years. Specifically, it illustrates the value of GBP100
invested in Rightmove's shares and in the FTSE 250 Index and the
FTSE 350 Index over that period.
As required by the Act, the Company's TSR performance is
required to be shown against a recognised broad-based share index.
Since 2016, as Rightmove continues to be ranked towards the top of
the FTSE 250 Index in terms of market capitalisation, the FTSE 350
Index is felt to be more appropriate for the purpose of comparing
TSR performance and therefore this will be used as the criteria
applied to 25% of the PSP awards to be granted in February
2018.
The graphs below illustrate, for statutory purposes, the TSR of
Rightmove's shares against the FTSE 250 Index and the FTSE 350
Index for the three and nine years to 31 December 2017.
TSR Graph - three years
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
TSR Graph - nine years
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
Total remuneration for the Chief Executive Officer
The table below shows the total remuneration figure for the
Chief Executive Officer over a nine-year performance period. The
total remuneration figure includes the annual bonus and long-term
incentive awards that vested based on performance in those
years.
Annual bonus outturn (% of Long-term incentive
Total single figure maximum) outturn
Year Executive GBP (% of maximum)
-------- ------------------------- ---------------------- --------------------------- ----------------------------
2017 Peter Brooks-Johnson(1) 504,557 60% 100%
Nick McKittrick(1) 1,223,443 n/a 100%
---------------------------------- ---------------------- --------------------------- ----------------------------
2016 Nick McKittrick 2,126,923 92% 100%
-------- ------------------------- ---------------------- --------------------------- ----------------------------
2015 Nick McKittrick 2,300,349 100% 100%
-------- ------------------------- ---------------------- --------------------------- ----------------------------
2014 Nick McKittrick 1,599,610 70% 92%
2013 Nick McKittrick 531,371 85% 100%
Ed Williams(2) 1,531,515 n/a 100%
---------------------------------- ---------------------- --------------------------- ----------------------------
2012 Ed Williams 2,219,882 90% 100%
-------- ------------------------- ---------------------- --------------------------- ----------------------------
2011 Ed Williams 4,934,942 100% 100%
-------- ------------------------- ---------------------- --------------------------- ----------------------------
2010 Ed Williams 652,800 100% -(3)
-------- ------------------------- ---------------------- --------------------------- ----------------------------
2009 Ed Williams 627,641 100% -(3)
-------- ------------------------- ---------------------- --------------------------- ----------------------------
(1) Nick McKittrick was Chief Executive Officer and a director
until 9 May 2017 and retired from Rightmove on 30 June 2017. Peter
Brooks-Johnson was appointed Chief Executive Officer on 9 May
2017.
(2) Ed Williams was Chief Executive Officer until his retirement
on 30 April 2013. Nick McKittrick was appointed Chief Executive
Officer at this time.
(3) The table above includes share-based incentive awards in the
period that the associated performance conditions, excluding
service conditions are satisfied. Certain pre-float share option
awards prior to 2006, which had only service conditions and no
performance conditions would have been included in the single
figure remuneration table in the year of grant in accordance with
Schedule 8 of the Act. The table above therefore excludes
GBP4,151,532 and GBP2,026,674 of awards with no performance
conditions, which vested in 2010 and 2009 respectively.
Directors' remuneration (audited)
The information included below up to and including page 94 is
audited.
The remuneration of the directors of the Company during 2017 for
time served as a director is as follows:
Fixed Pay Performance-related pay
--------------------------------------------------------- ---------------------------------------------- --------------
Long-term
Fixed incentives Performance-related Total
Salary/ pay Annual (3) pay remuneration
Fee Benefits(1) subtotal bonus(2) GBP subtotal in 2017
GBP GBP GBP GBP
GBP GBP
------------------------------ ------------- ---------- ---------- ----------- --------------------- --------------
Executive directors
------------------------------- ------------- ---------- ---------- ----------- --------------------- --------------
Nick McKittrick(4) 159,120 666 159,786 - 1,063,657 1,063,657 1,223,443
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Peter
Brooks-Johnson(5) 420,103 1,852 421,955 315,077 1,155,196 1,470,273 1,892,228
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Robyn Perriss 320,000 1,406 321,406 240,000 925,763 1,165,763 1,487,169
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Non-executive directors
------------------------------- ------------- ---------- ---------- ----------- --------------------- --------------
Scott Forbes 170,000 - 170,000 - - - 170,000
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Colin Kemp 18,012 - 18,012 - - - 18,012
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Ashley Martin 60,000 - 60,000 - - - 60,000
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Peter Williams 65,000 - 65,000 - - - 65,000
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Rakhi Goss-Custard 50,000 - 50,000 - - - 50,000
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Jacqueline de Rojas 50,000 - 50,000 - - - 50,000
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
Andrew Findlay(6) 29,166 - 29,166 - - - 29,166
-------------------- --------- ------------- ---------- ---------- ----------- --------------------- --------------
(1) Benefits in kind for the executive directors relate to
private medical insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in
respect of the full year results for the year ended 31 December
2017 including the deferred element (60% of annual bonus).
(3) The value of the long-term incentives includes:
-- nil cost PSPs where vesting is calculated by taking the
number of nil cost options expected to vest in March 2018
(including dividend roll up), which are dependent on the three-year
performance period ended 31 December 2017 and multiplying by the
year end closing share price of GBP45.00; and
-- the notional capital gain on Sharesave options exercisable on
1 November 2017 which reflects the difference between the option
grant price of GBP19.72 and GBP41.39, being the market value of
shares on the date they vested.
(4) Reflects base salary through to resignation as Chief
Executive Officer and director on 9 May 2017 together with pro rata
vesting of PSPs awarded in March 2015.
(5) Reflects base salary of GBP373,136 as Chief Operating
Officer to 9 May 2017 and increased annual salary of GBP445,536 as
Chief Executive Officer from 10 May 2017.
(6) Fee for seven months from 1 June 2017 to 31 December
2017.
The remuneration of the directors of the Company during 2016
was:
Fixed pay Performance related pay
-------------------------------------------------------- -------------------------------------------------------------------------------
Long-term
Fixed incentives Performance- Total remuneration in
Salary/ pay Annual (3) related pay 2016
Fee Benefits(1) Pension subtotal bonus(2) GBP subtotal GBP
GBP GBP GBP GBP
GBP GBP
--------------------------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Executive directors
---------------------------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Nick McKittrick 424,320 1,973 - 426,293 487,968 1,212,662 1,700,630 2,126,923
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Peter
Brooks-Johnson 355,368 1,973 15,849 373,190 408,673 1,015,601 1,424,274 1,797,464
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Robyn Perriss 281,112 1,240 13,233 295,585 323,279 803,392 1,126,671 1,422,256
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Non-executive directors
---------------------------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Scott Forbes 170,000 - - 170,000 - - - 170,000
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Colin Kemp 50,000 - - 50,000 - - - 50,000
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Ashley Martin 60,000 - - 60,000 - - - 60,000
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Peter Williams 65,000 - - 65,000 - - - 65,000
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Rakhi
Goss-Custard 50,000 - - 50,000 - - - 50,000
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
Jacqueline de
Rojas 274(4) - - 274 - - - 274
----------------- --------- ------------- ------------ ---------- ---------- ----------- -------------- --------------------------
(1) Benefits in kind for the executive directors relate to
private medical insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in
respect of the full year results for the year ended 31 December
2016 including the deferred element of 60%.
(3) The value of the nil cost PSPs vesting is calculated by
taking the number of nil cost options expected to vest in March
2017 (including dividend roll up), which are dependent on the
three-year performance period ended 31 December 2016 and
multiplying by the year end closing share price of GBP39.03.
(4) Fee for two days from appointment on 30 December 2016 to
year end.
Defined contribution pension
The Group operates a stakeholder pension plan for employees
under which the employer contributes 6% of base salary, subject to
the employee contributing a minimum of 3% of base salary. None of
the directors elected to participate in the pension plan during
2017. The Company does not contribute to any personal pension
arrangements.
How was pay linked to performance in 2017?
Annual bonus plan
The incentive for the financial year ended 31 December 2017 was
in the form of a cash bonus of up to 50% of salary and a DSP bonus
of up to 75% of salary (i.e. 125% in total). The bonus (both cash
and DSP elements) was determined by a mixture of underlying
operating profit performance (65%) and key performance indicators
(35%) relating to underlying drivers of long-term revenue
growth.
When comparing performance against the 2017 bonus targets set,
the Committee determined that 60% of the maximum achievable cash
and DSP bonus should be paid to the executive directors.
Accordingly, a cash bonus of 30% of base salary will be paid to the
executives and 45% of base salary will be granted to the executive
directors under the DSP, which will be deferred until March 2020.
More details are provided in the table below:
Measure Hurdle As a % of Actual Resulting bonus
maximum bonus performance % achieved
opportunity achieved
----------------- ----------------------------------------------- --------------- --------------- ----------------
Financial targets
----------------------------------------------------------------------------------------------------------------------
Underlying
operating
profit
achieved:
GBP184.4m
The 2017
underlying
Targets: operating
* GBP175.2m: 25% payout profit
Underlying represented
operating growth of 11%
profit (1) * GBP185.7m: 100% payout 65% on 2016 59%
----------------- ----------------------------------------------- --------------- --------------- ----------------
Strategic targets
----------------------------------------------------------------------------------------------------------------------
Traffic market Growth in time in minutes spent on Rightmove 15% There was a 0%
share platforms as measured by comScore relative to lower growth
nearest competitors in time in
* Same absolute growth: 25% payout minutes spent
on Rightmove
platforms year
* 50% higher absolute growth: 100% payout on year than
our nearest
competitors
----------------- ----------------------------------------------- --------------- --------------- ----------------
Other revenue(2) 15% Revenue 0%
* Growth of 16%: 25% payout increased from
GBP17.8m to
GBP18.6m, an
* Growth of 24%: 100% payout increase below
the minimum
threshold
----------------- ----------------------------------------------- --------------- --------------- ----------------
Employee Percentage of respondents to the employee 5% 90% of 1%
engagement (3) survey who say 'Rightmove is a great place to respondents
work': say 'Rightmove
* 90%: 25% payout is a great
place to work'
* 95%: 100% payout
----------------- ----------------------------------------------- --------------- --------------- ----------------
Total 100% 60%
------------------------------------------------------------------ --------------- --------------- ----------------
(1) Operating profit before share-based payments and NI on
share-based incentives.
(2) The targets relate to all revenue streams except Agency and
New Homes.
(3) Based on the results of the annual employee survey.
Long-term incentives vesting during the year
The PSP awards granted in March 2015 were subject to EPS (75% of
the awards) and relative TSR (25% of the awards) performance
conditions that related to the three-year period ended 31 December
2017.
The vesting schedule for the relative TSR element of executive
directors' 2015 PSP awards is set out below:
% of award vesting
Relative TSR condition (maximum 25%)
--------------------------- ----------------------
Less than the Index 0%
--------------------------- ----------------------
Equal to the Index 6.25%
--------------------------- ----------------------
25% higher than the Index 25%
--------------------------- ----------------------
Intermediate performance Straight-line vesting
--------------------------- ----------------------
At the end of the performance period, Rightmove's TSR was 109.2%
compared to 39.2% for the FTSE 250 Index. As this level of
outperformance is 70% higher than the Index, these options will
vest in full on 2 March 2018.
Rightmove's EPS growth is measured over a period of three
financial years (2015 to 2017). The EPS figure used is equivalent
to Rightmove's reported underlying basic EPS (before share-based
payments, NI on share-based incentives and no related adjustment
for tax) and the vesting schedule is set out below:
Underlying basic EPS growth % of award vesting
from 2015 to 2017 (maximum 75%)
---------------------------- ----------------------
Less than 30% 0%
---------------------------- ----------------------
30% 18.75%
---------------------------- ----------------------
60% 75%
---------------------------- ----------------------
Between 30% and 60% Straight-line vesting
---------------------------- ----------------------
At the end of the performance period, underlying basic EPS was
163.3p which from an underlying basic EPS base of 100.3p results in
growth of 63%, exceeding the maximum 60% EPS growth target and will
result in full vesting of this part of the award (maximum of 75%)
from 2 March 2018.
Share awards granted during the year
On 1 March 2017 Peter Brooks-Johnson and Robyn Perriss were
awarded shares under the PSP, which vest in March 2020, and are
subject to a mixture of EPS (75% of the awards) and TSR relative to
the FTSE 350 Index (25% of the awards) performance with the greater
weighting on EPS to reflect its particular relevance to the
performance of the business.
Executive director Basis of grant Number of shares Face value of award(1)
---------------------- --------------------- ----------------- -----------------------
Peter Brooks-Johnson 200% of base salary 18,691 746,273
---------------------- --------------------- ----------------- -----------------------
Robyn Perriss 200% of base salary 16,029 640,000
---------------------- --------------------- ----------------- -----------------------
(1) Based on the average mid-market share price for the three
consecutive days prior to grant, taken from the Daily Official
List, of GBP39.93.
On 9 May 2017, the Committee approved a top-up award of
performance shares for Peter Brooks-Johnson, following his
promotion to CEO. The award was over 3,457 ordinary shares of 1p
each, reflecting the increase in his base salary from GBP373,136 to
GBP445,536. The performance shares are exercisable for a period of
2 years from 9 May 2020 and are subject to the same performance
criteria as the original award granted on 1 March 2017. The number
of additional shares was based on the average mid-market share
price for the three consecutive days prior to grant, taken from the
Daily Official List, of GBP41.90.
The vesting schedule for the relative TSR element of executive
directors' 2017 PSP awards is set out below. It is consistent with
the TSR condition used for previous grants under the share option
scheme. Performance will be measured over three financial
years.
% of award vesting
Relative TSR condition (maximum 25%)
--------------------------- ----------------------
Less than the Index 0%
--------------------------- ----------------------
Equal to the Index 6.25%
--------------------------- ----------------------
25% higher than the Index 25%
--------------------------- ----------------------
Intermediate performance Straight-line vesting
--------------------------- ----------------------
Rightmove's EPS growth will be measured over a period of three
financial years (2017-2019). The EPS figure used will be equivalent
to the Group's underlying basic EPS (before share-based payments,
NI on share-based incentives and no related adjustments for
tax).
The following vesting schedule will apply for executive
directors' awards granted in 2017:
Underlying basic EPS growth % of award vesting
from 2017 to 2019 (maximum 75%)
---------------------------- ----------------------
Less than 20% 0%
---------------------------- ----------------------
20% 18.75%
---------------------------- ----------------------
50% 75%
---------------------------- ----------------------
Between 20% and 50% Straight-line vesting
---------------------------- ----------------------
The benchmark underlying basic EPS for the financial year 2016
from which these targets will be measured is 142.8p.
Retirement arrangements for Nick McKittrick
Nick McKittrick retired as a director and Chief Executive
Officer following the AGM on 9 May 2017. His employment with the
Group ended on 30 June 2017.
The Committee determined that he should continue to be paid his
salary and normal package of benefits up to 30 June 2017 and
receive a bonus in respect of the 2016 financial year as detailed
below. In line with the Remuneration Policy, 40% of the 2016 bonus
was paid in cash with the balance deferred in shares for a period
of two years. Nick did not receive a bonus for the six months to 30
June 2017 and was not awarded performance shares under the PSP in
March 2017.
The Committee also determined that Nick would be treated as a
good leaver in relation to his outstanding PSP and DSP awards, with
these awards vesting in line with the relevant plan rules and the
Remuneration Policy set out on pages 66 to 71. Outstanding PSP
awards would also be subject to the achievement of performance
conditions and vest pro-rata in accordance with the plan rules.
Full details of the remuneration arrangements were published on
the Company's website in accordance with Section 430(2B) of the
Companies Act following the AGM and details of share awards are set
out below.
Rightmove Performance Share Plan
In accordance with our Policy, unvested PSP awards were
pro-rated to 30 June 2017 and vest on the original vesting dates,
subject to the achievement of TSR and EPS performance criteria.
These awards will be exercisable for 12 months from the original
vesting dates. PSP awards which have already vested but remain
unexercised will be exercisable until 30 June 2018, being 12 months
from Nick's leaving date.
Details of unexercised PSP awards as at the date of Nick's
retirement (based on the maximum possible vesting if EPS and TSR
performance conditions are fully met) are set out in the table
below:
Award Date Performance Normal Vesting Award (number Pro-rated award
Period Date of shares) (number of
shares)
------------ ----------------- ---------------- -------------- ----------------
1 January 2013
8 March to 31 December 8 March
2013 2015 2016 33,465(1) 33,465(1)
------------ ----------------- ---------------- -------------- ----------------
1 January 2014
3 March to 31 December 3 March
2014 2016 2017 31,070(2) 31,070(2)
------------ ----------------- ---------------- -------------- ----------------
1 January 2015
2 March to 31 December 2 March
2015 2017 2018 29,321 22,805(3)
------------ ----------------- ---------------- -------------- ----------------
1 January 2016
1 March to 31 December 1 March
2016 2018 2019 21,912 9,739(3)
------------ ----------------- ---------------- -------------- ----------------
(1) No pro-rating applies; includes rolled up dividend of 1,186 shares.
(2) No pro-rating applies; includes rolled up dividend of 1,052 shares.
(3) Pro-rated to 30 June 2017 and subject to TSR and EPS related performance conditions.
Rightmove Deferred Share Bonus Plan
In accordance with our Policy, DSP awards granted in respect of
prior years' performance remain capable of vesting in full:
-- vested but unexercised DSP awards may be exercisable for 12 months from 30 June 2017; and
-- unvested DSP awards will vest on the original vesting dates
and be exercisable for 12 months from vesting.
Award Date Performance Period Normal Vesting Date Award (number of shares)
-------------- ------------------------------------ --------------------- -------------------------
2 March 2015 1 January 2014 to 31 December 2014 2 March 2017 7,546
-------------- ------------------------------------ --------------------- -------------------------
1 March 2016 1 January 2015 to 31 December 2015 1 March 2018 7,901
-------------- ------------------------------------ --------------------- -------------------------
1 March 2017 1 January 2016 to 31 December 2016 1 March 2019 7,333
-------------- ------------------------------------ --------------------- -------------------------
Rightmove Sharesave Plan (SAYE)
Nick held options over 760 shares in total under the
all-employee SAYE, which lapsed following his retirement in
accordance with the SAYE rules.
Share-based incentives held by the directors and not exercised
as at 31 December 2017
Average
Share-based share Share-based
incentives Granted price incentives
held in year/ at date held at
Date 1 January dividend Exercise Exercised of 31 December Vesting Expiry
granted 2017 roll-up price in year exercise 2017 date date
Executive directors
---------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
Peter 10/10/2007
Brooks-Johnson (Unapproved) 75,000 - GBP5.22 75,000(8) GBP41.03 - 15/3/2011 9/10/2017
----------------- --------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
5/3/2009
(Unapproved) 139,286 - GBP2.24 - - 139,286 5/3/2012 4/3/2019
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
5/3/2010
(Unapproved) 52,553 - GBP6.66 - - 52,553 5/3/2013 4/3/2020
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
8/3/2013
(PSP) 24,210 889 GBP0.00 25,099(1) GBP41.03 - 8/3/2016 7/3/2018
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
3/3/2014
(PSP) 25,140 - GBP0.00 - - 25,140 3/3/2017 2/3/2019
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/10/2014
(Sharesave) 456(6) - GBP19.72 456(10) GBP40.15 - 1/11/2017 30/4/2018
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
2/3/2015
(DSP) 6,320 (-) GBP0.00 6,320(7) GBP41.20 - 2/3/2017 1/3/2018
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
2/3/2015
(PSP) 24,556 (-) GBP0.00 - - 24,556 2/3/2018 1/3/2020
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/10/2015
(Sharesave) 304 (-) GBP29.60 - - 304 1/11/2018 30/4/2019
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/3/2016
(DSP) 6,617 (-) GBP0.00 - - 6,617 1/3/2018 28/2/2019
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/3/2016
(PSP) 18,351 (-) GBP0.00 - - 18,351 1/3/2019 28/2/2021
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/3/2017
(DSP) - 6,141(3) GBP0.00 - - 6,141 1/3/2019 29/2/2020
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/3/2017
(PSP) - 18,691(4) GBP0.00 - - 18,691 1/3/2020 28/2/2022
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
9/5/2017
(PSP) - 3,457(5) GBP0.00 - - 3,457 9/5/2020 8/5/2022
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/10/2017
(Sharesave) - 273(9) GBP32.89 - - 273 1/11/2020 30/4/2021
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
Total 372,793 29,451 106,875 295,369
---------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
Robyn
Perriss 8/3/2013
(PSP) 14,928 548 GBP0.00 15,476(1) GBP40.62 - 8/3/2016 7/3/2018
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
3/3/2014
(DSP) 4,353 (-) GBP0.00 4,353(2) GBP40.61 - 3/3/2016 2/3/2017
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
3/3/2014
(PSP) 19,887 697 GBP0.00 20,584(6) GBP43.26 - 3/3/2017 2/3/2019
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/10/2014
(Sharesave) 912 (-) GBP19.72 912(10) GBP40.15 - 1/11/2017 30/4/2018
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
2/3/2015
(DSP) 4,999 (-) GBP0.00 4,999(7) GBP43.12 - 2/3/2017 1/3/2018
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
2/3/2015
(PSP) 19,425 (-) GBP0.00 - - 19,425 2/3/2018 1/3/2020
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/3/2016
(DSP) 5,234 (-) GBP0.00 - - 5,234 1/3/2018 28/2/2019
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/3/2016
(PSP) 14,516 (-) GBP0.00 - - 14,516 1/3/2019 28/2/2021
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/3/2017
(DSP) - 4,858(3) GBP0.00 - - 4,858 1/3/2019 29/2/2020
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/3/2017
(PSP) - 16,029(4) GBP0.00 - - 16,029 1/3/2020 28/2/2022
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
1/10/2017
(Sharesave) - 547(9) GBP32.89 - - 547 1/11/2020 30/4/2021
--------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
Total 84,254 22,679 46,324 60,609
---------------------------------- ------------ ----------------- ------------ ---------- --------- ------------ ---------- ------------
(1) On 8 March 2013, the executive directors were awarded nil
cost options under the PSP which vested in 2016 subject to EPS and
relative TSR performance measures, which were met in full.
Robyn Perriss exercised the nil cost option over 15,476 shares
(which included a dividend roll-up of 548 shares) on 27 February
2017, sold 11,375 upon exercise at an average market price of
GBP40.62 and retained the balance of 4,101 shares.
Peter Brooks-Johnson exercised the nil cost option over 25,099
shares (which included a dividend roll-up of 889 shares) on 31
October 2017 and sold all the shares at an average market price of
GBP41.03 per share.
(2) The nil cost deferred shares granted under the DSP on 3
March 2014, were exercisable from 3 March 2016 subject to annual
bonus targets which were met in full. Robyn Perriss exercised the
nil cost option over 4,353 shares on 27 February 2017 and sold
3,199 shares at an average market price of GBP40.61 per share to
satisfy the resulting tax liability and retained the balance of
1,154 shares.
(3) On 1 March 2017, the executive directors were awarded nil
cost options under the DSP, which vest in March 2019. The average
mid-market share price for the three consecutive preceding days,
used to calculate the number of shares awarded, was GBP39.93.
(4) On 1 March 2017, the executive directors were awarded nil
cost shares under the PSP, which vest in March 2020. Further
details are set out on pages 88 to 89.
(5) On 9 May 2017, a top-up award of nil cost shares under the
PSP was made to Peter Brooks-Johnson, which vest in May 2020.
Further details are set out on page 88.
(6) On 3 March 2014, the executive directors were awarded nil
cost options under the PSP which vested in 2017 subject to EPS and
relative TSR performance measures, which were met in full. Robyn
Perriss exercised the nil cost option over 20,584 shares (which
included a dividend roll-up of 697 shares) on 31 May 2017, sold
15,129 upon exercise at an average market price of GBP43.26 and
retained the balance of 5,455 shares.
(7) The nil cost deferred share awards granted under the DSP on
2 March 2015, were exercisable from 2 March 2017 subject to annual
bonus targets which were met in full.
Robyn Perriss exercised the nil cost option over 4,999 shares on
31 May 2017 and sold 3,674 shares at an average market price of
GBP43.12 per share and retained the balance of 1,325 shares.
Peter Brooks-Johnson exercised the nil cost option over 6,320
shares on 3 October 2017 and sold all the shares at an average
market price of GBP41.20 per share.
(8) Peter Brooks-Johnson was granted an unapproved option over
75,000 shares at an exercise price of GBP5.22 which vested in 2011.
On 3 October 2017, he exercised the option, which the Company net
settled, he sold 30,907 shares at an average market price of
GBP41.03 per share to satisfy the resulting tax liability and
retained the balance of 34,574 shares.
(9) On 29 September 2017, Peter Brooks-Johnson and Robyn Perriss
were granted Sharesave options over 273 and 547 shares respectively
at an exercise price of GBP32.89. The options will be exercisable
from November 2020.
(10) In October 2014, Peter Brooks-Johnson and Robyn Perriss
were granted Sharesave options over 456 and 912 shares
respectively, which vested in November 2017 at an exercise price of
GBP19.72. On 28 November 2017, both directors exercised their
options in full and retained the shares.
Dilution
All existing executive share-based incentives can be satisfied
from shares held in the Rightmove Employees' Share Trust (EBT) and
shares held in treasury. It is intended that the 2017 share-based
incentive awards will also be settled from shares currently held in
the EBT or from shares held in treasury without any requirement to
issue further shares.
During 2017, treasury shares were used to satisfy vested PSP
awards and unapproved options over 379,269 shares, representing
0.42% of issued share capital (less treasury shares) as at 31
December 2017.
Directors' interests in shares
The interests (both beneficial and family interests) of the
directors in office at the date of this report in the share capital
of the Company were as follows:
Interests in Interests in
ordinary shares of GBP0.01 share-based incentives
--------------------------------------- ----------------------------------------------------------------------------------
PSP & DSP PSP & DSP awards (vested
At 1 awards but unexercised) Options (vested but
At January (unvested) Options unexercised)
31 December 2017 2017 (unvested)
--------------------------- ---------- ---------------- -------------------------- ------------ --------------------------
Executive directors
---------------------------- ---------- ---------------- ---------------------------------------- --------------------------
Peter
Brooks-Johnson 90,716 55,146 77,813 25,140 577 191,839
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
Robyn Perriss 18,780 5,833 60,062 - 547 -
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
Non-executive directors
---------------------------- ---------- ---------------- ----------------------------------------
Scott Forbes 219,300 319,300 - - - -
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
Ashley Martin 2,060 2,060 - - - -
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
Peter Williams 3,728 3,728 - - - -
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
Rakhi
Goss-Custard 544 544 - - - -
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
Jacqueline de
Rojas 188 188 - - - -
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
Andrew Findlay
- - - - - -
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
Total 335,316 386,799 137,875 25,140 1,124 191,839
----------------- --------- ---------- ---------------- -------------------------- ------------ --------------------------
-- The Company's shares in issue (including 1,892,456 shares
held in treasury) as at 31 December 2017 comprised 93,266,207
(2016: 95,490,266) ordinary shares of GBP0.01 each.
-- The closing share price of the Company was GBP45.00 as at 29
December 2017 (the last day of trading in 2017). The lowest and
highest share prices during the year were GBP38.89 and GBP45.25
respectively.
-- The executive directors are regarded as being interested, for
the purposes of the Companies Act 2006, in 263,767 (2016: 343,275)
ordinary shares of GBP0.01 each in the Company currently held by
the EBT at 31 December 2017 as they are, together with other
employees, potential beneficiaries of the EBT.
-- The directors' beneficial holdings represent 0.4% of the
Company's shares in issue as at 31 December 2017 (2016: 0.6%)
(excluding shares held in treasury).
-- There have been no changes to the above interests between the
year end and the date of this report.
Executive director share ownership guidelines are set out in the
Remuneration Policy Report on page 70. The interests of the
executive directors in office at 31 December 2017 in the share
capital of the Company as a percentage of base salary were as
follows:
Number of shares held Value of Value of shares as a %
Base salary at shares at of base salary
1 January 2018 31 December 2017 31 December 2017
---------------------- ------------------ ----------------------- ------------------ -----------------------
Executive directors
------------------------------------------ ----------------------- ------------------ -----------------------
Peter Brooks-Johnson GBP472,268 90,176 GBP4,057,920 860%
---------------------- ------------------ ----------------------- ------------------ -----------------------
Robyn Perriss GBP339,200 18,780 GBP845,100 250%
---------------------- ------------------ ----------------------- ------------------ -----------------------
Percentage increase in the remuneration of the Chief Executive
Officer
The table below shows the movement in the salary, benefits and
annual bonus for the Chief Executive Officer (CEO) between the
current and previous financial year compared to that of the total
amounts for all employees of the Group for each of these elements
of pay.
The CEO's base salary increased by 5%, in line with the approved
Remuneration Policy of awarding 3% above the average workforce
inflationary increase for 2017. The annual bonus of the CEO
decreased by 32% as a result of 60% of the maximum bonus being
achieved in relation to the 2017 bonus targets, compared with a
pay-out of 92% for 2016.
The average salary for all employees increased by 2% due to a
universal cost of living increase in January 2017.
2017 2016
GBP GBP % change
----------------------------------------- --------- --------- -----------
Chief Executive Officer
Salary(1) 445,536 424,320 5%
----------------------------------------- --------- --------- -----------
Benefits 1,852 1,973 (6)%
----------------------------------------- --------- --------- -----------
Annual bonus(1) 334,152 487,968 (32)%
----------------------------------------- --------- --------- -----------
Average of all employees(2)
Salary 45,995 45,148 2%
----------------------------------------- --------- --------- -----------
Benefits 770 834 (8)%
----------------------------------------- --------- --------- -----------
Annual bonus 1,571 2,394 (34)%
----------------------------------------- --------- --------- -----------
Ratio of CEO to average employee pay(3) 16x 19x (16)%
----------------------------------------- --------- --------- -----------
(1) 2017 pro-forma salary and bonus cost (based on 60%
achievement) is for comparison purposes based on the full year
salary payable to the CEO. The actual salaries earned by Nick
McKittrick and Peter Brooks-Johnson in 2017 were pro-rated and are
set out in the Directors' remuneration table on page 85.
(2) Based on 477 employees, which excludes the executive
directors.
(3) The multiple of the CEO remuneration compared to the average
employee's remuneration.
Relative importance of the spend on pay
The table below shows the total pay for all Rightmove's
employees compared to other key financial indicators. Additional
information on the number of employees, total revenue and
underlying operating profit has been provided for context.
Year ended Year ended
31 December 2017 31 December 2016
% change
------------------------------------------------ ------------------ ------------------ -----------
Employee costs (refer Note 7) GBP28,338,000 GBP27,423,000 3%
------------------------------------------------ ------------------ ------------------ -----------
Dividends paid to shareholders (refer Note 12) GBP49,611,000 GBP43,206,000 15%
------------------------------------------------ ------------------ ------------------ -----------
Purchase of own shares (refer Note 22) GBP90,809,000 GBP88,083,000 3%
------------------------------------------------ ------------------ ------------------ -----------
Income tax (refer Note 10) GBP34,120,000 GBP32,005,000 7%
------------------------------------------------ ------------------ ------------------ -----------
Average number of employees (refer Note 7)(2) 479 469 2%
------------------------------------------------ ------------------ ------------------ -----------
Revenue GBP243,273,000 GBP219,993,000 11%
------------------------------------------------ ------------------ ------------------ -----------
Underlying operating profit(1) GBP184,365,000 GBP166,240,000 11%
------------------------------------------------ ------------------ ------------------ -----------
(1) Before share-based payments and NI on share-based incentives.
(2) Average number of employees includes executive directors.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF RIGHTMOVE PLC
1 Our opinion is unmodified
We have audited the financial statements of Rightmove plc ("the
Company") for the year ended 31 December 2017 which comprise the
Consolidated statement of comprehensive income, Consolidated
statement of financial position, Company statement of financial
position, Consolidated statement of cash flows, Company statement
of cash flows, Consolidated statement of changes in shareholders'
equity, Company statement of changes in shareholders' equity, and
the related notes, including the accounting policies in note 1.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the parent Company's affairs as at 31
December 2017 and of the Group's profit for the year then
ended;
-- the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU);
-- the parent Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the EU and as
applied in accordance with the provisions of the Companies Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities are described below. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the
audit committee.
We were appointed as auditor by the directors to the group's
previous holding company, prior to it becoming a public interest
entity, for the financial period ended 31 December 2000. The period
of total uninterrupted engagement as auditor is for the 12
financial years ended 31 December 2017 as a public-interest entity
and 18 years in total.
We have fulfilled our ethical responsibilities under, and we
remain independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to
listed public interest entities. No non-audit services prohibited
by that standard were provided.
2 Key audit matters: our assessment of risks of material
misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. We summarise below
the key audit matters (unchanged from 2016), in decreasing order of
audit significance, in arriving at our audit opinion above,
together with our key audit procedures to address those matters and
our findings from those procedures in order that the Company's
members as a body may better understand the process by which we
arrived at our audit opinion. These matters were addressed, and our
findings are based on procedures undertaken, in the context of, and
solely for the purpose of, our audit of the financial statements as
a whole, and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate
opinion on these matters.
Revenue recognition GBP243.3m (2016: GBP220.0m) Risk vs 2016:
Unchanged
Refer to page 47 (Audit Committee Report), page 111 (accounting
policy) and page 116 (financial disclosures)
-- The risk:
Processing Error
The key revenue streams, being Agency, New Homes and Overseas,
consist of subscription fees and customer spend on additional
advertising products in respect of properties listed on Rightmove
platforms. There is a variety of packages and membership offers
available and customers are able to tailor the combination of
products they receive. The resulting large volume of non-homogenous
transactions creates a risk of processing error. In addition
revenue is the most material figure in the financial statements and
is considered to be a main driver of results, and as such had the
greatest effect on our allocation of resources in planning and
completing the audit.
-- Our response: Our audit procedures included:
o Control operation: Testing the design, implementation and
operating effectiveness of the Group's controls over the review of
monthly revenue recognised compared to the Group's expectation and
controls over the review and monitoring of membership offers that
impact revenue recognition;
o Data comparison: Agreeing billings by individual invoice, for
the entire population, to cash receipts;
o Tests of details: For a sample of the highest revenue
generating customers we inspected contracts signed in the year, to
assess whether revenue has been recognised in accordance with the
specific contract terms and conditions;
o Re-performance: For membership offers operated during the
year, we selected a sample of customers from each offer, inspected
the underlying contract and reperformed the revenue recognition
calculations;
o Tests of details: We assessed the appropriateness of deferred
revenue at the period end with reference to subscription fee
billings in December, and specific product deferrals where amounts
are billed in advance but revenue recognition deferred until the
services are provided;
o Test of details: Inspecting a sample of credit notes raised
post year end to determine whether they related to revenue
recognised in the year;
o Tests of details: We obtained 100% of the journals posted in
respect of revenue and, using computer assisted audit techniques,
analysed these to identify and investigate any entries which
appeared unusual based upon the specific characteristics of the
journal, considering in particular whether the debit side of the
journal entry was as expected, based on our business
understanding.
-- Our findings:
o We found no errors in the Group's calculation of the revenue
recognised.
Recoverability of parent Company's investment in subsidiaries
GBP548.7m (2016: GBP546.2m) Risk vs 2016: Unchanged
Refer to page 47 (Audit Committee Report), page 109 (accounting
policy) and pages 122 to 123 (financial disclosures)
-- The risk:
Low risk, high value
The carrying amount of the parent Company's investment in the
subsidiary company Rightmove Group Limited represents 99% (2016:
99%) of the Company's total assets. Its recoverability is not at a
high risk of significant misstatement or subject to significant
judgement. However, due to its materiality in the context of the
parent Company financial statements, this is considered to be the
area that had the greatest effect on our overall parent Company
audit.
-- Our response: Our audit procedures included:
-- Comparing valuations: comparing the carrying amount of the
investment to the market capitalisation of the Group, as Rightmove
Group Limited contains all of the Group's trading operations.
-- Our findings:
We found no indicators of impairment.
3 Our application of materiality and an overview of the scope of
our audit
Materiality for the Group financial statements as a whole was
set at GBP7.5m (2016: GBP7.0m), determined with reference to a
benchmark of group profit before tax of GBP178.2m, of which it
represents 4.2% (2016: 4.3%).
Materiality for the parent Company financial statements as a
whole was set at GBP6.0m (2016: GBP5.6m), determined with reference
to a benchmark of Company net assets, of which it represents 1.1%
(2016: 1.1%).
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding GBP0.37m (2016:
GBP0.35m), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Of the group's three (2016: three) reporting components, which
includes the parent Company, we subjected two (2016: three) to full
scope audits for Group purposes. The components within the scope of
our work accounted for 100% of total Group revenue, 100% of Group
profit before tax and 99.8% of total Group assets.
The remaining 0.2% of total Group assets is represented by one
reporting component, which individually is not significant to the
Group.
The work on the two reporting components (2016: three
components) was performed by the Group team, which includes the
audit of the parent Company, with materiality for the components
set at GBP6.0m (2016: GBP5.6m).
4 We have nothing to report on going concern
We are required to report to you if:
-- we have anything material to add or draw attention to in
relation to the directors' statement in note 1 to the financial
statements on the use of the going concern basis of accounting with
no material uncertainties that may cast significant doubt over the
Group and Company's use of that basis for a period of at least
twelve months from the date of approval of the financial
statements; or
-- the related statement under the Listing Rules set out on
pages 107 to 108 is materially inconsistent with our audit
knowledge.
We have nothing to report in these respects.
5 We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material
misstatements in the other information.
Strategic report and directors' report
Based solely on our work on the other information:
-- we have not identified material misstatements in the
strategic report and the directors' report;
-- in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
-- in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors' remuneration report
In our opinion the part of the Directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw attention
to in relation to:
-- the directors' confirmation within the Viability statement on
page 25 that they have carried out a robust assessment of the
principal risks facing the Group, including those that would
threaten its business model, future performance, solvency and
liquidity;
-- the Principal risks and uncertainties disclosures describing
these risks and explaining how they are being managed and
mitigated; and
-- the directors' explanation in the Viability statement of how
they have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Under the Listing Rules we are required to review the Viability
statement. We have nothing to report in this respect.
Corporate governance disclosures
We are required to report to you if:
-- we have identified material inconsistencies between the
knowledge we acquired during our financial statements audit and the
directors' statement that they consider that the annual report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's position and performance,
business model and strategy; or
-- the section of the annual report describing the work of the
Audit Committee does not appropriately address matters communicated
by us to the Audit Committee; or
-- a corporate governance statement has not been prepared by the Company.
We are required to report to you if the Corporate governance
report does not properly disclose a departure from the eleven
provisions of the UK Corporate Governance Code specified by the
Listing Rules for our review.
We have nothing to report in these respects.
Based solely on our work on the other information described
above:
-- with respect to the Corporate Governance Statement
disclosures about internal control and risk management systems in
relation to financial reporting processes and about share capital
structures:
-- we have not identified material misstatements therein; and
-- the information therein is consistent with the financial statements; and
-- in our opinion, the Corporate Governance Statement has been
prepared in accordance with relevant rules of the Disclosure
Guidance and Transparency Rules of the Financial Conduct
Authority.
6 We have nothing to report on the other matters on which we are
required to report by exception
Under the Companies Act 2006, we are required 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 financial statements and the part of the
Directors' Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
7 Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 60,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing the
Group and 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 they 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
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or other irregularities (see
below), or error, and to issue our opinion in an auditor's report.
Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud, other irregularities or error and are
considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the
FRC's website at www.frc.org.uk/auditorsresponsibilities.
Irregularities - ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our sector experience, through discussion with the
directors and other management (as required by auditing
standards).
We had regard to laws and regulations in areas that directly
affect the financial statements including financial reporting
(including related company legislation) and taxation legislation.
We considered the extent of compliance with those laws and
regulations as part of our procedures on the related financial
statements items.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
8 The purpose of our audit work and to whom we owe our
responsibilities
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
and the terms of our engagement by the company. 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 the further matters we are required to state to them in
accordance with the terms agreed with the company, 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.
Karen Wightman (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
23 February 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2017
2017 2016
Note GBP000 GBP000
------------------------------------------------------ ----- ----------- -----------
Revenue 5 243,273 219,993
------------------------------------------------------ ----- ----------- -----------
Administrative expenses (64,972) (58,346)
------------------------------------------------------ ----- ----------- -----------
Underlying operating profit 184,365 166,240
Share-based payments 24 (4,836) (4,142)
NI on share-based incentives 24 (1,228) (451)
Operating profit 6 178,301 161,647
------------------------------------------------------ ----- ----------- -----------
Financial income 8 129 109
Financial expenses 9 (214) (209)
------------------------------------------------------ ----- ----------- -----------
Net financial expense (85) (100)
------------------------------------------------------ ----- ----------- -----------
Profit before tax 178,216 161,547
Income tax expense 10 (34,120) (32,005)
------------------------------------------------------ ----- ----------- -----------
Profit for the year being total comprehensive income 144,096 129,542
------------------------------------------------------ ----- ----------- -----------
Attributable to:
Equity holders of the parent 144,096 129,542
------------------------------------------------------ ----- ----------- -----------
Earnings per share (pence)
Basic 11 156.75 137.87
Diluted 11 155.15 136.41
Dividends per share (pence) 12 54.00 46.00
Total dividends 12 49,611 43,206
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
2017 2016
Note GBP000 GBP000
--------------------------------------------------------------- ------- --------- ---------
Non-current assets
Property, plant and equipment 13 2,709 2,288
Intangible assets 14 3,290 3,525
Deferred tax asset 16 5,745 6,942
--------------------------------------------------------------- ------- --------- ---------
Total non-current assets 11,744 12,755
--------------------------------------------------------------- ------- --------- ---------
Current assets
Trade and other receivables 17 35,094 29,924
Money market deposits 18 4,045 4,026
Cash and cash equivalents 18 20,930 13,749
--------------------------------------------------------------- ------- --------- ---------
Total current assets 60,069 47,699
--------------------------------------------------------------- ------- --------- ---------
Total assets 71,813 60,454
--------------------------------------------------------------- ------- --------- ---------
Current liabilities
Trade and other payables 19 (38,888) (35,796)
Income tax payable (14,693) (16,256)
Provisions 21 (755) (185)
Total current liabilities (54,336) (52,237)
--------------------------------------------------------------- ------- --------- ---------
Non-current liabilities
Provisions 21 (294) (175)
--------------------------------------------------------------- ------- --------- ---------
Total non-current liabilities (294) (175)
--------------------------------------------------------------- ------- --------- ---------
Total liabilities (54,630) (52,412)
--------------------------------------------------------------- ------- --------- ---------
Net assets 17,183 8,042
--------------------------------------------------------------- ------- --------- ---------
Equity
Share capital 22 933 955
Other reserves 499 477
Retained earnings 15,751 6,610
--------------------------------------------------------------- ------- --------- ---------
Total equity attributable to the equity holders of the parent 17,183 8,042
--------------------------------------------------------------- ------- --------- ---------
The financial statements were approved by the Board of directors
on 23 February 2018 and were signed on its behalf by:
Peter Brooks-Johnson
Director
Robyn Perriss
Director
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
2017 2016
Note GBP000 GBP000
--------------------------------------------------------------- ------ ---------- ----------
Non-current assets
Investments 15 548,827 546,202
Deferred tax asset 16 2,490 3,757
--------------------------------------------------------------- ------ ---------- ----------
Total non-current assets 551,317 549,959
--------------------------------------------------------------- ------ ---------- ----------
Total assets 551,317 549,959
--------------------------------------------------------------- ------ ---------- ----------
Current liabilities
Trade and other payables 19 (23,410) (30,152)
Total current liabilities (23,410) (30,152)
--------------------------------------------------------------- ------ ---------- ----------
Net assets 527,907 519,807
--------------------------------------------------------------- ------ ---------- ----------
Equity
Share capital 22 933 955
Other reserves 23 115,698 113,051
Retained earnings 411,276 405,801
--------------------------------------------------------------- ------ ---------- ----------
Total equity attributable to the equity holders of the parent 527,907 519,807
--------------------------------------------------------------- ------ ---------- ----------
The financial statements were approved by the Board of directors
on 23 February 2018 and were signed on its behalf by:
Peter Brooks-Johnson
Director
Robyn Perriss
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2017
2017 2016
Note GBP000 GBP000
--------------------------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Profit for the year 144,096 129,542
Adjustments for:
Depreciation charges 13 1,311 1,241
Amortisation charges 14 473 378
Financial income 8 (129) (109)
Financial expenses 9 214 209
Loss on disposal of property, plant and equipment 13 20 -
Loss on disposal of intangible assets 14 203 -
Share-based payments 24 4,836 4,142
Transaction costs on acquisition of subsidiary 27 - 42
Income tax expense 10 34,120 32,005
--------------------------------------------------------- ------ ---------- ----------
Operating cash flow before changes in working capital 185,144 167,450
Increase in trade and other receivables (5,154) (2,237)
Increase in trade and other payables 3,212 3,913
Increase in provisions 21 689 124
Cash generated from operating activities 183,891 169,250
Financial expenses paid (214) (209)
Income taxes paid (33,187) (27,807)
--------------------------------------------------------- ------ ---------- ----------
Net cash from operating activities 150,490 141,234
--------------------------------------------------------- ------ ---------- ----------
Cash flows from / (used in) investing activities
Interest received on cash and cash equivalents 94 108
Acquisition of property, plant and equipment 13 (1,755) (1,281)
Proceeds from disposal of property, plant and equipment 13 3 -
Acquisition of intangible assets 14 (441) (478)
Acquisition of subsidiary (net of cash acquired) 27 - (2,088)
Net cash used in investing activities (2,099) (3,739)
--------------------------------------------------------- ------ ---------- ----------
Cash flows from / (used in) financing activities
Dividends paid 12 (49,611) (43,206)
Purchase of own shares for cancellation 22 (90,809) (88,083)
Purchase of own shares for share incentive plans 23 (761) (751)
Share-related expenses 22 (757) (497)
Proceeds on exercise of share-based incentives 728 373
Net cash used in financing activities (141,210) (132,164)
--------------------------------------------------------- ------ ---------- ----------
Net increase in cash and cash equivalents 7,181 5,331
Cash and cash equivalents at 1 January 13,749 8,418
--------------------------------------------------------- ------ ---------- ----------
Cash and cash equivalents at 31 December 18 20,930 13,749
--------------------------------------------------------- ------ ---------- ----------
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2017
2017 2016
Note GBP000 GBP000
------------------------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Profit for the year 144,476 136,648
Adjustments for:
Dividend income 28 (149,551) (141,563)
Financial expenses 28 330 527
Share-based payments 24 2,211 2,404
Income tax credit (1,136) (1,074)
Operating cash flow before changes in working capital (3,670) (3,058)
Increase in trade and other payables 19 3,670 3,058
Cash generated from operating activities - -
Net decrease in cash and cash equivalents - -
Cash and cash equivalents at 1 January - -
------------------------------------------------------- ------ ---------- ----------
Cash and cash equivalents at 31 December 18 - -
------------------------------------------------------- ------ ---------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARED 31 DECEMBER 2017
Reverse
Own shares Other reserves acquisition Retained
Share capital held GBP000 reserve earnings Total equity
Note GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ----- -------------- -------------- -------------- -------------- -------------- --------------
At 1 January
2016 977 (14,062) 317 138 19,267 6,637
Total
comprehensive
income
Profit for the
year - - - - 129,542 129,542
Transactions
with owners
recorded
directly in
equity
Share-based
payments 24 - - - - 4,142 4,142
Tax credit in
respect of
share-based
incentives
recognised
directly in
equity 10 - - - - 5 5
Dividends to
shareholders 12 - - - - (43,206) (43,206)
Exercise of
share-based
incentives 23 - 366 - - 7 373
Purchase of
shares for SIP 23 - (751) - - - (751)
Cancellation of
own shares 22 (22) - 22 - (88,083) (88,083)
Share-related
expenses 22 - - - - (617) (617)
--------------- -----
At 31 December
2016 955 (14,447) 339 138 21,057 8,042
--------------- ----- -------------- -------------- -------------- -------------- -------------- --------------
At 1 January
2017 955 (14,447) 339 138 21,057 8,042
Total
comprehensive
income
Profit for the
year - - - - 144,096 144,096
Transactions
with owners
recorded
directly in
equity
Share-based
payments 24 - - - - 4,836 4,836
Tax credit in
respect of
share-based
incentives
recognised
directly in
equity 10 - - - - 1,299 1,299
Dividends to
shareholders 12 - - - - (49,611) (49,611)
Exercise of
share-based
incentives 23 - 2,213 - - (1,485) 728
Purchase of
shares for SIP 23 - (761) - - - (761)
Cancellation of
own shares 22 (22) - 22 - (90,809) (90,809)
Share-related
expenses 22 - - - - (637) (637)
At 31 December
2017 933 (12,995) 361 138 28,746 17,183
--------------- ----- -------------- -------------- -------------- -------------- -------------- --------------
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARED 31 DECEMBER 2017
Reverse
Own shares Other acquisition Retained
Share capital held reserves reserve earnings Total equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--- --------------------- -------------- -------------- --------- -------------- -------------- --------------
At 1 January 2016 977 (11,897) 7,771 103,520 411,045 511,416
Total comprehensive
income
Profit for the year - - - - 136,648 136,648
Transactions with
owners recorded
directly in equity
Share-based payments 24 - - - - 2,404 2,404
Tax credit in
respect of
share-based
incentives
recognised directly
in equity 10 - - - - 24 24
Capital contribution 23 - - 1,738 - - 1,738
Dividends to
shareholders 12 - - - - (43,206) (43,206)
Transfer of shares
to SIP - (517) - - - (517)
Exercise of
share-based
incentives - 258 - - (258) -
Cancellation of own
shares 22 (22) - 22 - (88,083) (88,083)
Share-related
expenses 22 - - - - (617) (617)
At 31 December 2016 955 (12,156) 9,531 103,520 417,957 519,807
-------------------- ---- -------------- -------------- --------- -------------- -------------- --------------
At 1 January 2017 955 (12,156) 9,531 103,520 417,957 519,807
Total comprehensive
income
Profit for the year - - - - 144,476 144,476
Transactions with
owners recorded
directly in equity
Share-based payments 24 - - - - 2,211 2,211
Tax credit in
respect of
share-based
incentives
recognised directly
in equity 10 - - - - 586 586
Capital contribution 23 - - 2,625 - - 2,625
Dividends to
shareholders 12 - - - - (49,611) (49,611)
Transfer of shares
to SIP - (741) - - - (741)
Exercise of
share-based
incentives - 1,880 - - (1,880) -
Cancellation of own
shares 22 (22) - 22 - (90,809) (90,809)
Share-related
expenses 22 - - - - (637) (637)
At 31 December 2017 933 (11,017) 12,178 103,520 422,293 527,907
-------------------- ---- -------------- -------------- --------- -------------- -------------- --------------
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
1 General information
Rightmove plc (the Company) is a company registered in England
(Company no. 6426485) domiciled in the United Kingdom (UK). The
consolidated financial statements of the Company as at and for the
year ended 31 December 2017 comprise the Company and its interest
in its subsidiaries (together referred to as the Group).
The consolidated financial statements of the Group as at and for
the year ended 31 December 2017 are available upon request to the
Company Secretary from the Company's registered office at Turnberry
House, 30 Caldecotte
Lake Drive, Caldecotte, Milton Keynes, MK7 8LE or are available on the corporate website at plc.rightmove.co.uk.
Statement of compliance
The Group and Company financial statements have been prepared
and approved by the Board of directors in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union (Adopted IFRSs).
The consolidated financial statements were authorised for issue
by the Board of directors on 23 February 2018.
Basis of preparation
On publishing the Company financial statements here together
with the Group financial statements, the Company is taking
advantage of the exemption in s408 of the Companies Act 2006 not to
present its individual statement of comprehensive income and
related notes that form a part of these approved financial
statements.
The accounting policies set out below have been consistently
applied to both years presented, unless otherwise stated.
The financial statements have been prepared on an historical
cost basis.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control
exists when the Group has existing rights that give it the ability
to direct the relevant activities of an entity and has the ability
to affect the returns the Group will receive as a result of its
involvement with the entity. In assessing control, potential voting
rights that are currently exercisable or convertible are taken into
account. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases.
On 31 May 2016 the Group acquired The Outside View Analytics Ltd
("Outside View") from which date the results of Outside View have
been consolidated. Details of the acquisition are set out in Note
27.
Changes in accounting policies
The accounting policies applied by the Group in these
consolidated financial statements are in accordance with Adopted
IFRSs and are the same as those applied by the Group in its
consolidated financial statements as at and for the year ended 31
December 2016.
There have been no significant changes to accounting under IFRS
which have affected the Group's results for the current financial
year. The only changes to the IFRS that are effective for the first
time in this financial year, and are applicable for the Group, are
the Annual Improvements to IFRSs: 2014-2016 cycle. These have not
had a material impact on the Group.
Going concern
Throughout 2017, the Group was debt free and has continued to
generate significant cash and has an overall positive net asset
position. The Group had cash balances of GBP20,930,000 at 31
December 2017 (2016: GBP13,749,000). The Group also had
GBP4,045,000 of money market deposits (2016: GBP4,026,000).
During the year GBP140,420,000 (2016: GBP131,289,000) of cash
was returned to shareholders via dividends and discretionary share
buy backs.
The Group agreed to extend a 12 month agreement with Barclays
Bank plc for a GBP10,000,000 committed revolving loan facility.
This agreement will expire on 12 February 2019.
The Board of directors is confident that with the existing cash
resources and banking facilities in place, coupled with the
strength of the underlying business model, the Group and the
Company will remain cash positive and will have adequate resources
to continue in operational existence for a period of 12 months from
the date of signing these accounts.
1 General information (continued)
Further information regarding the Group's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report on
pages 1 to 32. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described on pages
17 to 19. In addition Note 4 to the financial statements includes
the Group's objectives, policies and processes for managing its
capital; its financial risk management objectives; details of its
financial instruments and its exposures to credit risk and
liquidity risk.
Capital structure
The Company was incorporated and registered in England and Wales
on 14 November 2007 under the Companies Act 1985 as a private
company limited by shares with the name Rightmove Group Limited,
registered no. 6426485. The Company was
re-registered as a public limited company under the name
Rightmove Group plc on 29 November 2007. On 28 January 2008 the
Company became the holding company of Rightmove Group Limited
(formerly Rightmove plc, Company no. 3997679) and its subsidiaries
pursuant to a Scheme of Arrangement under s425 of the Companies Act
1985. The shares in the Company were admitted to trading on the
Official List of the London Stock Exchange on 28 January 2008 and
the Company immediately changed its name to Rightmove plc. Details
of the share capital of the Company are disclosed in Note 22.
Judgements and estimates
The preparation of the consolidated and Company financial
statements in conformity with Adopted IFRSs requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any future
periods, if applicable.
In particular, information about significant areas of estimation
uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in
the consolidated and Company financial statements are included in
the following notes:
Notes 16 and 24 The choice of valuation methodology and the
inputs and assumptions used to calculate the initial fair value for
new share-based incentives granted and the rate at which the
related deferred tax asset is measured. The key estimates used in
calculating the fair value of the options are the fair value of the
Company's shares at the grant date, expected share price
volatility, risk-free interest rate, expected dividends, and
weighted average expected life of the instrument. In respect of
share-based incentives granted to employees, the number of
share-based incentives that are expected to vest is based upon
estimates of the number of employees that will forfeit their awards
through leaving the Group and the likelihood of any non-market
performance conditions being satisfied. Management regularly
performs a true-up of the estimate of the number of shares that are
expected to vest; this is dependent on the anticipated number of
leavers.
Non-GAAP (Generally Accepted Accounting Principles) performance
measures
In the analysis of the Group's financial performance certain
information disclosed in the financial statements may be prepared
on a non-GAAP basis or has been derived from amounts calculated in
accordance with IFRS but is not itself an expressly permitted GAAP
measure. These measures are reported in line with how financial
information is analysed by management. The key non-GAAP measures
presented by the Group are:
-- Underlying operating profit - which is defined as operating
profit before share-based payments and National Insurance on
share-based incentives; and
-- Underlying basic earnings per share (EPS) - which is defined
as profit for the year before share-based payments and National
Insurance on share-based incentives, with no related adjustment for
tax, divided by the weighted average number of shares in issue for
the year.
The Directors believe that these non-GAAP measures provide a
more appropriate measure of the Group's business performance as
share-based payments are a significant non-cash charge and are
driven by a valuation model, and NI on share-based incentives is
driven by reference to the Rightmove plc share price and so subject
to volatility, rather than reflecting operational activity. The
directors therefore consider underlying operating profit to be the
most appropriate indicator of the performance of the business and
year-on-year trends. For simplicity no adjustment for tax is made
within the calculation of underlying basic EPS. The non-GAAP
measures are designed to increase comparability of the Group's
financial performance year-on-year.
2 Significant accounting policies
(a) Investments
Investments in subsidiaries are held at cost less any provision
for impairment in the parent Company financial statements.
(b) Intangible assets
(i) Goodwill
Goodwill arising on a business combination represents the
difference between the fair value of the consideration paid and the
fair value of the net identifiable assets acquired and is included
in intangible assets.
In respect of acquisitions prior to 1 January 2004, goodwill is
included on the basis of its deemed cost, which represents the
amount previously recorded under UK GAAP. The classification and
accounting treatment of business that occurred prior to 1 January
2004 was not reconsidered in preparing the Group's opening IFRS
statement of financial position at 1 January 2004.
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is tested annually for impairment. This applies to
all goodwill arising both before and after 1 January 2004.
(ii) Research and development
The Group undertakes research and development expenditure in
view of developing new products and improving the existing property
platforms. Expenditure on research activities, undertaken with the
prospect of gaining new technical knowledge and understanding, is
recognised in profit or loss as incurred.
Expenditure on development activities, whereby research findings
are applied to a plan or design for the production of a new product
or substantially enhanced website, is capitalised if the new
product or the enhanced website is technically and commercially
feasible, the Group has sufficient resources to complete
development, future economic benefits are probable and the Group
can measure reliably the expenditure attributable to the intangible
asset during its development. Capitalised costs are held as an
asset in progress until such point that the asset is brought into
use, at which point it is transferred to the appropriate intangible
asset category and amortisation is charged.
The expenditure capitalised includes subcontractors and direct
labour. Capitalised development expenditure is stated at cost less
accumulated amortisation and accumulated impairment losses.
Subsequent expenditure on capitalised intangible assets is
capitalised only when it increases the economic benefits embodied
in the specific asset to which it relates. All other expenditure is
expensed when incurred.
(iii) Computer software and licences
Computer software and externally acquired software licences are
capitalised and stated at cost less accumulated amortisation and
impairment losses. Amortisation is charged from the date the asset
is available for use. Amortisation is provided to write off the
cost less the estimated residual value of the computer software or
licence by equal annual instalments over its estimated useful
economic life as follows:
Computer software 20.0% - 33.3% per annum
Software licences 20.0% - 33.3% per annum
(iv) Market appraisal algorithm
The market appraisal algorithm identified on the acquisition of
the Outside View Analytics Ltd is valued using the reproduction
cost method based on market rate salaries. Amortisation is expensed
in the profit or loss on a straight-line basis over the estimated
useful economic life as follows:
Market appraisal algorithm 33.3% per annum
(c) Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. Capitalised costs
are held as an asset in progress until such point that the asset is
brought into use, at which point it is transferred to the
appropriate property, plant and equipment category and depreciation
is charged. Depreciation is provided to write off the cost less the
estimated residual value of property, plant and equipment by equal
annual instalments over their estimated useful economic lives as
follows:
Office equipment, fixtures and fittings 20.0% per annum
Computer equipment 20.0% - 33.3% per annum
Leasehold improvements remaining life of the lease
2 Significant accounting policies (continued)
(d) Impairment
The carrying value of property, plant and equipment is reviewed
at each reporting date to determine whether there is any indication
of impairment. If any such indication exists, the asset's
recoverable amount is estimated. An impairment loss is recognised
for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount of non-financial assets
is the greater of their fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. For an asset that does not
generate largely independent cash flows, the recoverable amount is
determined for the cash generating unit to which the asset
belongs.
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation but are tested for impairment
annually and whenever there is an indication that they might be
impaired. An impairment loss is recognised for the amount by which
the carrying value of the asset exceeds its recoverable amount.
Investments are assessed for possible impairment when there is
an indication that the fair value of the investments may be below
the Company's carrying value. When such a condition is deemed to be
other than temporary, the carrying value of the investment is
written down to its fair value and the amount written off is
included in profit or loss. In making the determination as to
whether a decline is other than temporary, the Company considers
such factors as the duration and extent of the decline, the
investee's financial performance and the Company's ability and
intention to retain its investment for a period that will be
sufficient to allow for any anticipated recovery in the
investment's market value.
(e) Financial instruments
Trade receivables do not carry any interest and are initially
recognised at fair value and subsequently measured at amortised
cost less any impairment loss. A provision for impairment of trade
receivables is established when there is objective evidence that
the Group will not be able to collect all amounts due according to
the receivables' original terms.
Trade payables are not interest bearing and are initially
recognised at fair value and subsequently measured at amortised
cost. Trade payables are classified as current liabilities unless
the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
Money market deposits are initially recorded at fair value and
subsequently measured at amortised cost. They represent deposits
with a maturity of over three months.
Inter-group balances and transactions, and any unrealised income
and expenses arising from inter-group transactions, are eliminated
in preparing the consolidated financial statements.
(f) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with original maturities of three months or less.
(g) Provisions
A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that can be
estimated reliably and it is probable that an outflow of economic
benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market
assessment of the time value of money and the risks specific to the
liability. The unwinding of the discount is recognised as a finance
cost.
(h) Employee benefits
(i) Pensions
The Group provides access to a stakeholder pension scheme (a
defined contribution pension plan) into which employees may elect
to contribute via salary exchange. Obligations for contributions to
defined contribution pension plans are recognised as an employee
benefit expense in profit or loss when they are incurred.
(ii) Employee share schemes
The Group provides share-based incentive plans allowing
executive directors and other employees to acquire shares in the
Company. An expense is recognised in profit or loss, with a
corresponding increase in equity, over the period during which the
employees become unconditionally entitled to acquire equity settled
share-based incentives.
Fair value at the grant date is measured using either the Monte
Carlo or Black Scholes pricing model as is most appropriate for
each scheme. Measurement inputs include share price on measurement
date, exercise price of the instrument, expected volatility (based
on weighted average historic volatility adjusted for changes
expected due to publicly available information), weighted average
expected life of the instruments (based on historical experience
and general option behaviour), expected dividends, and risk-free
interest rates (based on government bonds). Service and non-market
performance conditions attached to the awards are not taken into
account in determining the fair value.
2 Significant accounting policies (continued)
For share-based incentive awards with non-vesting conditions,
the grant date fair value of the share-based incentives is measured
to reflect such conditions and there is no true-up for differences
between expected and actual outcomes. When either the employee or
the Company chooses not to meet the non-vesting condition, the
failure to meet the non-vesting condition is treated as a
cancellation and the cost that would have been recognised over the
remainder of the vesting period is recognised immediately in profit
or loss.
(iii) Own shares held by The Rightmove Employees' Share Trust
(EBT)
The EBT is treated as an agent of Rightmove Group Limited, and
as such EBT transactions are treated as being those of Rightmove
Group Limited and are therefore reflected in the Group's
consolidated financial statements. In particular, at a consolidated
level, the EBT's purchases of shares in the Company are charged
directly to equity.
(iv) Own shares held by The Rightmove Share Incentive Plan Trust
(SIP)
The SIP is treated as an agent of Rightmove plc, and as such SIP
transactions are treated as being those of Rightmove plc and are
therefore reflected in the Group's consolidated financial
statements. In particular, at a consolidated level, the SIP's
purchases of shares in the Company are charged directly to
equity.
(v) National Insurance (NI) on share-based incentives
Employer's NI is accrued, where applicable, at a rate of 13.8%,
which management expects to be the prevailing rate when share-based
incentives are exercised. In the case of share options, it is
provided on the difference between the share price at the reporting
date and the average exercise price of share options. In the case
of nil cost performance shares and deferred shares, it is provided
based on the share price at the reporting date.
(i) Treasury shares and shares purchased for cancellation
When share capital recognised as equity is repurchased, the
amount of the consideration paid, including directly attributable
costs, is recognised as a deduction from equity. Repurchased shares
are either held in treasury or cancelled.
(j) Revenue
Revenue principally represents the amounts receivable from
customers in respect of membership of the Rightmove platforms.
Agency, New Homes, Overseas and Commercial revenue comprises
subscriptions for core listing fees and amounts paid for additional
advertising products. Contracts for these services are per branch
location or branch equivalent for Agency and per development for
New Homes. They vary in length from one month to five years, but
are typically for periods of six to 12 months. Revenue is
recognised over the period of the contract or as advertising
products are used. Membership offers take place from time to time
and may include discounted products and free periods. These are
recognised on a monthly basis over the contract term.
Agency, Overseas and Commercial services are typically billed in
advance with revenue deferred until the service commencement date.
New Homes developers are billed monthly in arrears. Where invoices
are raised on other than a monthly basis, the amounts are
recognised as deferred or accrued revenue and released to the
profit or loss on a monthly basis in line with the provision of
services as stipulated in the contract terms.
Data Services revenue relates to fees generated for data and
valuation services under a variety of contractual arrangements.
Revenue is recognised when the service has been provided. Third
party advertising revenue represents amounts paid in respect of
non-property advertising on the Rightmove platforms and is
recognised in the month in which the service is provided. Consumer
Services revenue principally relates to payment for leads and is
recognised when the lead is generated. Data Services, third party
advertising and Consumer Services revenue is typically billed in
arrears.
(k) Segmental reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. An operating
segment's operating results are reviewed regularly by the Group's
Chief Executive Officer to make decisions about resources to be
allocated to the segment and assess its performance and for which
discrete financial information is available.
(l) Leases
Operating lease rentals are charged to profit or loss on a
straight-line basis over the period of the lease. The value of any
lease incentive received, for example a rent-free period, is
deferred and released on a straight-line basis over the lease
term.
(m) Financial income and expenses
Financial income comprises interest receivable on cash balances
and money market deposits and dividend income. Interest income is
recognised as it accrues, using the effective interest method.
Dividend income is recognised on the date that the Company's right
to receive payment is established.
Financial expenses comprise banking facility fees and bank
charges and the unwinding of the discount on provisions.
2 Significant accounting policies (continued)
(n) Taxation
Income tax on the results for the year comprises current and
deferred tax. Income tax is recognised in profit or loss except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the period net of any charge or credit posted directly to
equity, using tax rates enacted or substantially enacted at the
reporting date and any adjustment to tax payable in respect of
previous periods.
Deferred tax is provided in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for:
the initial recognition of goodwill; the initial recognition of
assets or liabilities that affect neither accounting nor taxable
profit other than in a business combination, and the differences
relating to investments in subsidiaries to the extent that they
will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantially enacted by
the reporting date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised.
In accordance with IAS 12, the Group policy in relation to the
recognition of deferred tax on share-based incentives is to include
the income tax effect of the tax deduction in profit or loss to the
value of the income tax charge on the cumulative IFRS 2 charge. The
remainder of the income tax effect of the tax deduction is
recognised in equity.
(o) Dividends
Dividends unpaid at the reporting date are only recognised as a
liability (and deduction to equity) at that date to the extent that
they are appropriately authorised and are no longer at the
discretion of the Company. Unpaid dividends that do not meet these
criteria are disclosed in the notes to the financial
statements.
(p) Earnings per share (EPS)
The Group presents basic, diluted and underlying basic and
diluted EPS data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to equity holders of
the Company by the weighted average number of ordinary shares
outstanding during the year, adjusted for own shares held. Diluted
EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary
shares outstanding, adjusted for own shares held, for the effects
of all potential dilutive instruments, which comprise share-based
incentives granted to employees. The calculation of underlying
basic and diluted EPS is disclosed in Note 11.
3 IFRSs not yet applied
A number of new standards, amendments to standards and
interpretations have been issued but are not yet effective for the
year ended 31 December 2017 and have not been applied in preparing
these consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers was issued in 2014
and was endorsed by the EU in 2016. IFRS 15 establishes a
comprehensive framework for determining whether, how much and when
revenue is recognised. It replaces existing revenue recognition
guidance, including IAS 18 Revenue. IFRS 15 is effective for annual
periods beginning on or after 1 January 2018, with early adoption
permitted. The Group plans to adopt IFRS 15 in its financial
statements for the year ending 31 December 2018 and to use the
practical expedients for completed contracts.
At present revenue is recognised either over time where there is
continuing service provided by Rightmove to the customer or at the
point in time when the risks and rewards of ownership transfer to
the customer. Under IFRS 15 revenue will be recognised when
performance obligations are satisfied. For the Group the transfer
of control under IFRS 15 and satisfaction of performance
obligations is over time. We have undertaken a detailed analysis of
the impact of IFRS 15 on the Group which has shown that the
recognition of revenue will be consistent with the transfer of
risks and rewards to the customer under IAS 18. We have concluded
following this assessment that the implementation of IFRS 15 will
not have a significant impact on the Group's consolidated financial
statements.
IFRS 16 Leases
IFRS 16 Leases was issued in January 2016, and was endorsed by
the EU in 2017. IFRS 16 introduces a single on-balance sheet lease
accounting model for lessees. A lessee recognises a right-of-use
asset representing its right to use the underlying asset and a
corresponding lease liability representing its obligation to make
lease payments. There are optional exemptions for short-term leases
and leases of low value items.
IFRS 16 replaces existing leases guidance including IAS 17
Leases, IFRIC 4 Determining whether an Arrangement contains a
Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the
Substance of Transactions Involving the Legal Form of a Lease. The
standard is effective for annual periods beginning on or after 1
January 2019. Early adoption is permitted for entities that apply
IFRS 15 Revenue from Contracts with Customers at or before the date
of initial application of IFRS 16.
The Group has completed a detailed assessment to quantify the
impact on its reported assets and liabilities of adoption of IFRS
16. The Group will transition to IFRS 16 using the modified
retrospective application approach with no restatement of prior
year comparatives. On 1 January 2018 the Group expects to recognise
new right-of-use assets of GBP10,730,000 and lease liabilities of
GBP10,824,000 for its operating leases in respect of office
premises and company cars. The nature of expenses related to those
leases will also change as the straight-line operating lease
expense will be replaced with a depreciation charge for
right-of-use assets and interest expense on lease liabilities, in
the first year of adoption these are expected to be approximately
GBP1,775,000 and GBP301,000 respectively.
IFRS 9 Financial Instruments
IFRS 9 Financial Instruments was issued in July 2014 and was
endorsed by the EU in 2016. It replaces existing financial
instruments guidance, including IAS 39 Financial Instruments:
Recognition and Measurement. IFRS 9 is effective for annual periods
beginning on or after 1 January 2018 and the Group plans to adopt
IFRS 9 in its financial statements for the year ending 31 December
2018. IFRS 9 will simplify the classification of financial assets
for measurement purposes, but is not anticipated to have a
significant impact on the financial statements.
Other amendments
There are no other new or amended standards expected to have a
significant impact on the Group's consolidated financial
statements.
4 Risk and capital management
Overview
The Group has exposure to the following risks from its use of
financial instruments:
-- credit risk
-- liquidity risk
-- market risk
This note presents information about the Group and Company's
exposure to each of the above risks, the Group's objectives,
policies and processes for measuring and managing risk and the
Group's management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
The Board of directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The primary method by which risks are monitored and
managed by the Group is through the monthly Executive Management
Committee, where any significant new risks or change in status to
existing risks will be discussed and actions taken as
appropriate.
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's activities.
The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and
obligations.
The Audit Committee oversees how management monitors compliance
with the Group's internal controls and reviews the adequacy of the
risk management framework in relation to the risks faced by the
Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or banking institution fails to meet its contractual
obligations.
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each customer. The Group provides
credit to customers in the normal course of business. The Group
provides its services to a wide range of customers in the UK and
overseas and therefore believes it has no material concentration of
credit risk.
More than 88.0% (2016: 90.0%) of the Group's Agency and New
Homes customers pay via monthly direct debit, minimising the risk
of non-payment. The Group establishes an allowance for impairment
that represents its estimate of incurred losses in respect of trade
and other receivables based on individually identified loss
exposures.
The Group's treasury policy is to monitor cash and deposit
balances on a daily basis to ensure that no more than GBP30 million
is held with any single institution.
4 Risk and capital management (continued)
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulties in meeting the obligations associated with its
financial liabilities that are settled by delivering cash. The
Group and Company's approach to managing liquidity is to ensure, as
far as possible, that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
The Group's revenue model is largely subscription-based, which
results in a regular level of cash conversion allowing it to
service working capital requirements.
The Group and Company ensure that they have sufficient cash on
demand to meet expected operational expenses excluding the
potential impact of extreme circumstances that cannot reasonably be
predicted, such as natural disasters. Throughout the year, the
Group typically had sufficient cash on demand to meet operational
expenses, before financing activities, for a period of 107 days
(2016: 95 days).
The Group agreed to extend a 12 month agreement with Barclays
Bank plc for a GBP10,000,000 committed revolving loan facility.
This agreement will expire on 12 February 2019.
Market risk
Market risk is the risk that changes in market prices such as
foreign exchange and interest rates will affect the Group's income.
The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while
optimising the return on risk.
(i) Currency risk
All of the Group's sales and more than 95.0% (2016: 97.0%) of
the Group's purchases are Sterling denominated, accordingly it has
no significant currency risk.
(ii) Interest rate risk
The Group and Company have no interest bearing financial
liabilities. The Group is exposed to interest rate risk on cash and
money market deposit balances.
Capital management
The Board of directors' policy is to maintain an efficient
statement of financial position so as to maintain investor,
creditor and market confidence and to sustain future development of
the business. The Board of directors considers that the future
working capital and capital expenditure requirements of the Group
will continue to be low and accordingly return on capital measures
are not key performance targets. The Board of directors monitors
the spread of the Company's shareholders as well as underlying
basic EPS.
The Board's policy is to return surplus capital to shareholders
through a combination of dividends and share buybacks.
(i) Dividend policy
The Board of directors has a progressive dividend policy and
monitors the level of dividends to ordinary shareholders in
relation to the growth in underlying basic EPS. The Board has
adopted this policy in order to align shareholder returns with the
underlying growth achieved in the profitability in the Group.
The capacity of the Group to make dividend payments is primarily
determined by the level of available retained earnings in the
Company, after deduction of own shares held, and the cash resources
of the Group. The retained earnings of the Company, after deduction
of own shares held, are GBP411,276,000 (2016: GBP405,801,000) as
set out in the Company statement of changes in shareholders' equity
on page 106. The Group has cash and money market deposits at 31
December 2017 of GBP24,975,000 (2016: GBP17,775,000), the majority
of which are held by the principal operating subsidiary Rightmove
Group Limited. The Group is well positioned to fund its future
dividends given the strong cash generative nature of the business
and in 2017 cash generated from operating activities was
GBP183,891,000 (2016: GBP169,250,000) representing an operating
cash conversion in excess of 100%.
(ii) Share buybacks
The Company purchases its own shares in the market; the timing
of these purchases depends on available free cash flow and market
conditions. In 2017, 2,224,059 (2016: 2,251,711) shares were bought
back and were cancelled at an average price of GBP40.83 (2016:
GBP39.12).
There were no changes in the Group's approach to capital
management during the year. Neither the Company nor any of its
subsidiaries are subject to externally imposed capital
requirements.
4 Risk and capital management (continued)
Operational risk
Operational risk is the risk of direct or indirect loss arising
from a wide variety of causes associated with the Group's
processes, personnel, technology and infrastructure, and from
external factors other than credit, market and liquidity risks such
as those arising from legal and regulatory requirements and
generally accepted standards of corporate behaviour. Operational
risks arise from all of the Group's operations.
The Group's objective is to manage operational risk so as to
balance the avoidance of financial losses and damage to the Group's
reputation with overall cost effectiveness and to avoid control
procedures that restrict initiative and creativity.
The primary responsibility for the development and
implementation of controls to address operational risk is assigned
to senior
management within each business unit. This responsibility is
supported by the development of overall Group standards for the
management of operational risk in the following areas:
-- requirements for appropriate segregation of duties, including
the independent authorisation of transactions;
-- requirements for the reconciliation and monitoring of transactions;
-- compliance with regulatory and other legal requirements;
-- documentation of controls and procedures;
-- requirements for the periodic assessment of operational risks
faced and the adequacy of controls and procedures to address the
risks identified;
-- requirements for reporting of operational losses and proposed remedial action;
-- development and regular testing of business continuity and disaster recovery plans;
-- regular testing of the security of the IT systems and
platforms, regular backups of key data and ongoing threat
monitoring to protect against the risk of cyber attack;
-- training and professional development; and
-- risk mitigation, including insurance where this is effective.
5 Operating segments
The Group determines and presents operating segments based on
internal information that is provided to the Chief Executive
Officer, who is the Group's Chief Operating Decision Maker.
The Group's reportable segments are as follows:
-- The Agency segment which provides resale and lettings
property advertising services on Rightmove's platforms; and
-- The New Homes segment which provides property advertising
services to new home developers and housing associations on
Rightmove's platforms.
The Other segment which represents activities under the
reportable segments threshold, comprises Overseas and Commercial
property advertising services and non-property advertising services
which include our third party advertising and Consumer Services as
well as Data Services. Management monitors the business segments at
a revenue and trade receivables level separately for the purpose of
making decisions about resources to be allocated and of assessing
performance. All revenue in both years is derived from third
parties and there is no inter-segment revenue.
Operating costs, financial income, financial expenses and income
taxes in relation to the Agency, New Homes and the Other segment
are managed on a centralised basis at a Rightmove Group Limited
level and as there are no internal measures of individual segment
profitability, relevant disclosures have been shown under the
heading of Central in the table below.
The Company has no reportable segments.
Agency New Homes Subtotal Other Central Adjustments Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- -------- ----------- ---------- -------- ----------- ------------- ----------
Year ended
31 December
2017
Revenue 185,217 39,478 224,695 18,578 - - 243,273
Operating
profit(1) - - - - 184,365(2) (6,064)(2) 178,301
Depreciation
and amortisation - - - - (1,784) - (1,784)
Financial
income - - - - 129 - 129
Financial
expenses - - - - (214) - (214)
Trade receivables(3) 21,282 6,610 27,892 2,283 - 118(4) 30,293
Other segment
assets - - - - 41,501 19(4) 41,520
Segment liabilities - - - - (54,493) (137)(4) (54,630)
Capital expenditure - - - - 2,196 - 2,196
---------------------- -------- ----------- ---------- -------- ----------- ------------- ----------
Year ended
31 December
2016
Revenue 168,311 33,893 202,204 17,789 - - 219,993
Operating
profit(1) - - - - 166,240(2) (4,593)(2) 161,647
Depreciation
and amortisation - - - - (1,619) - (1,619)
Financial
income - - - - 109 - 109
Financial
expenses - - - - (209) - (209)
Trade receivables(3) 19,040 5,266 24,306 2,188 - 139(4) 26,633
Other segment
assets - - - - 33,753 68(4) 33,821
Segment liabilities - - - - (52,205) (207)(4) (52,412)
Capital expenditure - - - - 1,759 - 1,759
---------------------- -------- ----------- ---------- -------- ----------- ------------- ----------
(1) Operating profit is stated after the charge for depreciation
and amortisation.
(2) Central operating profit does not include share-based
payments charge of GBP4,836,000 (2016: GBP4,142,000) and NI on
share-based incentives charge of GBP1,228,000 (2016:
GBP451,000).
(3) The only segment assets that are separately monitored by the
Chief Operating Decision Maker relate to trade receivables net of
any associated provision for impairment. All other segment assets
are reported on a centralised basis.
(4) The adjustments column reflects the reclassification of
credit balances in accounts receivable and debit balances in
accounts payable made on consolidation for statutory accounts
purposes.
Geographic information
In presenting information on the basis of geography, revenue and
assets are based on the geographical location of customers.
2017 2016
Revenue Trade receivables Revenue Trade receivables
Group GBP000 GBP000 GBP000 GBP000
------------------- -------- ------------------ -------- ------------------
UK 236,718 29,885 214,536 26,124
Rest of the world 6,555 408 5,457 509
------------------- -------- ------------------ -------- ------------------
243,273 30,293 219,993 26,633
------------------- -------- ------------------ -------- ------------------
6 Operating profit
2017 2016
GBP000 GBP000
----------------------------------------------- -------- --------
Operating profit is stated after charging:
Employee benefit expense 28,338 27,423
Depreciation of property, plant and equipment 1,311 1,241
Amortisation of intangibles 473 378
Bad debt impairment charge 466 437
Operating lease rentals
Land and buildings 1,361 898
Other 547 549
----------------------------------------------- -------- --------
Auditor's remuneration
2017 2016
GBP000 GBP000
-------------------------------------------------------------------------------- -------- --------
Fees payable to the Company's auditor in respect of the audit
Audit of the Company's financial statements 19 18
Audit of the Company's subsidiaries pursuant to legislation 122 131
-------------------------------------------------------------------------------- -------- --------
Total audit remuneration 141 149
-------------------------------------------------------------------------------- -------- --------
Fees payable to the Company's auditor in respect of non-audit related services
Half year review of the condensed financial statements 18 18
Tax compliance services and advisory - 1
All other services 12 2
-------------------------------------------------------------------------------- -------- --------
Total non-audit remuneration 30 21
-------------------------------------------------------------------------------- -------- --------
7 Employee numbers and costs
The average number of persons employed (including executive
directors) during the year, analysed by category, was as
follows:
2017 2016
Number of employees Number of employees
---------------- --------------------- ---------------------
Administration 449 440
Management 30 29
---------------- --------------------- ---------------------
479 469
---------------- --------------------- ---------------------
The aggregate payroll costs of these persons were as
follows:
2017 2016
GBP000 GBP000
----------------------- -------- --------
Wages and salaries 24,249 23,760
Social security costs 3,168 2,793
Pension costs 921 870
----------------------- -------- --------
28,338 27,423
----------------------- -------- --------
Social security costs do not include a charge of GBP1,228,000
(2016: GBP451,000) relating to NI on share-based incentives which
has been disclosed in the Statement of Comprehensive Income.
8 Financial income
2017 2016
GBP000 GBP000
---------------------------------------------- --------- --------
Interest income on cash and cash equivalents 110 83
Interest income on money market deposits 19 26
---------------------------------------------- --------- --------
129 109
---------------------------------------------- --------- --------
9 Financial expenses
2017 2016
GBP000 GBP000
-------------------- -------- ---------
Financial expenses 214 209
-------------------- -------- ---------
10 Income tax expense
2017 2016
GBP000 GBP000
------------------------------------------------------------ -------- --------
Current tax expense
Current year 34,582 33,048
Adjustment to current tax charge in respect of prior years (292) (407)
------------------------------------------------------------ -------- --------
34,290 32,641
------------------------------------------------------------ -------- --------
Deferred tax credit
Origination and reversal of temporary differences (170) (636)
(170) (636)
------------------------------------------------------------ -------- --------
Total income tax expense 34,120 32,005
------------------------------------------------------------ -------- --------
Income tax credit recognised directly in equity
2017 2016
GBP000 GBP000
------------------------------------------------------- -------- --------
Current tax
Share-based incentives (2,666) (441)
------------------------------------------------------- -------- --------
Deferred tax
Share-based incentives (refer Note 16) 1,367 436
Total income tax credit recognised directly in equity (1,299) (5)
------------------------------------------------------- -------- --------
Total income tax recognised directly in equity in respect of the
Company was a credit of GBP586,000 (2016: GBP24,000 credit).
Reconciliation of effective tax rate
The Group's income tax expense for the year is lower in both
years than the standard rate of corporation tax in the UK of 19.3%
(2016: 20.0%). The differences are explained below:
2017 2016
GBP000 GBP000
------------------------------------------------------------ --------- ---------
Profit before tax 178,216 161,547
Current tax at 19.3% (2016: 20.0%) 34,307 32,309
Non-deductible expenses 103 70
Share-based incentives 2 33
Adjustment to current tax charge in respect of prior years (292) (407)
34,120 32,005
------------------------------------------------------------ --------- ---------
The Group's consolidated effective tax rate on the profit of
GBP178,216,000 for the year ended 31 December 2017 is 19.1%
(2016: 19.8%).
The difference between the standard rate and effective rate at
31 December 2017 of 0.2% (2016: 0.2%) is primarily attributable to
an adjustment in respect of prior periods for research and
development tax relief.
11 Earnings per share (EPS)
Pence per share
GBP000 Basic Diluted
--------------------------------------- ------------------ --------
Year ended 31 December 2017
Earnings 144,096 156.75 155.15
Underlying earnings 150,160 163.34 161.67
Year ended 31 December 2016
Earnings 129,542 137.87 136.41
Underlying earnings 134,135 142.76 141.24
------------------------------ -------- ------------------ --------
Weighted average number of ordinary shares (basic)
2017 2016
Number of shares Number of shares
----------------------------------------------------------------------------- ------------------- ------------------
Issued ordinary shares at 1 January less ordinary shares held by the EBT and
SIP Trust 95,096,841 97,318,120
Less own shares held in treasury at the beginning of the year (2,271,725) (2,322,314)
Effect of own shares purchased for cancellation (1,034,015) (1,069,275)
Effect of share-based incentives exercised 139,011 34,560
Effect of shares purchased by the EBT (911) (738)
Issued ordinary shares at 31 December less ordinary shares held by the EBT
and SIP Trust 91,929,201 93,960,353
----------------------------------------------------------------------------- ------------------- ------------------
Weighted average number of ordinary shares (diluted)
For diluted EPS, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially
dilutive shares. The Group's potential dilutive instruments are in
respect of share-based incentives granted to employees, which will
be settled by ordinary shares held by the EBT, the SIP and shares
held in treasury.
2017 2016
Number of shares Number of shares
------------------------------------------------------- ------------------ ------------------
Weighted average number of ordinary shares (basic) 91,929,201 93,960,353
Dilutive impact of share-based incentives outstanding 948,184 1,007,190
92,877,385 94,967,543
------------------------------------------------------- ------------------ ------------------
The average market value of the Group's shares for the purposes
of calculating the dilutive effect of share-based incentives was
based on quoted market prices for the period during which the
share-based incentives were outstanding.
Underlying EPS
Underlying EPS is calculated by taking basic earnings for the
year and adding back the charge for share-based payments and the
charge for NI on share-based incentives but without any adjustment
to the tax charge in respect of these items. A reconciliation of
the basic earnings for the year to the underlying earnings is
presented below:
2017 2016
GBP000 GBP000
---------------------------------- -------- --------
Basic earnings for the year 144,096 129,542
Share-based payments 4,836 4,142
NI on share-based incentives 1,228 451
Underlying earnings for the year 150,160 134,135
---------------------------------- -------- --------
12 Dividends
Dividends declared and paid by the Company were as follows:
2017 2016
Pence per share GBP000 Pence per share GBP000
---------------------------- ---------------- ------- ---------------- -------
2015 final dividend paid - - 27.0 25,442
2016 interim dividend paid - - 19.0 17,764
2016 final dividend paid 32.0 29,507 - -
2017 interim dividend paid 22.0 20,104 - -
---------------------------- ---------------- ------- ---------------- -------
54.0 49,611 46.0 43,206
---------------------------- ---------------- ------- ---------------- -------
After the reporting date a final dividend of 36.0p (2016: 32.0p)
per qualifying ordinary share being GBP32,758,000 (2016:
GBP29,696,000) was proposed by the Board of directors.
The 2016 final dividend paid on 2 June 2017 was GBP29,507,000
being GBP189,000 lower than that reported in the 2016 Annual
Report, which was due to a decrease in the ordinary shares entitled
to a dividend between 31 December 2016 and the final dividend
record date of 5 May 2017.
The 2017 interim dividend paid on 3 November 2017 was
GBP20,104,000 being GBP115,000 lower than that reported in the 2017
Half Year Report, which was due to a decrease in the ordinary
shares entitled to a dividend between 30 June 2017 and the interim
dividend record date of 6 October 2017.
The terms of the EBT provide that dividends payable on the
ordinary shares held by the EBT are waived. No provision was made
for the final dividend in either year and there are no income tax
consequences.
13 Property, plant and equipment
Office equipment, Computer equipment Leasehold Assets in progress
fixtures & fittings GBP000 improvements GBP000 Total
Group GBP000 GBP000 GBP000
--------------------- --------------------- ------------------- -------------------- ------------------- --------
Cost
At 1 January 2017 829 7,053 451 - 8,333
Additions 232 906 430 187 1,755
Disposals (204) (135) (47) - (386)
At 31 December 2017 857 7,824 834 187 9,702
--------------------- --------------------- ------------------- -------------------- ------------------- --------
Depreciation
At 1 January 2017 (678) (5,101) (266) - (6,045)
Charge for year (88) (1,159) (64) - (1,311)
Disposals 199 117 47 - 363
At 31 December 2017 (567) (6,143) (283) - (6,993)
--------------------- --------------------- ------------------- -------------------- ------------------- --------
Net book value
At 31 December 2017 290 1,681 551 187 2,709
--------------------- --------------------- ------------------- -------------------- ------------------- --------
At 1 January 2017 151 1,952 185 - 2,288
--------------------- --------------------- ------------------- -------------------- ------------------- --------
The assets in progress consist of capitalised costs relating to
the leasehold improvements for the London office that are yet to be
brought into use.
Leasehold improvements include capitalised costs relating to the
renovation of leased properties. Full details are disclosed in Note
2.
13 Property, plant and equipment (continued)
Office equipment, Computer equipment Leasehold improvements
fixtures & fittings GBP000 GBP000 Total
Group GBP000 GBP000
--------------------------------------- --------------------- ------------------- ----------------------- --------
Cost
At 1 January 2016 769 5,823 451 7,043
Additions 58 1,223 - 1,281
Acquired through a business
combination 2 7 - 9
At 31 December 2016 829 7,053 451 8,333
--------------------------------------- --------------------- ------------------- ----------------------- --------
Depreciation
At 1 January 2016 (586) (4,010) (208) (4,804)
Charge for year (92) (1,091) (58) (1,241)
At 31 December 2016 (678) (5,101) (266) (6,045)
--------------------------------------- --------------------- ------------------- ----------------------- --------
Net book value
At 31 December 2016 151 1,952 185 2,288
--------------------------------------- --------------------- ------------------- ----------------------- --------
At 1 January 2016 183 1,813 243 2,239
--------------------------------------- --------------------- ------------------- ----------------------- --------
The Company had no property, plant or equipment in either
year.
14 Intangible assets
Market appraisal
Computer Asset in algorithm
Goodwill software progress GBP000 Total
Group GBP000 GBP000 GBP000 GBP000
----------------- ----------- ----------- ----------- ----------------- ---------
Cost
At 1 January
2017 2,465 4,639 203 309 7,616
Additions - 441 - - 441
Disposals - - (203) - (203)
At 31 December
2017 2,465 5,080 - 309 7,854
----------------- ----------- ----------- ----------- ----------------- ---------
Amortisation
At 1 January
2017 - (4,031) - (60) (4,091)
Charge for year - (370) - (103) (473)
----------------- ----------- ----------- ----------- ----------------- ---------
At 31 December
2017 - (4,401) - (163) (4,564)
----------------- ----------- ----------- ----------- ----------------- ---------
Net book value
At 31 December
2017 2,465 679 - 146 3,290
----------------- ----------- ----------- ----------- ----------------- ---------
At 1 January
2017 2,465 608 203 249 3,525
----------------- ----------- ----------- ----------- ----------------- ---------
14 Intangible assets (continued)
Market appraisal
Computer software Asset in progress GBP000 algorithm
Goodwill GBP000 GBP000 Total
Group GBP000 GBP000
-------------------------- ----------- ------------------- -------------------------- ----------------- ---------
Cost
At 1 January 2016 732 4,364 - - 5,096
Additions - 275 - - 275
Internally generated - - 203 - 203
Acquired through a
business combination 1,733 - - 309 2,042
-------------------------- ----------- ------------------- -------------------------- ----------------- ---------
At 31 December 2016 2,465 4,639 203 309 7,616
-------------------------- ----------- ------------------- -------------------------- ----------------- ---------
Amortisation
At 1 January 2016 - (3,713) - - (3,713)
Charge for year - (318) - (60) (378)
-------------------------- ----------- ------------------- -------------------------- ----------------- ---------
At 31 December 2016 - (4,031) - (60) (4,091)
-------------------------- ----------- ------------------- -------------------------- ----------------- ---------
Net book value
At 31 December 2016 2,465 608 203 249 3,525
-------------------------- ----------- ------------------- -------------------------- ----------------- ---------
At 1 January 2016 732 651 - - 1,383
-------------------------- ----------- ------------------- -------------------------- ----------------- ---------
Goodwill acquired in 2016 of GBP1,733,000 relates to the
goodwill recognised on the acquisition of The Outside View
Analytics Ltd ('Outside View'), being intangible assets that were
not separately identifiable under IFRS 3. The market appraisal
algorithm relates to the intangible asset recognised on the
acquisition of Outside View.
The Company had no intangible assets in either year.
Impairment testing for cash generating units containing
goodwill
For the purpose of impairment testing, goodwill is allocated to
the Group's Agency segment which represents the lowest level within
the Group at which goodwill is monitored for internal management
purposes, which is not higher than the Group's operating segments
as reported in Note 5.
The carrying value of GBP2,465,000 goodwill, comprises
GBP732,000 of purchased goodwill arising pre-transition to IFRS and
GBP1,733,000 on acquisition of the Outside View. Goodwill arising
from the acquisition of the Outside View has been allocated to the
Agency segment as the revenue expected from the Outside View
product is attributable to Agency customers.
Given the low level of significance of the total goodwill
balance and strong growth in the Agency segment revenue in the
year, with no impairment indicators present, the disclosures as
required by IAS 36 Impairment of Assets have not been made.
15 Investments
The subsidiaries of the Group as at 31 December 2017 are as
follows:
Country of incorporation
Company Nature of business Holding Class of shares
------------------------------- ---------------------------- ------------------------- --------- -----------------
Online property advertising
Rightmove Group Limited England and Wales 100% Ordinary
Property analytics services
The Outside View Analytics England and Wales 100% Ordinary
Ltd
Rightmove.co.uk Limited Dormant England and Wales 100% Ordinary
Rightmove Home Information
Packs Limited Dormant England and Wales 100% Ordinary
------------------------------- ---------------------------- ------------------------- --------- -----------------
All the above subsidiaries are included in the Group
consolidated financial statements. The registered office for all
subsidiaries
of the Group is Turnberry House, 30 Caldecotte Lake Drive,
Caldecotte, Milton Keynes, MK7 8LE.
2017 2016
Company GBP000 GBP000
-------------------------------------------------------------------- ---------- ----------
Investment in subsidiary undertakings
At 1 January 546,202 544,464
Additions - subsidiary share-based payments charge (refer Note 23) 2,625 1,738
-------------------------------------------------------------------- ---------- ----------
At 31 December 548,827 546,202
-------------------------------------------------------------------- ---------- ----------
15 Investments (continued)
In 2008, the Company became the holding company of Rightmove
Group Limited (formerly Rightmove plc, Company no. 3997679) and its
subsidiaries pursuant to a Scheme of Arrangement under s425 of the
Companies Act 1985 by way of a share-for-share exchange. Following
the Scheme of Arrangement, the Company underwent a court-approved
capital reduction. The consolidated assets and liabilities of the
Group immediately after the Scheme were substantially the same as
the consolidated assets and liabilities of the Group immediately
prior to the Scheme.
Following the capital reconstruction in 2008 all employees'
share-based incentives were transferred to the new holding company,
Rightmove plc. In addition certain directors' contracts of
employment were transferred from Rightmove Group Limited to
Rightmove plc, whilst all other employees remained employed by
Rightmove Group Limited. Accordingly the share-based payments
charge has been split between the Company and Rightmove Group
Limited with GBP2,625,000 (2016: GBP1,738,000) being recognised in
the Company accounts as a capital contribution to its
subsidiary.
16 Deferred tax asset
Deferred tax is presented net on the balance sheet in so far as
a right of offset exists. The net deferred tax asset is
attributable to the following:
Group Company
Share-based Property, Market Share-based
incentives plant appraisal incentives
GBP000 and equipment Provisions algorithm Total GBP000
GBP000 GBP000 GBP000 GBP000
----------------------- ------------ --------------- ------------- ----------- --------- ------------
At 1 January 2017 6,604 252 125 (39) 6,942 3,757
Recognised in income (15) 63 106 16 170 (142)
Recognised directly
in equity (1,367) - - - (1,367) (1,125)
----------------------- ------------ --------------- ------------- ----------- --------- ------------
At 31 December
2017 5,222 315 231 (23) 5,745 2,490
----------------------- ------------ --------------- ------------- ----------- --------- ------------
At 1 January 2016 6,509 179 103 - 6,791 3,581
Arising on business
combination - - - (49) (49) -
Recognised in income 531 73 22 10 636 346
Recognised directly
in equity (436) - - - (436) (170)
----------------------- ------------ --------------- ------------- ----------- --------- ------------
At 31 December
2016 6,604 252 125 (39) 6,942 3,757
----------------------- ------------ --------------- ------------- ----------- --------- ------------
The decrease in the deferred tax asset relating to share-based
incentives at 31 December 2017 is due to increased exercises of
shares options in 2017 which has outweighed the number of new share
scheme awards and the increase in the Company's share price from
GBP39.03 at 31 December 2016 to GBP45.00 at 31 December 2017.
A reduction in the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) and to 18% (effective 1 April 2020)
was substantively enacted on 26 October 2015, and an additional
reduction to 17% (effective 1 April 2020) was substantively enacted
on 6 September 2016. This will reduce the Group's future tax charge
accordingly. The deferred tax asset at 31 December 2017 has been
calculated at the rate of 19% which represents the average expected
rate at which the net deferred tax asset will reverse in the
future.
17 Trade and other receivables
2017 2016
Group GBP000 GBP000
---------------------------------------------------- ------------ ---------------
Trade receivables 30,756 27,061
Less provision for impairment of trade receivables (463) (428)
---------------------------------------------------- ------------ ---------------
Net trade receivables 30,293 26,633
Prepayments 4,545 2,826
Accrued income 166 338
Interest receivable 16 -
Other debtors 74 127
35,094 29,924
---------------------------------------------------- ------------ ---------------
Exposure to credit and currency risks and impairment losses
relating to trade and other receivables are disclosed in Note
26.
The Company has no trade and other receivables in either
year.
18 Cash and deposits
2017 2016
Group GBP000 GBP000
--------------------------- -------- --------
Cash and cash equivalents 20,930 13,749
Money market deposits 4,045 4,026
--------------------------- -------- --------
24,975 17,775
--------------------------- -------- --------
Cash balances with an original maturity of less than three
months were held in current accounts during the year and attracted
interest at a weighted average rate of 0.3% (2016: 0.4%).
The cash at bank balance includes GBP1,803,000 (2016:
GBP1,848,000) which is restricted to use in accordance with the
deeds of the EBT.
Money market deposits with an original maturity of more than
three months and less than a year, attracted interest at a weighted
average rate of 1.1% (2016: 0.7%).
19 Trade and other payables
Group Company
2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- -------- -------- --------
Trade payables 1,424 1,266 - -
Trade accruals 6,867 7,644 3,393 4,835
Other creditors 99 46 - -
Other taxation and social security 11,105 9,172 - -
Deferred revenue 19,393 17,668 - -
Inter-group payables - - 20,017 25,317
38,888 35,796 23,410 30,152
------------------------------------ -------- -------- -------- --------
Exposure to currency and liquidity risk relating to trade and
other payables is disclosed in Note 26.
20 Loans and borrowings
The Group agreed to extend a 12 month agreement with Barclays
Bank plc for a GBP10,000,000 committed revolving loan facility.
This agreement will expire on 12 February 2019.
The Company had no loans and borrowings in either year.
21 Provisions
2017 2016
Dilapidations Employee Dilapidations
provision provisions Total provision Other Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- -------------- ------------ --------- -------------- --------- ---------
At 1 January 272 88 360 236 - 236
Charged in
the year 109 580 689 36 88 124
----------------- -------------- ------------ --------- -------------- --------- ---------
At 31 December 381 668 1,049 272 88 360
----------------- -------------- ------------ --------- -------------- --------- ---------
Current 87 668 755 185 - 185
Non-current 294 - 294 87 88 175
----------------- -------------- ------------ --------- -------------- --------- ---------
The dilapidations provision is in respect of a number of the
Group's leased properties where the Group has obligations to make
good dilapidations. The non-current liabilities are estimated to be
payable over periods from one to ten years. Where appropriate the
provision may form part of the cost of the asset.
During the year we have accrued amounts in relation to a number
of employee related provisions, principally holiday pay. The
provisions are based on the estimated future payroll cost to the
Group and have not been discounted as the time value of money is
not significant.
The Company had no provisions in either year.
22 Share capital
2017 2016
Amount Number Amount Number
GBP000 of shares GBP000 of shares
---------------------------- -------- ------------ -------- ------------
In issue ordinary shares
of GBP0.01 each
At 1 January 955 95,490,266 977 97,741,977
Purchase and cancellation
of own shares (22) (2,224,059) (22) (2,251,711)
---------------------------- -------- ------------ -------- ------------
At 31 December 933 93,266,207 955 95,490,266
---------------------------- -------- ------------ -------- ------------
The authorised share capital is 300,000,000 ordinary GBP0.01
shares in both years.
All issued shares are fully paid. The holders of ordinary shares
are entitled to receive dividends as declared from time to time and
are entitled to one vote per ordinary share at general meetings of
the Company.
In June 2007, the Company commenced a share buyback programme to
purchase its own ordinary shares. The total number of shares bought
back in 2017 was 2,224,059 (2016: 2,251,711) representing 2.4%
(2016: 2.4%) of the ordinary shares in issue (excluding shares held
in treasury). All of the shares bought back in both years were
cancelled. The shares were acquired on the open market at a total
consideration (excluding costs) of GBP90,809,000 (2016:
GBP88,083,000). The maximum and minimum prices paid were GBP44.50
(2016: GBP42.50) and GBP38.48 (2016: GBP33.11) per share
respectively. Share-related expenses in relation to stamp duty
charges and broker expenses were GBP637,000 (2016: GBP617,000).
Included within shares in issue at 31 December 2017 are 263,767
(2016: 343,275) shares held by the EBT, 67,700 (2016: 50,150)
shares held by the SIP and 1,892,456 (2016: 2,271,725) shares held
in treasury.
23 Reconciliation of movement in capital and reserves
Group
Own shares held - GBP000
EBT shares reserve SIP shares reserve Treasury
GBP000 GBP000 shares Total
GBP000 GBP000
---------------------------------------------------- ------------------- ------------------- --------- ---------
Own shares held as at 1 January 2016 (2,165) (852) (11,045) (14,062)
Shares purchased for SIP (751) - - (751)
Shares transferred to SIP 517 (517) - -
Share-based incentives exercised in the year 108 - 241 349
SIP releases in the year - 17 - 17
Own shares held as at 31 December 2016 (2,291) (1,352) (10,804) (14,447)
---------------------------------------------------- ------------------- ------------------- --------- ---------
Own shares held as at 1 January 2017 (2,291) (1,352) (10,804) (14,447)
Shares purchased for SIP (761) - - (761)
Shares transferred to SIP 741 (741) - -
Share-based incentives exercised in the year 333 - 1,886 2,219
Reduction in shares released due to net settlement - - (81) (81)
SIP releases in the year - 75 - 75
Shares held as at 31 December 2017 (1,978) (2,018) (8,999) (12,995)
---------------------------------------------------- ------------------- ------------------- --------- ---------
Own shares held - number of shares
Number of shares
EBT shares reserve SIP shares reserve Treasury
shares Total
---------------------------------------------------- ------------------- ------------------- ---------- ----------
Own shares held as at 1 January 2016 386,057 37,800 2,322,314 2,746,171
Shares purchased for SIP 20,250 - - 20,250
Shares transferred to SIP (12,950) 12,950 - -
Share-based incentives exercised in the year (50,082) - (50,589) (100,671)
SIP releases in the year - (600) - (600)
Own shares held as at 31 December 2016 343,275 50,150 2,271,725 2,665,150
---------------------------------------------------- ------------------- ------------------- ---------- ----------
Own shares held as at 1 January 2017 343,275 50,150 2,271,725 2,665,150
Shares purchased for SIP 17,500 - - 17,500
Shares transferred to SIP (20,000) 20,000 - -
Share-based incentives exercised in the year (77,008) - (396,192) (473,200)
Reduction in shares released due to net settlement - - 16,923 16,923
SIP releases in the year - (2,450) - (2,450)
Shares held as at 31 December 2017 263,767 67,700 1,892,456 2,223,923
---------------------------------------------------- ------------------- ------------------- ---------- ----------
23 Reconciliation of movement in capital and reserves
(continued)
(a) EBT shares reserve
This reserve represents the cost of own shares acquired by the
EBT less any exercises of share-based incentives.
At 31 December 2017, the EBT held 263,767 (2016: 343,275)
ordinary shares in the Company of GBP0.01 each, representing 0.3%
(2016: 0.4%) of the ordinary shares in issue (excluding shares held
in treasury). The market value of the shares held in the EBT at 31
December 2017 was GBP11,870,000 (2016: GBP13,398,000).
(b) SIP shares reserve (Group and Company)
In November 2014, the Company established the Rightmove Share
Incentive Plan Trust (SIP). This reserve represents the cost of
acquiring shares less any exercises or releases of SIP awards.
Employees of the Group were offered 50 free shares (2016: 50),
subject to a three year service period, with effect from 5 January
2018 (2016: 3 January 2017). 2,450 (2016: 600) shares were released
by the SIP during the year in relation to good leavers and
retirees. 20,000 (2016: 12,950) shares were transferred to the SIP
reserve from the EBT.
At 31 December 2017 the SIP held 67,700 (2016: 50,150) ordinary
shares in the Company of GBP0.01 each, representing 0.07% (2016:
0.05%) of the ordinary shares in issue (excluding shares held in
treasury). The market value of the shares held in the SIP at 31
December 2017 was GBP3,047,000 (2016: GBP1,957,000).
(c) Treasury shares (Group and Company)
This represents the cost of acquiring shares held in treasury
less any exercises of share-based incentives. These shares were
bought in 2008 at an average price of GBP4.76 and may be used to
satisfy certain share-based incentive awards. An additional 6,277
shares were issued as a result of rolled up dividend payments in
relation to performance shares.
Other reserves
This represents the Capital Redemption Reserve in respect of own
shares bought back and cancelled. The movement of GBP22,000 (2016:
GBP22,000) is the nominal value of ordinary shares cancelled during
the year.
Retained earnings
The loss on the exercise of share-based incentives of
GBP1,485,000 (2016: GBP7,000 gain) is the difference between the
value that the shares held by the EBT, SIP and treasury shares were
originally acquired at and the exercise price at which share-based
incentives were exercised or released during the year. Details of
share buybacks and cancellation of shares are included in Note
22.
Company
Reverse acquisition reserve
This reserve resulted from the acquisition of Rightmove Group
Limited by the Company and represents the difference between the
value of the shares acquired at 28 January 2008 and the nominal
value of the shares issued.
Other reserves
Awards relating to share-based incentives made to Rightmove
Group Limited employees have been treated as a deemed capital
contribution. The principal movement in other reserves for the year
comprises GBP2,625,000 (2016: GBP1,738,000) in respect of the
share-based incentives charge for employees of Rightmove Group
Limited.
In addition, other reserves include GBP361,000 (2016:
GBP339,000) of Capital Redemption Reserve. A movement of GBP22,000
(2016: GBP22,000) has been recorded in relation to the nominal
value of ordinary shares cancelled during the year.
24 Share-based payments
The Group and Company operate a number of share-based incentive
schemes for executive directors and employees.
All share-based incentives are subject to a service condition.
Such conditions are not taken into account in the fair value of the
service received. The fair value of services received in return for
share-based incentives is measured by reference to the fair value
of share-based incentives granted. The estimate of the fair value
of the share-based incentives is measured using either the Monte
Carlo or Black Scholes pricing model as is most appropriate for
each scheme.
The Group recognised a total share-based payments charge for the
year of GBP4,836,000 (2016: GBP4,142,000) with a Company charge for
the year of GBP2,211,000 (2016: GBP2,404,000), as set out
below:
Group Company
2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000
------------------------------------- -------- -------- ---------- ---------
Sharesave Plan 310 204 - 4
Performance Share Plan (PSP) 2,297 2,755 1,544 1,879
Deferred Share Bonus Plan (DSP) 1,441 884 667 521
Share Incentive Plan (SIP) 788 299 - -
------------------------------------- -------- -------- ---------- ---------
Total share-based payments charge 4,836 4,142 2,211 2,404
------------------------------------- -------- -------- ---------- ---------
NI on applicable share-based
incentives at 13.8% 1,228 451 876 232
------------------------------------- -------- -------- ---------- ---------
A 2% reduction or increase in the employee leaver assumption
(excluding executive directors) for the DSP and the PSP would have
increased/decreased the share-based payments charge in the year by
GBP34,000 (2016: GBP36,000).
Approved and Unapproved Plans
There has been no award of share options for Approved and
Unapproved Plans since 5 March 2010.
2017 2016
Weighted Weighted average
average exercise exercise price
Number price Number (pence)
Group (pence)
-------------------------- ---------- ------------------ -------- -----------------
Outstanding at 1 January 546,527 307.42 546,527 307.42
Exercised (214,755) 328.07 - -
Outstanding at 31
December 331,772 294.06 546,527 307.42
-------------------------- ---------- ------------------ -------- -----------------
Exercisable at 31
December 331,772 294.06 546,527 307.42
-------------------------- ---------- ------------------ -------- -----------------
The weighted average market value per ordinary share for options
exercised in 2017 was GBP41.77 (2016: nil).
The options outstanding at 31 December 2017 have an exercise
price in the range of GBP2.24 to GBP6.66 in both years and a
weighted average contractual life of 1.3 years (2016: 2.1
years).
24 Share-based payments (continued)
Sharesave Plan
The Group operates an HMRC Approved Sharesave Plan under which
employees are granted an option to purchase ordinary shares in the
Company at up to 20% less than the market price at invitation, in
three years' time, dependent on their entering into a contract to
make monthly contributions into a savings account over the relevant
period. These funds are used to fund the option exercise. No
performance criteria are applied to the exercise of Sharesave
options. The assumptions used in the measurement of the fair value
at grant date of the Sharesave Plan are as follows:
Employee
turnover
before
Share vesting/
price at non-vesting Fair
grant Exercise Expected Option Risk free Dividend condition value per
date price volatility life rate yield (%) option
Grant date (pence) (pence) (%) (years) (%) (%) (pence)
------------- ---------- ----------- ----------- ------------ ----------- ----------- ------------ -----------
1 October
2013 2371.00 1896.00 27.3 3.0 0.7 1.1 25.0 659.00
1 October
2014 2144.00 1972.00 25.3 3.0 1.0 1.4 25.0 430.00
1 October
2015 3639.00 2960.00 24.7 3.0 0.8 1.0 25.0 933.00
1 October
2016 4293.00 3315.00 27.8 3.0 0.4 1.1 25.0 1233.00
1 October
2017 4045.00 3289.00 30.1 3.0 0.1 1.3 25.0 1195.00
------------- ---------- ----------- ----------- ------------ ----------- ----------- ------------ -----------
Expected volatility is estimated by considering historic average
share price volatility at the grant date.
The requirement that an employee has to save in order to
purchase shares under the Sharesave Plan is a non-vesting
condition. This feature has been incorporated into the fair value
at grant date by applying a discount to the valuation obtained from
the Black Scholes pricing model. The discount has been determined
by estimating the probability that the employee will stop saving
based on expected future trends in the share price and past
employee behaviour.
2017 2016
Weighted Weighted
average exercise average exercise
price price
Group Number (pence) Number (pence)
--------------------------- --------- ------------------ -------- ------------------
Outstanding at 1 January 116,933 2712.71 104,019 2273.13
Granted 36,939 3289.00 43,451 3315.00
Forfeited (19,620) 2938.14 (9,939) 2695.91
Exercised (37,112) 1961.61 (20,598) 1809.87
Outstanding at 31 December 97,140 3182.54 116,933 2712.71
Exercisable at 31 December 3,299 1972.00 4,601 1896.00
The weighted average market value per ordinary share for
Sharesave options exercised in 2017 was GBP41.36 (2016:
GBP38.34).
The Sharesave options outstanding at 31 December 2017 have an
exercise price in the range of GBP19.72 to GBP33.15
(2016: GBP18.96 to GBP33.15) and a weighted average contractual
life of 2.4 years (2016: 2.3 years).
24 Share-based payments (continued)
Performance Share Plan (PSP)
The PSP permits awards of nil cost options or contingent shares
which will only vest in the event of prior satisfaction of a
performance condition.
34,720 PSP awards were made on 1 March 2017 (the Grant Date)
subject to Earnings Per Share (EPS) and Total Shareholders Return
(TSR) performance. A further 3,457 awards were made to Peter
Brooks-Johnson on 9 May 2017 to bring his 2017 PSP award in line
with his Chief Executive Officer salary. Performance for all 2017
awards will be measured over three financial years (1 January 2017
- 31 December 2019). The vesting in March and May 2020 (Vesting
Date) of 25% of the 2017 PSP award will be dependent on a relative
TSR performance condition measured over a three year performance
period and the vesting of the 75% of the 2017 PSP award will be
dependent on the satisfaction of an EPS growth target measured over
a three year performance period.
The PSP awards have been valued using the Monte Carlo model for
the TSR element and the Black Scholes model for the EPS element and
the resulting share-based payments charge is being spread evenly
over the three year period between Grant Date and Vesting Date. PSP
award holders are entitled to receive dividends accruing between
the Grant Date and the Vesting Date and this value will be
delivered in shares. The assumptions used in the measurement of the
fair value at grant date of the PSP awards are as follows:
Employee
turnover
Share before Fair
price at Risk free vesting/ value
grant Exercise Expected Option rate Dividend non-vesting per
date price volatility life (%) yield condition option
Grant date (pence) (pence) (%) (years) (%) (%) (pence)
3 March 2014
(TSR dependent)(1) 2688.00 nil 25.3 3.0 1.0 0.0 4.8 1219.00
3 March 2014
(EPS dependent)(1) 2688.00 nil n/a 3.0 1.0 0.0 4.8 2688.00
2 March 2015
(TSR dependent)(1) 3044.00 nil 24.7 3.0 0.8 0.0 5.2 2258.00
(2)
2 March 2015 3044.00 nil n/a 3.0 0.8 0.0 5.2 3044.00
(EPS dependent)(1)
(2)
1 March 2016
(TSR dependent)(1) 4069.00 nil 27.8 3.0 0.4 0.0 4.4 1985.00
1 March 2016
(EPS dependent)(1) 4069.00 nil n/a 3.0 0.4 0.0 4.4 4069.00
1 March 2017
(TSR dependent)(2) 4065.00 nil 30.1 3.0 0.1 0.0 0.0 2111.00
1 March 2017
(EPS dependent)(2) 4065.00 nil n/a 3.0 0.1 0.0 0.0 4065.00
9 May 2017
(TSR dependent)(2) 4244.00 nil 30.1 3.0 0.1 0.0 0.0 2111.00
9 May 2017
(EPS dependent)(2) 4244.00 nil n/a 3.0 0.1 0.0 0.0 4065.00
(1) For details of TSR and EPS performance conditions refer to
the Directors' Remuneration Report on pages 61 to 94.
(2) Both the TSR and EPS performance conditions for PSPs with a
grant date of 2 March 2015 have been met in full and 100% of the
awards are expected to vest in March 2018.
Expected volatility is estimated by considering historic average
share price volatility at the grant date.
2017 2016
Group Number Number
Outstanding at 1 January 402,952 388,002
Granted 38,177 89,041
Forfeited (23,635) (22,688)
Exercised (175,160) (51,403)
Outstanding at 31 December 242,334 402,952
Exercisable at 31 December 25,140 82,467
The weighted average market value per ordinary share for options
exercised in 2017 was GBP41.25 (2016: GBP38.86). The weighted
average exercise price was nil in both years.
The PSP awards outstanding at 31 December 2017 have a weighted
average contractual life of 2.7 years (2016: 2.7 years).
24 Share-based payments (continued)
Deferred Share Bonus Plan (DSP)
In March 2009 a DSP was established which allows executive
directors and other selected senior management the opportunity to
earn a bonus determined as a percentage of base salary settled in
nil cost deferred shares. The award of shares under the plan is
contingent on the satisfaction of pre-set internal targets relating
to underlying drivers of long-term revenue growth (the Performance
Period). The right to the shares is deferred for two years from the
date of the award (the Vesting Period) and potentially forfeitable
during that period should the employee leave employment. The
deferred share awards have been valued using the Black Scholes
model and the resulting share-based payments charge is being spread
evenly over the combined Performance Period and Vesting Period of
the shares, being three years.
The assumptions used in the measurement of the fair value of the
deferred share awards are calculated at the date on which the
potential DSP bonus is communicated to directors and senior
management (the grant date) as follows:
Employee
turnover
before
Share vesting/
price at non-
grant date Exercise Expected Risk free Dividend vesting Fair value
(pence) price term rate yield condition per share
Grant date Award date (pence) (years) (%) (%) (%) (pence)
-----------
3 March 2014 2 March 2015 2688.00 nil 3.0 1.0 1.0 5.6 2605.00
2 March 2015 1 March 2016 3044.00 nil 3.0 0.8 1.2 6.0 2941.00
1 March
1 March 2016 2017(1) 4069.00 nil 3.0 0.4 1.1 5.7 3942.00
1 March
1 March 2017 2018(2) 4065.00 nil 3.0 0.1 1.3 10.0 3915.00
-----------
(1) Following the achievement of 92% of the 2016 internal
performance targets, 38,416 nil cost deferred shares were awarded
to executives and senior management on 1 March 2017 (the Award
Date) with the right to the release of the shares deferred until
March 2019.
(2) Based on the 2017 internal performance targets, the
Remuneration Committee determined that 60% of the maximum award in
respect of the year will be made in March 2018. The number of
shares to be awarded will be determined based on the share price at
the Award Date in March 2018.
2017 2016
Group Number Number
--------
Outstanding at 1 January 76,172 68,309
Awarded 38,416 36,276
Forfeited (3,579) (1,677)
Exercised (39,896) (26,736)
Outstanding at 31 December 71,113 76,172
Exercisable at 31 December - 7,709
The weighted average market value per ordinary share for
deferred shares exercised in 2017 was GBP41.07 (2016: GBP38.60).
The weighted average exercise price was nil in both years.
The DSP awards outstanding at 31 December 2017 have a weighted
average contractual life of 1.7 years (2016: 1.5 years).
24 Share-based payments (continued)
Share Incentive Plan
In 2014, the Group established the Rightmove Share Incentive
Plan Trust (SIP). Employees were offered 50 shares (2016: 50) as a
gift, subject to a three year service period (the Vesting Period).
The SIP awards have been valued using the Black Scholes model and
the resulting share-based payments charge spread evenly over the
Vesting Period of three years. The SIP shareholders are entitled to
dividends paid in cash over the Vesting Period. No performance
criteria are applied to the exercise of SIP options. The
assumptions used in the measurement of the fair value at grant date
of the SIP awards are as follows:
Employee
turnover
before
Share vesting/
price at non-vesting Fair value
grant Exercise Expected Option Risk free Dividend condition per option
date price volatility life rate yield (%) (pence)
Grant date (pence) (pence) (%) (years) (%) (%)
----------- ----------- ------------ ------------ ------------
1 January
2015 2245.00 nil 24.7 3.0 0.8 nil 33.0 2245.00
1 January
2016 4093.00 nil 27.8 3.0 0.4 nil 33.0 4093.00
1 January
2017 3945.00 nil 30.1 3.0 0.1 nil 33.0 3945.00
----------- ----------- ------------ ------------ ------------
Expected volatility is estimated by considering historic average
share price volatility at the grant date.
2017 2016
Group Number Number
Outstanding at 1 January 44,300 30,200
Granted 23,600 20,550
Forfeited (6,250) (5,850)
Released (2,450) (600)
Outstanding at 31 December 59,200 44,300
Exercisable at 31 December - -
The weighted average market value per ordinary share for SIP
awards released in 2017 was GBP41.66 (2016: GBP37.90). The weighted
average exercise price in both years was nil.
The SIP shares released relate to good leavers and retirements
from the SIP, in accordance with the terms of the Trust.
The SIP options outstanding at 31 December 2017 have a weighted
average contractual life of 0.9 years (2016: 1.4 years).
25 Operating lease commitments
Non-cancellable operating lease rentals are payable as
follows:
2017 2016
Plant & machinery Land & Plant & machinery Land &
GBP000 buildings Total GBP000 buildings Total
Group GBP000 GBP000 GBP000 GBP000
--------------------- ------------ ----------
Less than one year 304 929 1,233 234 491 725
Between one and
five years 287 5,048 5,335 157 1,172 1,329
More than five
years - 5,700 5,700 - 3 3
--------------------- ------------ ----------
591 11,677 12,268 391 1,666 2,057
During 2017 the Group entered into three new operating lease
arrangements for additional space at the London office. These
leases will be capitalised on transition to IFRS 16 on 1 January
2018. For further detail please see Note 3.
The Company had no operating lease commitments in either
year.
26 Financial instruments
Credit risk
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the
reporting date was:
2017 2016
Group Note GBP000 GBP000
Net trade receivables 17 30,293 26,633
Accrued interest receivable 17 16 -
Other debtors 17 74 127
Cash and cash equivalents 18 20,930 13,749
Money market deposits 18 4,045 4,026
55,358 44,535
The Company had no exposure to credit risk in either year.
The maximum exposure to credit risk for trade receivables at the
reporting date by geographic region was:
2017 2016
Group Note GBP000 GBP000
--------
UK 29,885 26,124
Rest of the world 408 509
17 30,293 26,633
The maximum exposure to credit risk for trade receivables at the
reporting date by type of customer was:
2017 2016
Group Note GBP000 GBP000
------
Property advertisers 29,020 25,361
Other 1,273 1,272
------
17 30,293 26,633
--------------------- ------
The Group's most significant customer accounts for GBP1,408,000
(2016: GBP1,589,000) of net trade receivables as at 31 December
2017.
Impairment losses
The ageing of trade receivables at the reporting date was:
2017 2016
Gross Impairment Gross Impairment
Group GBP000 GBP000 GBP000 GBP000
Not past due 26,725 (4) 24,010 (7)
Past due 0 - 30 days 2,750 (68) 1,876 (70)
Past due 30 - 60 days 659 (30) 880 (56)
Past due 60 - 90 days 336 (75) 58 (58)
Past due older 286 (286) 237 (237)
30,756 (463) 27,061 (428)
The movement in the allowance for impairment in respect of trade
receivables during the year was as follows:
2017 2016
Group GBP000 GBP000
--------
At 1 January 428 446
Charged during the year 466 437
Utilised during the year (431) (455)
--------
At 31 December 463 428
--------
The Group has identified specific balances for which it has
provided an impairment allowance on a line by line basis across all
ledgers, in both years. No general impairment allowance has been
provided in either year.
The allowance accounts in respect of trade receivables are used
to record impairment losses unless the Group is satisfied that no
recovery of the amount owing is possible; at that point the amounts
considered irrecoverable are written off against the financial
asset directly.
26 Financial instruments (continued)
Liquidity risk
The contractual maturities of undiscounted financial
liabilities, including undiscounted estimated interest payments, as
at year end were:
Contractual cash flows 6 months
Carrying amount GBP000 or less
Group GBP000 GBP000
At 31 December 2017
Trade payables being non-derivative financial liabilities 1,424 (1,424) (1,424)
At 31 December 2016
Trade payables being non-derivative financial liabilities 1,266 (1,266) (1,266)
The Company had no non-derivative financial liabilities in
either year.
It is not expected that the cash flows included in the maturity
analysis could occur earlier or at significantly different amounts
and all payables are due within six months of the balance sheet
date.
Currency risk
During 2017 all the Group's sales and more than 95.0% (2016:
97.0%) of the Group's purchases were Sterling denominated and
accordingly it has no significant currency risk.
Interest rate risk
The Group has exposure to interest rate risk on its cash and
money market deposit balances. As at 31 December 2017 the Group had
total cash of GBP20,930,000 (2016: GBP13,749,000) and money market
deposits of GBP4,045,000 (2016: GBP4,026,000).
Fair values
The fair values of all financial instruments in both years are
equal to the carrying values.
27 Acquisition of subsidiary
Acquisition in 2016
On 31 May 2016, Rightmove Group Limited acquired the entire
ordinary share capital of The Outside View Analytics Ltd ("Outside
View"), a predictive analytics business. Full details of the
acquisition are included in the Annual Report 2016. The total cash
consideration paid of GBP2,096,000 excludes acquisition costs of
GBP42,000 which were recognised as an expense in 2016 in the
Consolidated Statement of Comprehensive Income.
The following table provides a reconciliation of the amounts
included in the Consolidated Statement of Cash Flows:
2016
Net cash flow on acquisition GBP000
Cash paid for subsidiary (2,096)
Transaction costs on acquisition (42)
Cash acquired 50
Net cash outflow (2,088)
In the seven month period to 31 December 2016, Outside View
contributed revenue of GBP174,000 and profit of GBP80,000 to the
Group's results.
27 Acquisition of subsidiary (continued)
The following table details the fair values of the assets and
liabilities acquired at the date of acquisition:
Carrying values pre-acquisition Fair value adjustments
GBP000 GBP000 Fair values
Net assets acquired GBP000
Non-current assets
Property, plant and equipment 9 - 9
Intangible assets - market appraisal
technology - 309 309
Current assets
Trade and other receivables 191 (2) 189
Cash and cash equivalents 50 - 50
Current liabilities (145) - (145)
Non-current liabilities
Deferred tax liabilities - 49 49
Fair value of net assets acquired 105 258 363
Cash consideration 2,096
Total consideration 2,096
Goodwill 1,733
28 Related party disclosures
Inter-group transactions with subsidiaries
Under the inter-group loan agreement dated 30 January 2008,
Rightmove Group Limited settles all expenses on behalf of the
Company, including dividends paid to shareholders and share
buybacks and related costs. During the year, the Company was
charged interest of GBP330,000 (2016: GBP527,000) under this
agreement and at 31 December 2017, the inter-group loan balance was
GBP20,017,000 (2016: GBP25,317,000) including capitalised interest
(refer Note 19).
On 12 June 2017 Rightmove Group Limited declared an interim
dividend of 55p per ordinary share to the Company. Additionally, on
5 December 2017, Rightmove Group Limited declared a further interim
dividend of 60p per ordinary share to the Company. The dividends of
GBP148,810,000 (2016: GBP141,046,000) were settled via a reduction
in the inter-group loan balance owed by Rightmove plc to Rightmove
Group Limited. Rightmove Group Limited also declared a dividend in
specie of GBP741,000 (2016: GBP517,000), representing the cost of
the SIP shares transferred from the EBT to the SIP during the
year.
Inter-group transactions between subsidiaries
Following its acquisition on 31 May 2016, The Outside View
Analytics Ltd became a related party to the Company. During the
year, Rightmove Group Limited has settled liabilities on behalf of
The Outside View Analytics Ltd and the balance owing under an
inter-group loan agreement dated 13 June 2016 was GBP25,000 (2016:
GBP15,000) as at 31 December 2017.
Directors' transactions
There were no transactions with directors in either year other
than those disclosed in the Directors' Remuneration Report.
Information on the emoluments of the directors who served during
the year, together with information regarding the beneficial
interest of the directors in the ordinary shares of the Company is
included in the Directors' Remuneration Report on pages 61 to
94.
During the year, the directors in office in total had gains of
GBP5,574,000 (2016: GBP1,566,000) arising on the exercise of
share-based incentive awards. The total share-based payments charge
in relation to the directors in office was GBP2,211,000 (2016:
GBP2,404,000).
Key management personnel
No other Rightmove employees are considered to meet the
definition of key management personnel other than those disclosed
in the Directors' Remuneration Report on pages 61 to 94.
29 Contingent liabilities
The Group and the Company had no contingent liabilities in
either year.
30 Subsequent events
There have been no subsequent events having a material impact on
the financial statements between 31 December 2017 and the reporting
date.
ADVISERS AND SHAREHOLDER INFORMATION
Contacts Registered office Corporate advisers
Chief Executive Peter Brooks-Johnson Rightmove plc Financial adviser
Officer:
Finance Director: Robyn Perriss Turnberry House UBS Investment
Company Secretary: Sandra Odell 30 Caldecotte Bank
Lake Drive Joint brokers
Website: www.rightmove.co.uk Milton Keynes UBS Limited
MK7 8LE Numis Securities
Limited
Registered in Auditor
England no. 6426485 KPMG LLP
Bankers
Financial calendar Barclays Bank
2018 Plc
2017 full year results 23 February Santander UK
2018 Plc
Final dividend record 4 May 2018 Solicitors
date
Annual General Meeting 4 May 2018 EMW LLP
Final dividend payment 7 June 2018 Slaughter and
May
Half year results 27 July 2018 Pinsent Masons
Interim dividend 2 November Registrar
2018
Link Asset Services*
*Shareholder enquiries
The Company's registrar is Link Asset Services (formerly Capita
Asset Services). They will be pleased to deal with any questions
regarding your shareholding or dividends. Please notify them of
your change of address or other personal information. Their address
details are:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Link Asset Services is a trading name of Link Market Services
Limited.
Shareholder helpline: 0371 664 0300 (calls cost 10p per minute
plus network extras) (Overseas: +44 20 8639 3399)
Email: enquiries@linkgroup.co.uk
Share portal: www.signalshares.com
Through the website of our registrar, Link Asset Services,
shareholders are able to manage their shareholding online and
facilities include electronic communications, account enquiries,
amendment of address and dividend mandate instructions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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