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the UK’s
number one
property
website
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Caldecotte, Milton Keynes
MK7 8LE
Registered in England no 6426485
rightmove plc
rightmove plc
annual report 2014
annual report 2014
the biggest
home moving
audience and the
largest number
of properties in
the UK
Rightmove is the UK’s largest property portal.
Our aim is to be the place for all UK home hunters to
find details of all properties available to buy or rent.
Our platforms provide an easy to use but sophisticated
online property search. With the depth of information
that they provide, home hunters can immediately identify
their preferred properties.
The service is directed at four key membership groups:
• estate agents
• lettings agents
• new homes developers
• overseas homes agents offering properties outside
the UK but interested in advertising to UK-based
home hunters.
Designed and produced by The Team www.theteam.co.uk
Contents
Strategic report
3 Highlights
4 Chairman’s statement
Chief Executive’s review
6
13 Financial review
17 Principal risks and
uncertainties
18 Our people
19 Corporate responsibility
developing
our brand
continuing
to innovate
supporting
our customers
investing in
our people
page 8
page 10
page 12
page 14
Governance
24 Directors and officers
26 Corporate governance
37 Directors’ report
40 Statement of directors’
report
responsibilities
41 Directors’ remuneration
67 Auditor’s report
report
Financial statements
70 Consolidated statement
of comprehensive
income
71 Consolidated statement
of financial position
72 Company statement of
financial position
73 Consolidated statement
75 Consolidated statement
of changes in
shareholders’ equity
of cash flows
76 Company statement
77 Notes forming part
of the financial
statements
108 Advisers and
74 Company statement of
cash flows
of changes in
shareholders’ equity
shareholder information
Rightmove plc annual report 2014 1
Strategic reportGovernanceFinancial statements leading with
mobile
Our innovation lab is
launching our Move or
Improve app in 2015.
over
50%
of all our visits
now come from
mobile devices
2
2
rightmove.co.uk
rightmove.co.uk
Highlights
“ Rightmove’s popularity with the British home
moving public has gone from strength to
strength as more home movers visited more
often and spent more time on Rightmove
than ever in 2014.”
Nick McKittrick, Chief Executive Officer
Financial highlights
• Revenue up 19% to £167.0m (2013: £139.9m)
• Underlying operating profit(1) up 20% to £124.6m (2013: £104m)
• Underlying operating margin(1) of 74.6% (2013: 74.3%)
• Basic earnings per share up 32% to 97.7p (2013: 74.1p)
• Underlying earnings per share(2) up 24% to 100.3p (2013: 81.0p)
• Final dividend of 22p (2013: 17p) per ordinary share making a total
dividend of 35p for the year (2013: 28p), up 25%
• £103.4m (2013: £85.6m) of cash returned to shareholders through
dividends and share buybacks in the year
Operational highlights
• Traffic growth up 10% year on year to 15.4bn pages (2013: 14.0bn)
• Leads up 19% to 42.8m (2013: 36.0m)
• Number of Agency and New Homes advertisers up 5% to
19,304 (31 December 2013: 18,425)
• Average revenue per advertiser (ARPA)(3) up £77 (+13%) to £684 per
month (2013: £607) with around 70% of ARPA growth driven by
customers spending more on our additional advertising products
and packages
(1) Before share-based payments and NI on share-based incentives.
(2) Before share-based payments and NI on share-based incentives and no related adjustment for tax.
(3) For Agency and New Homes customers.
Rightmove plc annual report 2014 3
Strategic reportGovernanceFinancial statements Strategic report | Chairman’s statement
Scott Forbes
Chairman
I am pleased to present Rightmove plc’s results for the year
ended 31 December 2014.
Rightmove has demonstrated a characteristic and
unwavering focus on improving its market leading customer
proposition and consumer experience. It has proven a wise
strategy as customers continue to invest more for greater
returns, reflecting the value of our immense and growing
popularity with Britain’s property searching public, our
customers’ customers.
We have built our brand over 15 years and become the
undisputed leader in the online property marketplace by
providing consumers with one place to search and research
UK property and by providing our customers one place to
reach all home hunters. We at Rightmove take no greater
satisfaction than providing a great value service to the
organised property industry, by connecting them to most
vendors and home searchers efficiently and effectively.
Rightmove is perennially ranked as one of the top ten most
popular websites in the UK. This popularity was highlighted
when Google identified Rightmove as the most searched
for business in the UK in 2014. The attraction of our more
than 15 billion and growing page impressions demonstrates
how compelling Rightmove is to consumers and ultimately to
our customers.
Rightmove is the marketplace for property in the UK.
This has been built from both the consumer’s desire to
search for property habitually with us and our leadership in
property listings. The latter has substantially increased
in early 2015. We are committed to the never-ending need
to evolve and innovate to continue to drive our clear
leadership position.
The Board and I are grateful for the confidence of our
19,300 Agency and New Homes customers and also to our
employees whose efforts have positioned Rightmove as the
essential marketplace for home hunters to find their next
home and for property advertisers to reach by far the widest
possible audience.
Financial results
The strength of our business model and core value
proposition underpin record financial results in 2014.
Underlying operating profit(1) was up 20% to
£124.6m (2013: £104.0m) driven by strong organic
revenue growth of 19% to £167.0m (2013: £139.9m)
and continued focus on cost control. Underlying basic
earnings per share (EPS)(2) was up 24% to
100.3p (2013: 81.0p), even greater than the percentage
increase in profits and in part attributable to £73.9m of
share repurchases as part of our policy of returning cash
to shareholders.
4
rightmove.co.uk
Google identified Rightmove
as the most searched for
business in the UK in 2014
Returns to shareholders
Our commitment to return excess cash promptly to investors
continues to be as strong as ever. Cash conversion remains
in excess of 100% of operating profit. In 2014, we returned
a further £103.4m (2013: £85.6m) to shareholders through
dividends and share buybacks while retaining only
£11.2m (2013: £6.8m) at the end of the year. This brings
the total cash returned to shareholders since our flotation
in March 2006 to £482.1m.
Dividend
The Board previously announced that it would increase the
interim dividend to 13p (H1 2013: 11.0p) per ordinary share,
which was paid on 7 November 2014. Consistent with our
policy of increasing the total dividend for the year broadly in
line with underlying operating profit, the Board proposes to
pay a final dividend of 22.0p (2013: 17.0p) per ordinary share
for a total dividend for the year of 35.0p (2013: 28.0p), an
increase of 25%. The final dividend, subject to shareholder
approval, will be paid on 5 June 2015 to all shareholders on
the register on 8 May 2015.
Board changes
During the past year, we welcomed Peter Williams and Rakhi
Parekh to the Board. Peter and Rakhi have already made
substantial contributions drawing upon their collective
consumer and digital experience and Peter’s extensive board
experience. During an overlapping transition period, the
Board continued to benefit from the sage contributions of
Jonathan Agnew and Judy Vezmar as we have for each of the
past nine years. Having completed three terms and no longer
deemed independent, Jonathan and Judy will not stand for
re-election to the Board in May 2015. We are grateful for their
insights throughout their service, perhaps most nostalgically
during Rightmove’s early days as a public company when
online marketing was less accepted as the norm and best
way to reach home movers.
Outlook
Our results for 2014 show us continuing to outperform
expectations. Based upon strong customer numbers, traffic
and healthy growth in average spend per advertiser at the
start of the year, the Board remains confident of continued
success in 2015.
Scott Forbes
Chairman
(1) Before share-based payments and NI on share-based incentives.
(2) Before share-based payments and NI on share-based incentives and no related adjustment for tax.
Rightmove plc annual report 2014 5
Strategic reportGovernanceFinancial statements Strategic report | Chief Executive’s review
Nick McKittrick
Chief Executive
Officer
Rightmove’s popularity with the British home moving
public has gone from strength to strength, as more home
movers visited more often and spent more time on
Rightmove than ever in 2014. Today they come to search
and research the only marketplace with over one million
properties in the UK.
We count nearly every agent in the UK as a customer
and we care about all of our customers’ business success
and focus on building strong relationships that support their
ambitions. This approach continues to serve us well as we
have grown our customer base by 5% during 2014 to a
record high.
The importance and trust in our brand was highlighted by
figures released by Google showing that Rightmove was the
most searched for business in the UK in 2014 and a national
survey showing that 94%(1) of home sellers expect their
property to be marketed on Rightmove. The ubiquity of our
brand coupled with our commitment to ongoing innovation
has significantly increased consumer engagement. Traffic
increased by 10% to 15.4 billion pages and consistent with
being a multi-platform digital leader, over half of our visits
now come from mobile devices.
On the back of this record traffic the number of leads we
generated for our customers increased to 43 million, up
19% on 2013 and more than double the number of leads we
generated in 2012. Our market share of leads has increased
and the share of sales from our leads remains at over 80%
meaning vendors are five times more likely to find a buyer
on Rightmove than any other website.
Our culture of restlessness has driven further
improvement and innovation in the year. We launched
Instant Property Alerts which alert home movers within
minutes of a property coming to the market. We send over
one million alerts every day and a quarter of our registered
users with property alerts have already signed up to get
them instantly. We also launched a number of new products,
including Property Alert Sponsor to enable agents to
advertise in our Property Alerts, in addition to a series of
enhancements to our existing products.
(1) Source: The Property Academy Home Moving Trends Survey 2014
Our culture, of course, comes from our people and I am
proud of the business we have built together. We strive to
make Rightmove a great place to work and this enables us
to attract and retain the best talent and provide the best
service for consumers and customers. I am delighted that in
our 2014 ‘Have Your Say’ people survey, again over 90% of
respondents think Rightmove is a great place to work. I would
like to thank everyone for everything they have done over the
past year.
We have seen increased adoption of our additional
advertising products and packages as customers invest
more to drive their brand exposure and gain the competitive
edge. Average revenue per advertiser (ARPA) increased by
13% in 2014 with around 70% of the ARPA growth driven by
customers spending more on these products and packages.
Spending on additional products and packages now
accounts for 40% of Agency and New Homes revenue.
With an increase in both the number of agency offices
and the number of new home developments, our
membership base grew by 5% in the last 12 months.
This, coupled with the increase in ARPA, has driven our
significant revenue and profits growth in the year.
Business model
Rightmove is the UK’s largest property portal and operates
a two-sided model that benefits from strong network effects.
On the one side we have the UK’s largest and most engaged
property audience and on the other side we have the largest
inventory of properties from over 19,300 advertisers.
Consumers engage with Rightmove when searching and
researching the property market and when selling or letting
their property. Rightmove is a free consumer service that is
compelling to buyers and renters as they can see nearly the
whole of the market and is compelling to sellers and landlords
as it is where nearly all buyers and renters are searching and
researching the market.
6
rightmove.co.uk
Vendors are five times
more likely to find a buyer
on Rightmove than any
other website.
Our customers are primarily estate agents, lettings agents
and new homes developers advertising properties for sale
and to rent in the UK. We offer the most significant and
effective exposure for their brand and properties, the largest
source of high quality leads together with best in class tools,
market insight and support.
Our principal sources of revenue are the monthly
subscription fee paid by customers to advertise all their
properties and the monthly subscription fee paid for
additional advertising products and packages that promote
their properties, brand and proposition more strongly.
The Rightmove
network effect
Advertiser
growth
More
leads
Increased
value
More
property
inventory
Home
hunters/
audience
growth
Our model benefits from a strong network effect with the
growth of home movers and property advertisers providing
a ‘virtuous circle’ enhancing the Rightmove value proposition.
Our growth potential comes from continuing to realise
the value embedded in our market leading audience through
product innovation and pricing, helped by the ongoing
structural shift of property advertising spend from offline
to online with further opportunity afforded from a cyclical
recovery in the UK housing market.
We also have a number of smaller business units, including
advertising overseas and commercial properties, providing
property related data and valuation services, and providing
a platform for property related advertisers such as mortgage
providers and removal companies.
Our strategy
We have a disciplined focus on the UK property advertising
market. We focus on increasing the size and engagement
of our audience of property consumers to provide great
value for our customers. We focus on growing organically
through our customers investing more in their presence on
Rightmove and by broadening our offering to cover more of
the consumer journey.
Our brand
Our strong brand recognition with the public and the
simplicity of the core service we provide make Rightmove
the public’s first choice to help them find their next home.
Much of our success comes from the positive experience
that home hunters have in using our services in addition to
our considerable investment over 15 years in promoting the
Rightmove brand.
We have continued to invest in our brand in 2014 with our
new ‘find your happy’ campaign. The campaign plays on the
theme that finding the ‘right’ home creates one of life’s most
positive emotions…happiness. And there’s a happy out there
for everyone. A ‘walk to work’ happy, a ‘close to a good
school’ happy, a ‘smell the sea air’ happy. We are using the
campaign to empower people to search and research homes
on Rightmove that means they will ‘find their happy’.
Our brand building has focused on national TV, more
recently through our partnership with Channel 4 across all of
their property content. We also specifically target London
through additional outdoor media, 400 Rightmove branded
taxis and our Time Out partnership. We launched refreshed
material at the start of 2015 across all our media, including
national TV, building on the largest consumer themes of ‘more
indoor space’, ‘more outdoor space’, ‘a place of my own’
and ‘minimal commute time’.
Rightmove plc annual report 2014 7
Strategic reportGovernanceFinancial statements over
90%
of home sellers
expect their property
to be marketed on
Rightmove
developing
our brand
We target London through
outdoor media, 400 Rightmove
branded taxis and our Time Out
partnership.
8
8
rightmove.co.uk
rightmove.co.uk
Source: The Property Academy
Home Moving Trends Survey 2014
Strategic report | Chief Executive’s review continued
Revenue
200
150
167.0
139.9
s
n
o
i
l
l
i
m
£
100
119.4
97.0
81.6
50
0
10
11
12
13
14
150
120
s
n
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i
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l
i
m
£
90
60
30
0
Underlying operating profit(1)
Underlying basic EPS
69.4
56.6
125
87.5
e
r
a
h
s
124.6
104.0
Spending on additional
products and packages
now accounts for 40%
of Agency and New
Homes revenue.
e
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P
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39.8
100
50
25
75
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i
50.3
0
100.3
81.0
65.7
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S
10
11
12
13
14
10
11
12
13
14
Rightmove’s position is strong when measured by traditional
classified advertising metrics, with brand awareness close to
90% and over ten million unique users. Our commanding
position is revealed when one looks at how often consumers
visit and what they do. The depth of consumers’ engagement
with Rightmove not only leads to more consumers turning to
Rightmove first and spending more time on Rightmove, but
most importantly to more and better quality leads leading to
better outcomes and value for our customers.
We have over 60% market share of visits and leads, over
70% share of page impressions, over 80% share of sales
generated from our leads compared to our nearest competitor
and over 90% of sellers expecting their property to be
marketed on Rightmove.
We serve by far the most pages of property pricing
information in the UK and we have an opportunity to grow this
advantage further by extending our offering to consumers
researching the market. We added our popular ‘Sold Prices’
functionality to our mobile and tablet platforms in 2014.
This functionality is unique in that it matches our unrivalled
catalogue of current and archived properties, containing over
two billion property images, to Land Registry sold prices.
We also launched a new ‘Market Info’ section to help
consumers better understand their local market. In the first
month alone this new content was viewed over two million
times. Looking forward, our innovation lab is launching a
new valuation app early in 2015.
s
n
o
i
l
l
i
60
Revenue
Innovation
Our mission is to empower the UK’s decisions around
property. We want to continue to be the place that consumers
turn to first and engage with the most when searching and
researching property to ensure we are the brand they insist on.
To that end, in addition to our ongoing investment in our
Margin 57.8
100
120
100
60
80
80
40
20
m
£
brand, we continue to innovate and invest in our market
leading desktop, mobile and tablet platforms to deliver the
most engaging experience for consumers. Our focus is on
having the largest, most up to date and accurate property
inventory in the UK coupled with the best search and research
capability and fastest property alerts.
2008
2009
2010
2012
2011
2008
m
£
40
20
0
0
s
n
o
i
l
l
i
Underlying operating profit
and margin
We are the most up to date site and over one third of
our agents are now using the real-time data feed, which we
built last year and has become the industry standard, to get
their vendors’ properties onto Rightmove immediately. To
complement this we launched Instant Property Alerts to alert
consumers within minutes of a property coming to market.
Via Property Alerts alone, we have 1.4 million highly engaged
subscribers to whom we delivered over a quarter of a billion
property alerts in 2014.
100
100
m
£
m
£
s
n
o
s
n
o
80
60
40
80
60
40
i
l
l
i
i
l
l
i
20
0
20
0
Underlying operating profit and margin
The infrastructure that underpins Rightmove is critical
to our success and in 2014 the team achieved an enviable
99.995% for availability and a webpage load time of
just over one second which is twice the speed of our
nearest competitor.
Underlying basic EPS
69.4
73.3
71.5
62.9
70
60
e
r
a
h
s
50
Competitive edge
We want to offer the most significant and effective exposure
for our customers’ brands and properties, be the largest
source of high quality leads and empower our customers’
decisions through best in class tools, market insight
and support.
2010
r
e
p
e
c
n
e
P
y
r
a
n
d
r
o
10
0
2009
2008
2012
2010
2011
20
30
40
i
2009
In addition to the valuation opportunities within the
43 million leads we generated, over 70,000 individual
home sellers used our Local Valuation Alert product to
request a valuation directly from their local agents.
Underlying operating profit
and margin
We launched an upgrade to our popular market
Underlying operating profit and margin
100
intelligence tools under the banner of ‘Rightmove Intel’ to
provide further insight into local markets for our agents and
ensure they have the competitive edge. Drawing on the
most comprehensive dataset available, Rightmove Intel
builds on our existing set of tools which are used by 90% of
m
our customers who generate over half a million reports using
£
these tools every month.
s
n
o
80
40
60
20
i
l
l
i
0
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Underlying operating profit
Underlying operating margin
Rightmove plc annual report 2014 9
87.6
69.4
56.6
57.8
62.9
69.4
71.5
73.3
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
41.2
40.6
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Strategic reportGovernanceFinancial statements
real-time
data feed
allows properties to
be marketed faster and
sent directly to home
movers instantly
continuing to
innovate
The technical specification
for our market-leading
real-time data feed is now
available to other portals
free of charge as we drive
industry standards forward.
10
10
rightmove.co.uk
rightmove.co.uk
Strategic report | Chief Executive’s review continued
Revenue
Underlying operating profit(1)
s
n
o
i
l
l
i
m
£
200
150
100
50
0
167.0
139.9
119.4
97.0
81.6
10
11
12
13
14
150
120
s
n
o
i
l
l
i
m
£
90
60
30
0
124.6
104.0
87.5
69.4
56.6
e
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R
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:
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c
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u
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S
10
11
12
13
14
125
e
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100
y
r
a
n
d
r
o
i
r
e
p
e
c
n
e
P
75
50
25
0
Underlying basic EPS
We have grown our customer
base by 5% during 2014 to a
record high.
100.3
81.0
65.7
i
39.8
50.3
e
v
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t
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R
:
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u
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S
10
11
12
13
14
Current trading and outlook
The outlook for the UK online property advertising market
remains positive as consumers and customers become ever
more digital and the market continues to shift from traditional
advertising channels. We are well positioned to benefit from
this transition due to our market leading position which is
strengthening on both sides of the network.
Our customers choose to spend money with Rightmove
based on the value we deliver. We are delighted that nearly
every agent in the UK has chosen to remain on Rightmove
following the recent launch of a new entrant, OnTheMarket.com,
cementing Rightmove as the best property advertising option in
the UK. As at the end of February customer numbers were
unchanged from our record year end position.
With our market leading position strengthening, average
spend per advertiser continuing to grow and record January
traffic numbers, the Board remains confident of making
further progress in growing the business organically in 2015
and beyond.
Underlying basic EPS
We care about our customers’ business success and building
strong relationships is vital in order to support their ambitions.
We are spending more time with customers than ever before
as we expand and segment our account management team
and increase their efficiency through better sales and
administrative tools and back-office support. We have also
provided more training and introduced new tools to facilitate
better conversations with customers.
We refreshed our ever popular seminar programme
focusing on the 21st century home mover, their digital
footprint, and how agents can use Rightmove to better
identify and understand the consumer and their evolving
property-related needs. We ran over 25 seminars across the
country for more than 2,000 participants and also introduced
more specialised content in the form of webinars. Already in
2015 we’ve run six seminars across the country from Torquay
to Inverness.
Margin 57.8
Underlying operating profit and margin
62.9
69.4
71.5
73.3
70
100
i
l
l
i
80
60
s
n
o
Other businesses
Our overseas homes advertising business has grown strongly
with customer numbers up 70% in the year to over 2,000.
Audience figures set new records with over 80 million
overseas searches, up 33% on last year. Rightmove now has
170,000 overseas homes advertised for sale, an increase of
over 50% compared to a year ago.
2009
2011
r
e
p
e
c
n
e
P
y
r
a
n
d
r
o
10
0
2008
2012
2008
2010
e
r
a
h
s
m
£
30
50
20
60
40
20
40
0
i
Our commercial property advertising business has
established itself as the UK’s largest commercial property site
with over 45,000 properties advertised and close to 70 million
commercial searches in 2014, up 75% on last year.
2008
2009
2010
2011
2012
Underlying operating profit
and margin
2009
2010
2011
2012
Nick McKittrick
Chief Executive Officer
Our data services business continues to grow as we help
Underlying operating profit
and margin
27 February 2015
Underlying operating profit and margin
100
a wide range of customers, including banks and surveyors
to leverage Rightmove’s UK property database, which is the
largest of its kind covering nearly two-thirds of the UK owner
occupied and privately rented housing stock.
100
80
80
s
n
o
60
s
n
o
60
i
l
l
i
m
£
40
20
0
i
l
l
i
m
£
40
20
0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Underlying operating profit
Underlying operating margin
Rightmove plc annual report 2014 11
87.6
69.4
56.6
57.8
62.9
69.4
71.5
73.3
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
41.2
40.6
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Revenue
120
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
Strategic reportGovernanceFinancial statements
Rightmove Intel
provides tools and insight
to agents on their share of
instructions, property stock
and agreed sales saving
our customers time
supporting our
supporting our
customers
customers
90% of our customers use our
by giving them an advantage is
winning even more instructions
tools to generate over half
a million reports every month.
by marketing properties faster.
12
12
12
rightmove.co.uk
rightmove.co.uk
rightmove.co.uk
Strategic report | Financial review
Robyn Perriss
Finance Director
Key performance indicators
Number of advertisers
+5%
Agency and New Homes
membership at end of 2014
was 19,304 (2013: 18,425),
up 5% year on year
Average revenue
per advertiser
+13%
£684 per month, up 13%
(2013: £607)
Market share
78%
market share of the top 3 UK
property websites by pages
viewed, unchanged from 2013
Source: Comscore December 2014
and December 2013
Properties displayed
Page impressions
Leads
1.1m
1.1 million properties
displayed on rightmove.co.uk
at 31 December 2014,
unchanged (2013: 1.1 million)
15.4bn
15.4 billion page
impressions up 10% from
14.0 billion in 2013
42.8m
42.8 million leads up 19%
from 36.0 million in 2013
Rightmove plc annual report 2014 13
Strategic reportGovernanceFinancial statements
our team works
24/7
to ensure the
website and
apps are always
available
investing in
our people
In our 2014 ‘Have Your Say’
people survey, over 90% of
respondents think Rightmove
is a great place to work.
14
14
rightmove.co.uk
rightmove.co.uk
Revenue
Underlying operating profit(1)
Underlying basic EPS
Strategic report | Financial review continued
s
n
o
i
l
l
i
m
£
200
150
100
50
0
167.0
139.9
119.4
97.0
81.6
124.6
104.0
87.5
69.4
56.6
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i
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10
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12
13
14
10
11
12
13
14
Revenue
120
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
100
80
60
40
20
0
s
n
o
i
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i
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£
Underlying operating profit and margin
Margin 57.8
62.9
69.4
71.5
73.3
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Underlying operating profit
and margin
Underlying operating profit
and margin
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
125
e
r
a
h
s
100
y
r
a
n
d
r
o
i
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e
p
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c
n
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75
50
25
0
39.8
50.3
100.3
81.0
65.7
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i
:
e
c
r
u
o
S
10
11
12
13
14
Revenue
Revenue grew strongly in 2014 up 19% to £167.0m
(2013: £139.9m). Our Agency business was the main
contributor to the revenue growth with a year on year increase
of £22.3m (2013: £14.9m), up over 20%. Whilst we experienced
a pleasing 4% growth in Agency customer numbers, helped
by a better UK housing market, the majority of the revenue
increase has come from ARPA growth, primarily through
discretionary sales of additional advertising products together
with increases to core membership prices. Agency continues to
be by far our largest business contributing 78% (2013: 77%) of
our total revenue.
Revenue from our New Homes business grew by 9% to
£26.4m (2013: £24.2m). Growth was primarily driven by the
sale of additional advertising products and by increases to
core membership prices; revenue was less impacted by the
increase in the number of developers, as the gain in developer
numbers was weighted to the second half of the year.
Other revenue across our data services, overseas,
Underlying basic EPS
70
50
commercial and non-property advertising streams increased
by £2.6m to £11.0m (2013: £8.4m), constituting 7%
(2013: 6%) of our total revenue in the year.
y
r
a
n
d
r
o
30
40
i
e
r
a
h
s
60
r
e
p
e
c
n
e
P
20
10
0
2008
2009
Underlying operating profit
Underlying operating profit(1) increased by 20% to £124.6m
(2013: £104.0m) and underlying operating margin(1) for the
year reflected further operating leverage gains, increasing to
74.6% (2013: 74.3%).
2010
2012
2011
This was driven by continued strong revenue growth
Underlying operating profit and margin
coupled with a slightly lower percentage increase in
underlying operating costs(1). Underlying operating costs(1)
100
increased by £6.4m to £42.4m (2013: £36.0m). £2.4m of the
increase related to salary costs attributable to general wage
80
inflation and an increased average headcount of 388
60
(2013: 349), up 11% reflecting investment in both sales and
40
technical staff during the year and the full year impact of staff
20
recruited during 2013. Marketing spend also increased by
0
£2.7m year on year as we continued to invest in promoting
2010
the Rightmove brand.
2012
2011
2008
2009
s
n
o
i
l
l
i
m
£
Rightmove continues to see
strong cash generation and
to return all the free cash
generated to shareholders.
Share-based payments and National Insurance (NI)
In accordance with IFRS 2, a non-cash charge of £2.7m
(2013: £2.4m) is included in profit or loss representing the
amortisation of the fair value of share-based incentives
granted, including Sharesave options.
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 reduction in the closing
share price at 31 December 2014 from £27.40 to £22.48
in respect of the outstanding share-based incentives
granted, together with the actual NI cost on share-based
incentives exercised in the year, there is a credit of
£0.2m (2013: charge of £4.5m).
Taxation
The consolidated tax rate for the year ended
31 December 2014 was 21.2% (2013: 23.4%).
The effective tax rate was lower than the UK enacted
rate of 21.5% due to research and development relief
claimed in relation to previous years.
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 2014 was
£66.2m (2013: £73.5m). £28.6m (2013: £20.2m) related
to corporation tax and Employers NI borne by the
Group while the remaining £37.6m (2013: £53.3m) was
collected in respect of payroll taxes and VAT.
Earnings per share (EPS)
Underlying basic EPS(2) increased by 24% to 100.3p
(2013: 81.0p). Basic EPS increased by 32% to 97.7p
(2013: 74.1p). The growth in EPS was driven by the increase
in profitability in the year together with the benefit from our
continued share buyback programme which reduced the
weighted average number of ordinary shares in issue to
98.4m (2013: 100.3m).
Underlying operating profit
Underlying operating margin
Rightmove plc annual report 2014 15
87.6
69.4
56.6
57.8
62.9
69.4
71.5
73.3
41.2
40.6
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
150
120
90
60
30
0
s
n
o
i
l
l
i
m
£
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
100
80
60
40
20
0
s
n
o
i
l
l
i
m
£
Strategic reportGovernanceFinancial statements
Strategic report | Financial review continued
Balance sheet
Rightmove’s balance sheet at 31 December 2014 reflects
total equity of £2.4m (2013: £8.9m) reflecting the continuing
return of capital to shareholders in the form of share buybacks
and dividends during the year.
In line with stronger revenue, trade receivables increased
by 14% to £21.8m (2013: £19.1m). Trade and other payables
increased by £2.6m to £27.6m (2013: £25.0m) principally
due to an increase in deferred revenue. Our deferred tax
asset, representing future tax benefits from share-based
incentives, is lower at £4.5m (2013: £5.6m) due to a lower
potential tax benefit being recognised in relation to
outstanding share-based incentives as a result of the
decline in the year on year share price.
Cash flow
Rightmove continues to see strong cash generation and
to return all the 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 was £125.4m
(2013: £99.2m) representing an operating cash conversion
in excess of 100%.
Tax payments increased to £17.1m (2013: £16.1m) and
£0.1m (2013: £0.1m) was paid in relation to bank charges
and facility fees resulting in net cash from operating activities
of £108.2m (2013: £83.0m).
Capital expenditure was in line with last year at £1.1m
(2013: £1.1m) reflecting ongoing investment in our
website infrastructure.
Proceeds of £0.2m (2013: £3.7m) were received on the
exercise of share-based incentives and £0.9m was applied to
purchase shares to fund the Rightmove Share Incentive Plan
which was introduced in January 2015.
During 2014, £73.9m was invested in the repurchase of
our own shares (2013: £60.5m) whilst a further £29.5m
(2013: £25.1m) was paid in dividends reflecting the
increased final dividend for 2013 and the 2p increase in
the interim dividend this year. This brings the total cash
returned to shareholders in the year to £103.4m and
£482.1m since our flotation in March 2006.
The closing Group cash balance for the year was
£11.2m (2013: £6.8m).
Going concern
The Group entered into a 12 month agreement with HSBC for
a £10.0m committed revolving loan facility on 10 February 2014.
This agreement has been extended for a further 12 months
and will expire on 9 February 2016. To date no amount has
been drawn under this facility. During the year £103.4m of
cash was returned to shareholders.
The Board 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 the foreseeable future.
The Board’s priorities for the use of cash continue to be:
investment in the business; payment of dividends; and the
return of cash to shareholders via share buybacks. The Board
believes that the future working capital and capital expenditure
requirements of the business will continue to be low and that
the business will be in a position to return surplus cash to
shareholders during 2015 through a combination of dividends
and share buybacks.
Robyn Perriss
Finance Director
27 February 2015
(1) Before share-based payments charge of £2,728,000 (2013: £2,408,000) and
NI credit of £194,000 (2013: £4,538,000 charge) on share-based incentives.
(2) Before share-based payments charge of £2,728,000 (2013: £2,408,000) and
NI credit of £194,000 (2013: £4,538,000 charge) on share-based incentives
and no related adjustment for tax.
16
rightmove.co.uk
Strategic report | Principal risks and uncertainties
We recognise that the Group’s strategic objectives can only be achieved if potential risks are monitored and managed effectively
by the Board. The risks set out below are those considered principal to delivering our strategy and are specific to the nature of
our business, although there are other risks that may occur and impact the Group’s performance.
Description
Impact
Monitoring and mitigation
Change from
prior year
UK housing market downturn
• Substantially fewer housing
transactions than the norm may
lead to a reduction in the number
of agent branches or new homes
developments
• Reduction in the size of the UK
property advertising market
leading to fewer customers
Competition
• Increased competition from
existing entrants
• Increased competition from
new entrants including
OnTheMarket.com, which
launched in January 2015
and requires its members to
list on a maximum of only
one other portal
Underperformance as the number of
agents and new homes developments
are a major determinant of Rightmove’s
revenue
• Monitoring of housing market leading
indicators and trends in Rightmove
membership
• Rentals advertising is counter-cyclical
and mitigates recessionary
decreases in estate agency revenue
• Cost reduction resulting from selling
and servicing fewer customers
• Developing revenue streams in
related and adjacent markets
Underperformance and impact on
Rightmove’s ability to grow revenue
due to the potential loss of:
• Audience
• Advertisers
• Demand for additional advertising
products
• Communication of the value of
Rightmove membership to advertisers
• Sustained marketing investment in the
Rightmove brand
• Sustained investment and innovation
in serving both home hunters and
our advertisers
New or disruptive technologies
and changing consumer
behaviours
• Failure to innovate or adopt
new technologies
• Failure to adapt to changing
consumer behaviour
Underperformance and impact on
Rightmove’s ability to grow revenue
due to the potential loss of:
• Audience
• Advertisers
• Demand for additional
advertising products
Cyber attack
• Unavailability of the website
and other platforms
• Corruption or loss of key data
Reputational risk
• Continual improvements to our
platforms and product proposition
• Significant and ongoing investment
in mobile and tablet platforms
• Large in-house technology team
with culture of innovation
• Ongoing monitoring of consumer
behaviour and annual ‘Hackathons’
• Disaster Recovery and Business
Continuity Policy which is reviewed
regularly
• Use of three data centres to load
balance and ensure optimal
performance and business
continuity capability
• Regular backups of key data and
denial of service testing
Securing and retaining the
right talent
The inability to recruit and retain
talented people could impact our ability
to maintain our financial performance
and deliver growth
When key staff leave or retire, there is
a risk that knowledge or competitive
advantage is lost
• Ongoing succession planning and
development of future leaders
• Payment of competitive rewards
• Staff communication and
engagement
• Maintaining the culture of the
Group, which generates significant
staff loyalty
Increased risk
Decreased risk
Risk unchanged
Rightmove plc annual report 2014 17
Strategic reportGovernanceFinancial statements our people
We are proud of our people and
the mixture of talent and experience
that they bring. We depend on their
skills and commitment to achieve
our objectives.
Strategic report | Corporate responsibility
Our people
Our people are our most highly valued asset, they are critical to
our success and our growth. We are proud of our people and
the mixture of talent and experience that they bring. We depend
on their skills and commitment to achieve our objectives.
Our cultural style is open and honest. We invest in
ensuring that all employees understand Rightmove’s core
values and goals. We achieve this through a combination of
a rigorous selection process, including technical skills testing,
an off-site residential course to ensure all ‘Rightmovers’
understand our core values, ongoing coaching and mentoring,
and cross-functional team building events involving all
employees. Given the specialised technical nature of the work
we do and the services we provide, we also support ongoing
external professional development where appropriate.
We encourage employee involvement and place emphasis
on keeping employees informed of the Group’s activities via
bi-monthly staff forums and business performance updates
with senior management and quarterly sales conferences.
In 2014 we held a Company day, which allowed the whole
Company to get together and enjoy a day of business
updates, team building and inspirational speakers.
During 2014, our employee recognition scheme, which is
based around ‘the Rightmove behaviours’ which reflect our
unique blend of values and ways of working and which is an
opportunity to nominate colleagues who have demonstrated
these behaviours in action, continued to prove popular with up
to eight awards presented every two months at our bi-monthly
staff forums.
As a result of last year’s ‘Have your Say’ people survey
feedback, our employee appraisal process was reviewed and
updated with new continual feedback sessions introduced in
their place, which provide a dynamic culture of personal
development. All employees received training on how to use
the new feedback process in order to gain the maximum
impact from it. Also as a result of the 2013 survey feedback,
we carried out a refreshment of the activities and content
of our off-site residential course concentrating on providing
people related activities to develop positive working
relationships, which can be carried forward from the course
into a work environment.
The careers section of our Corporate website continues to
provide a successful direct approach to recruiting great people
to Rightmove. We have received positive feedback that the
site provides a useful insight into our business for those
looking to join us.
We offer all employees a range of additional benefits, which
continue to help us both attract and retain staff. Rightmovers
are made aware of these benefits through our induction
process and intranet.
In 2014 we complied with new pension auto enrolment
regulations, certifying the Rightmove Group stakeholder
pension plan and auto enrolling those employees not already
members of the plan. We communicated auto enrolment
by holding employee seminars and offering the opportunity
for one to one briefings with external benefits advisers.
We have been delighted to have had very low opt out rates
and currently 91% of employees are now members of the
pension plan.
We also offer private healthcare complimented by a cash
plan scheme. In November 2014, the Company’s sixth
Sharesave contract matured allowing employees to benefit
from the success of the Group over the last three years. 60%
of our employees currently participate in the Sharesave Plan.
Rightmove plc annual report 2014 19
Strategic reportGovernanceFinancial statements Strategic report | Corporate responsibility continued
In November 2014, we introduced the Rightmove Share
Incentive Plan with an award of 100 free shares to all
qualifying employees in January 2015, as a thankyou for all
the hard work and dedication shown over the last few years
of the Rightmove journey.
We offer flexible working arrangements, supporting part
time working and reduced hours to allow our employees to
balance their work and family commitments.
As it’s important to us to know what our employees think
and having received such valuable feedback last year, we ran
our annual ‘Have your Say’ people survey, with 94% of
respondents saying Rightmove is a great place to work and
96% of respondents committed to making a real contribution
to the success of Rightmove.
In 2014 we celebrated 18 people being at Rightmove for
10 years or more and in 2015, 20 more people will reach 10
years’ service, figures which back up our impressive people
survey results.
Equality and diversity
Rightmove has a strong commitment to equality of
opportunity in all our employment policies, practices and
procedures. We take a proactive approach throughout our
recruitment and selection process to ensure that we attract,
hire and retain a diverse and talented workforce and this is
kept under close and regular scrutiny. No existing or potential
employee will receive less favourable treatment due to their
race, creed, nationality, colour, ethnic origin, age, religion or
similar belief, connections with a national minority, sexual
orientation, gender, gender reassignment, marital status,
member or membership of a trade union, disability, or any
other classification as prescribed by law.
We recognise that a diverse workforce will provide a wide
array of perspectives that promote innovation and business
success and 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.
Our gender diversity throughout the Group remains
strong especially at the Director level for the year ended
31 December 2014, with one out of three executive directors
being female. Our female representation on the Board
increased during the year to 30%, with the appointment of
a third female Board member as a non-executive director
in July 2014, although this number will reduce to 25% as
various Board changes take place in 2015 as detailed in
the Chairman’s Statement on page 5.
Having made substantial progress with gender diversity at
Board level, the Board continues to focus on the next level of
senior management in order to develop potential within this
team to step up to Board level at the appropriate time and to
identify and develop potential within the wider organisation
with a view to strengthening the female representation within
the senior management team. In 2014, 28% (2013:14%) of
our senior management team were female.
A breakdown by gender of the number of persons who
were directors of Rightmove, senior managers and other
employees as at 31 December 2014, is set out below:
Human rights
Whilst Rightmove does not have a specific human rights
policy, it does have policies such as Equal Opportunities and
Anti-bribery policy that adhere to internationally proclaimed
human rights principles.
Directors
Senior management
All Rightmove employees
3
7
5
13
182
206
Male
Female
Male
Female
Male
Female
20
rightmove.co.uk
Charitable activity
We continue to encourage all our employees to devote time
and fundraising efforts to charitable causes of particular
importance to them as individuals. During 2014 many of
our staff have been active in raising money or supporting
fundraising activities across a wide range of charities for
which Rightmove matches the donations raised.
Our employees are also able to donate directly from
their monthly salary to any charity or recognised good
cause registered within the UK through the Charities
Trust. This provides a tax efficient means of giving.
In 2014, in conjunction with Agents Giving, we launched a
charitable sponsorship fund where we contribute to the costs
of setting up a charitable activity carried out by our
customers, for example paying for the kit to be used at
a charity football match. This allows for more of the money
raised by our customers to go directly to the charity they are
fundraising for. We have put aside a fund of £100,000 to
support customer initiatives via Agents Giving of which
£10,000 was contributed in 2014. To date the related fund
raising activities by our customers will raise over £100,000
for UK charities.
Environment
Rightmove actively considers its environmental impact and
we are conscious of playing our part in tackling climate
change. Traditional ways of finding a home tend to involve
large amounts of paper and printing, whether in the form of
newspaper advertising, property particulars mailed to
applicants through the post or leaflet drops by agents.
Rightmove reduces the need for print media and the
environmental damage that goes with it. Rightmove takes
care to design the layout of property particulars to reduce the
total number of pages that need to be printed out in those
cases where a home hunter does want a physical copy.
Enhanced information on properties also reduces the
amount of time home hunters waste in visiting properties
that rapidly turn out to be inappropriate. As a high proportion
of viewings involve a car journey, any reduction in wasted
viewings has an environmental benefit. Rightmove has
worked hard to increase the number and size of photographs
of each property, improved the size and added functionality
to property floor plans and has introduced more
comprehensive map searches and aerial photographs
which help home hunters to identify the specific location
of a property. Rightmove has added information on which
schools are closest to the properties listed and the
Broadband speed for the area, all of which combined,
provides high quality information about properties, to reduce
the carbon footprint generated by prospective buyers
making wasted journeys.
The rightmove.co.uk website includes functionality for our
customers to display Energy Performance Certificates which
allow prospective buyers to evaluate the energy efficiency
of a property they are considering buying and to identify
opportunities to improve the energy efficiency once they
have purchased the property.
As an internet-based Group with most staff employed
in two office locations, we believe our own environmental
footprint is small. We encourage our staff to take steps to
address our environmental responsibilities. For instance,
we continue to operate recycling schemes which were
Rightmove plc annual report 2014 21
Strategic reportGovernanceFinancial statements Strategic report | Corporate responsibility continued
established in consultation with local authorities and recycling
partners. All waste bins were removed from the desks in our
London and Milton Keynes offices which encourages and
increases the amount of recycling we do.
As an operator of an online property portal, the main
environmental impact is 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 alternatives to car
travel, by promoting the use of public transport in particular
when travelling between our two office locations and by
encouraging participation in our Cycle to Work scheme.
As an online business, our culture emphasises a paperless
environment. We also recognise that our responsibilities do
not stop with how we operate internally; we encourage all our
customers, business partners and suppliers not to
unnecessarily print out emails sent by us in the signature of
all our emails. We also continue to focus on streamlining
processes and replacing paper-based services with online
services and communications, wherever possible. Steps
introduced in recent years include e-communications to
shareholders and online customer membership forms and
product documentation.
Greenhouse gas reporting
Since 1 October 2013, the Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013 has required
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, which whilst 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 2014. Scope 3 is not yet
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 website platforms.
Rightmove emissions by Scope:
Scope
Source
Scope 1
Company cars
Scope 2
Electricity
Scope 3
Outsourced – data centres
Total
Tonnes CO2e(1)
2014
Tonnes CO2e(1)
2013
510
317
243
1,070
461
330
202
993
(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. https://www.gov.uk/measuring-and-reporting-environmental-impacts-
guidance-for-businesses
22
rightmove.co.uk
We do not have responsibility for any emission sources that
are not included in the above information.
Health and safety
The Group considers the effective management of health and
safety to be an integral part of managing its business. During
2014, we continued our fire safety, first aid and work place
safety training. The Group’s ongoing policy on health and
safety is to provide adequate control of the health and safety
risks arising from work activities, through further 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.
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
Scope 1
Company cars
Scope 2
Electricity
Scope 3
Outsourced – data centres
Total
Tonnes CO2e
Per Employee
2014(2)
Tonnes CO2e
Per Employee
2013(2)
1.3
0.8
0.6
2.7
1.3
0.9
0.6
2.8
(2) Based on 388 (2013: 349) employees taken as the average number of
employees in the Group throughout the year.
Emissions per employee remain broadly the same year
on year. We will continue to monitor and look for ways to
improve energy efficiency. As we meet the qualification
criteria for the Government’s Energy Savings Opportunity
Scheme (ESOS) we will be required to carry out a mandatory
energy assessment during 2015 and this will help us to
identify any areas of potential improvement.
Methodology
We have reported on all of the emission sources required
under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013. We have used the
GHG’s Protocol’s Operational Control consolidation method.
Rightmove plc annual report 2014 23
Strategic reportGovernanceFinancial statements
Governance | Directors and officers
Nick McKittrick
Chief Executive Officer
Appointment to the Board
5 March 2004
Current external commitments
None
Previous roles and relevant experience
Nick is one of the co-founding executives
and became Chief Executive Officer in
April 2013 having been Chief Operating
Officer since 2005 and additionally
Finance Director since 2009. His prior
experience is in technology consulting
with Accenture.
Peter Brooks-Johnson
Chief Operating 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 estate agency business since 2008.
Prior to joining Rightmove, Peter was a
management consultant with Accenture
and the Berkeley Partnership.
Scott Forbes
Chairman
Appointment to the Board
13 July 2005
Committee membership
Nomination
Current external commitments
Chairman of Orbitz Worldwide
Chairman of Innasol Group Limited
Chief Executive of Bridge Capital Advisors Ltd
Previous roles and relevant experience
Director of NetJets Management Ltd, a
subsidiary of Berkshire Hathaway until
October 2009. Scott has over 30 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 Williams
Non-Executive Director
Appointment to the Board
3 February 2014
Committee membership
Remuneration
Current external commitments
Chairman of boohoo.com plc
Chairman of Jaeger
Chairman of Mister Spex GmbH
Senior independent non-executive director
of Sportech plc
Non-executive director of Cineworld Group plc
Previous roles and relevant experience
Peter was previously senior independent director
of ASOS plc, held non-executive director roles in
the EMI group, Blacks Leisure Group plc, JJB
Sports plc, GCap Media plc and Capital Radio
Group plc. In his executive career, he 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.
Judy Vezmar
Non-Executive Director
Appointment to the Board
16 January 2006
Committee membership
Remuneration, Nomination, Audit
Current external commitments
Non-executive director of blinkx plc
Previous roles and relevant experience
Judy was Chief Executive Officer of
LexisNexis International until January
2014. LexisNexis®, part of the global
media group Reed Elsevier PLC,
is a leading worldwide provider
of content-enabled workflow solutions,
where Judy was responsible for the
International Group and their expansion
of the range of successful solutions
including online services to over
100 countries.
Colin Kemp
Non-Executive Director
Appointment to the Board
3 July 2007
Committee membership
Remuneration, Nomination
Current external commitments
Managing Director of Telephone Banking
for the Lloyds Banking Group, Retail
Business
Previous roles and relevant experience
With over 30 years’ experience in high
street retail banking, Colin has worked for
Lloyds Banking Group companies since
1979. Between January 2005 and
December 2007, Colin was Managing
Director of Halifax Estate Agencies
Limited. Colin is a Cranfield MBA and
an Associate of the Chartered Institute
of Marketing.
24
rightmove.co.uk
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, was
appointed Company Secretary in April
2012 (until July 2014) and promoted to
the Board as Finance Director in April
2013. 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.
Jonathan Agnew
Senior Independent
Non-Executive Director
Appointment to the Board
16 January 2006
Committee membership
Remuneration (Chairman), Nomination
and Audit
Current external commitments
Chairman of The Cayenne Trust plc
Chairman of Fleet Mortgages Limited
Previous roles and relevant experience
Jonathan spent nearly 30 years in
investment banking, with Hill Samuel
where he became a director, Morgan
Stanley as a managing director and
Kleinwort Benson as Chief Executive.
He has been Chairman of Ashmore
Global Opportunities, Nationwide Building
Society, Limit, Gerrard Group, Beazley
and of several investment companies.
He also served on the Council of Lloyd’s.
Ashley Martin
Non-Executive Director
Appointment to the Board
11 June 2009
Committee membership
Remuneration, Audit (Chairman)
Current external commitments
Group Chief Financial Officer of
Engine Holding LLC
Previous roles and relevant experience
Ashley qualified as a chartered
accountant in 1981 and has a career
in finance spanning 30 years. He was
previously Finance Director of Rok plc,
the building services group, and Group
Finance Director of the media services
company, Tempus plc.
Rakhi Parekh
Non-Executive Director
Appointment to the Board
28 July 2014
Current external commitments
None
Previous roles and relevant experience
Rakhi was previously Director of UK
Media at Amazon through 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.
Jenny Warburton
Company Secretary
Appointment to the Board
1 July 2014
Current external commitments
None
Previous roles and relevant experience
Jenny joined Rightmove in 2011 as
Assistant Company Secretary and was
promoted to Company Secretary in
2014. She is an Associate of the Institute
of Chartered Secretaries and
Administrators. Prior to joining Rightmove
Jenny was the Assistant Company
Secretary at Jacques Vert plc and before
that held various senior management
roles within the Aurora Fashions Group.
Rightmove plc annual report 2014 25
Rightmove plc annual report 2014 25
Strategic reportGovernanceFinancial statements Governance | Corporate governance report
Introduction
The following sections explain how the Company applies
the main provisions set out in the 2012 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 following
areas:
• 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 page 52.
The Group’s risk management and internal control framework
and the principal risks and uncertainties are described on
pages 17 and 34 to 35. The Directors’ Report on pages 37 to
39 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. We are pleased
to confirm, that for the year under review, the Group has
complied fully with the principles and provisions of the Code.
Further information on the Code can be found on the
FRC’s website at www.frc.org.uk
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 relevant laws of England and Wales
and the Company’s Articles of Association. The Board
delegates certain matters to the Board committees and
delegates the detailed implementation of matters approved
by the Board and the day to day operational aspects of the
business to the executive directors. The Board’s main
responsibilities and the key actions carried out during the
year are set out below:
Responsibility
Specific actions during the year
Strategy and
direction
Annual strategy meeting
to review and agree the
Group’s strategy; including
an external consultant’s
view on Rightmove’s
strategic direction
Presentation on Agency
customer proposition
Performance
monitoring
Received regular market
updates and reports about
competitor activity
Marketing presentation on
‘find your happy’ campaign
including particular focus
on London market
Attendance at Board
meeting by CEO of large
Agency customer, who
presented on Agency
operational considerations
and the UK housing
market outlook
Received presentations
from senior management
covering progress of
businesses other than UK
residential home advertising
Approval of the Group’s
budget for 2015 and its
three year business plan
to 2017
Regular updates on
business performance
relative to analyst
consensus forecasts
Shareholder
engagement
Governance
and risk
Reviewed the 2014 AGM
proxy voting figures and
made preparations in
respect of the 2014 AGM
Received monthly reports
on shareholder composition
and significant changes to
the shareholder register
Feedback from the
executive directors post
results and investor
roadshows
Presentation by UBS on
their view of the equity
market and Rightmove
peer comparison
Regular reviews of the
risk register and changes
in significant risks affecting
the business
Reviewing and approving
the Group’s regulatory
results announcements
and Annual Report
Discussion of key findings
from the 2014 internal
Board evaluation
Received briefings and
presentations from senior
management covering a
wide range of topics
including cyber and security
risks and 2015 insurance
renewal programme
26
rightmove.co.uk
Responsibility
Specific actions during the year
People and values
September Board meeting
held in Milton Keynes
providing the opportunity
to interact informally with a
number of employees and
to hear a number of short
presentations from across
the business
Met with the Head of
Human Resources who
updated the Board on
the Rightmove values
and behaviours, known
collectively as the ‘Hows’
as well as the introduction
of a new feedback system
encompassing the Hows
Approval of the introduction
of the Rightmove Share
Incentive Plan
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 provides a report
or update of each meeting of the respective committee to
the Board 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 30. The composition of these Committees is reviewed
regularly, taking into consideration the recommendations of
the Nomination Committee (refer page 28 for further planned
changes in 2015).
The Board has adopted a formal schedule of matters
requiring specific approval.
These include:
• The approval of the annual business plan;
• Review of Group strategy;
• Changes to the Group’s capital structure;
• Approval of the dividend policy;
• Acquisitions and disposals;
• Appointment and removal of officers of the Company;
• Approval of annual and half-year results and shareholder
communications; and
• System of internal control and risk management.
The Board normally schedules seven or eight meetings each
year although meetings can be scheduled at short notice
at the request of any director, if required. In addition to formal
Board meetings, there is regular informal dialogue between
all directors.
The Board receives meeting papers sufficiently in advance
of the meetings to allow time for review and consideration of
the documents beforehand. If any director has a concern
about any aspect of the business conducted at any Board
meeting, the Company Secretary shall discuss this with the
director concerned and record their concern or comments
in the Board minutes. The Board receives monthly
management and financial reports on the operational and
financial performance of the business setting out actual and
forecast financial performance against approved budgets
in addition to other key performance indicators. The Board
also receives copies of broker reports and press releases
relating to the Group.
Rightmove plc annual report 2014 27
Strategic reportGovernanceFinancial statements Governance | Corporate governance report continued
Committee
Role and terms of reference
Membership
required under the
terms of reference
Minimum number
of meetings
per year
Committee report
on pages
Three
32-35
Audit
Reviews and reports to the Board on
the Group’s financial reporting, internal
control and risk management systems,
the independence and effectiveness of
the auditors and monitors the need for
an internal audit function.
Makes recommendations to the
Board for a resolution to be put to
the shareholders of the Company in
relation to the appointment of the
external auditors
At least three
members
All members should
be independent
non-executive
directors
Remuneration Responsible for setting and
recommending to the Board the
remuneration policy and strategy to
ensure that the Company’s executive
directors and senior management are
properly incentivised and fairly rewarded
for their individual contributions to the
Group’s overall performance, having
due regard to the interests of the
shareholders and to the financial and
commercial health of the Group
At least three
members
Two
41-42;
52-66
All members should
be independent
non-executive
directors
Nomination
Undertakes an annual review of
organisation and succession planning
and ensures that the membership and
composition of the Board, including the
balance of skills, remains appropriate.
Makes recommendations for the
membership of the Board, Audit and
Remuneration Committees
At least three
members
The majority should
be independent
non-executive
directors
Two
35
Board composition
The Board at the date of this report comprises three executive
directors and seven non-executive directors, including the
Chairman. The three executive directors are Nick McKittrick,
Chief Executive Officer, Peter Brooks-Johnson, Chief
Operating Officer and Robyn Perriss, Finance Director.
The non-executive directors are Scott Forbes, Chairman,
Jonathan Agnew, Senior Independent Director, Colin Kemp,
Ashley Martin, Judy Vezmar, Peter Williams and Rakhi Parekh.
Biographical details of all directors at the date of this report
appear on pages 24 to 25 and details of their committee
membership appear on page 30.
Consideration of the Board size and composition is kept
under regular review by the Nomination Committee.
Board changes
Peter Williams was appointed to the Board on 3 February
2014 and Rakhi Parekh was appointed to the Board on
28 July 2014. All other directors served throughout the year.
In addition to the above effective changes, Jonathan
Agnew, Senior Independent Director and Judy Vezmar, both
who will have served nine years, will not stand for re-election
to the Board at the AGM of the Company to be held on
7 May 2015.
28
rightmove.co.uk
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
Chief Executive Officer
• The leadership and governance of the Board;
• Ensuring its effectiveness by creating and managing constructive relationships between
the executive and non-executive directors;
• Ensures there is ongoing and effective communication between the Board and its key
shareholders; and
• With the assistance of the Company Secretary, setting the Board’s agenda and ensuring that
adequate time is available for discussions and that the Board receives sufficient, pertinent,
timely and clear information.
• Responsible for the day to day management of the Group;
• Responsible for the operations and results of the Group;
• Developing the Group’s objectives and strategy and following Board approval, the successful
execution of strategy;
• Responsible for the effective and ongoing communication with shareholders; and
• Chairing the Executive Committee.
Non-executive directors
• Constructively challenge the executive directors; and
• Monitor the delivery of the strategy within the risk and control framework set by the Board.
Senior Independent Director
Company Secretary
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 24 and 25 and demonstrates a range
of business expertise that provides the right mix of skills and experience given the size of
the Group.
• Acting in an advisory capacity to the Chairman;
• Deputising for the Chairman if required;
• Serving as an intermediary for other directors when necessary;
• Being 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
• Conducting 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.
• Monitoring compliance with appropriate Board procedures;
• Advising the Board on corporate governance matters;
• Assisting the Chairman in ensuring that all the directors have full and timely access to relevant
information; and
• Assisting the Chairman by organising induction and training programmes.
In addition to her duties as Company Secretary to the Board, the Company Secretary also acts
as Secretary to the Audit, Remuneration and Nomination Committees.
The appointment and removal of the Company Secretary is one of the matters reserved
for the Board.
Rightmove plc annual report 2014 29
Strategic reportGovernanceFinancial statements
Governance | Corporate governance report continued
Board diversity
We are committed to a Board comprised of directors from
different backgrounds, 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. We strive to
maintain the optimal balance.
We have made further progress in terms of gender diversity,
with 28% (2013: 14%) of women now filling senior management
positions across the Group. As at 31 December 2014, 30%
(2013: 25%) of Board members were female and the Board was
therefore aligned with the minimum target representation level to
be achieved by 2015, as recommended by the Davies Review.
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 (33%) and non-executive
directors (67%) and that all non-executive directors are fully
independent of management and independent in character
and judgement.
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.
Neither the Chairman nor the executive directors hold any
other non-executive directorships or commitments requiring
disclosure under the Code.
Board tenure as at
31 December 2014
Balance of directors as at
31 December 2014
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 2006. All directors are
subject to election at the first AGM following their appointment
and to re-election at intervals of no more than three years in
accordance with the Company’s Articles of Association.
However, following changes to the Code, all directors, other
than Jonathan Agnew and Judy Vezmar who are retiring, will
seek re-election at the 2015 AGM, in accordance with the
Code provision B.7.1.
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:
Board
Remuneration
Committee
Audit
Committee
Nomination
Committee
Total meetings
Scott Forbes
Nick McKittrick
Peter Brooks-
Johnson
Robyn Perriss
Jonathan Agnew
Colin Kemp
Ashley Martin
Judy Vezmar
Peter Williams
9
9
9
9
9
9
9
9
9
8
Rakhi Parekh
3(1)
4
4(2)
N/A
N/A
N/A
4
4
4
4
1(3)
2(4)
5
N/A
N/A
N/A
N/A
5
N/A
5
5
3(5)
1(4)
4
4
N/A
N/A
N/A
4
4
1(6)
4
1(5)
2(4)
(1) Rakhi Parekh was appointed to the Board on 28 July 2014 and has
attended all Board meetings post her appointment.
(2) The Remuneration Committee Chairman has requested that the
Chairman of the Board attend the Remuneration Committee meetings.
(3) Peter Williams was appointed to the Remuneration Committee in
November 2014 and has attended all meetings post his appointment.
(4) Rakhi Parekh was invited to attend two Remuneration and Nomination
Committee meetings and one Audit Committee meeting on a guest basis.
(5) Peter Williams attended three Audit Committee meetings and one
Nomination Committee meeting on a guest basis.
(6) Ashley Martin was invited to attend one Nomination Committee meeting
on a guest basis.
5
3
2
6
3
1
0-3 years
3-6 years
6-9 years
Executive
directors
Chairman
Non-
executive
directors
30
rightmove.co.uk
Any director’s absence from Board meetings or meetings of
the Remuneration, Audit or Nomination Committees was
previously agreed with the Chairman, the Chief Executive
Officer or the Chairman of the relevant committee.
In addition to the above meetings, the Chairman conducts
meetings with the non-executive directors without the
executive directors being present when required. Jonathan
Agnew, the Senior Independent Director, chaired a meeting
of the Board 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 written policies in compliance with an
internal code of securities dealings in relation to the process
and timing for dealing in shares, which is equivalent to the
Model Code published in the Listing Rules. The Code applies
to all directors, other persons discharging managerial
responsibility and other relevant employees.
Annual General Meeting
The AGM is an opportunity for shareholders to vote on certain
aspects of the Company’s business, and to ask questions
of the directors, who will also be available for discussions
with shareholders prior to and after the meeting. The AGM
will be held on 7 May 2015 at the offices of UBS Limited at
100 Liverpool Street, London, EC2M 2RH.
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) so as to allow at least 20 working days for
consideration before the AGM.
The Company also complies with the Code with the
separation of all resolutions put to the vote of shareholders.
The Company proactively encourages shareholders to vote
at general meetings by providing electronic voting for
shareholders who hold their shares through the Crest system
and provides personalised proxy cards to ensure that all votes
are clearly identifiable. The Company presently takes votes
at general meetings on a show of hands on the grounds of
practicality due to the limited number of shareholders in
attendance. Votes are taken by a poll at any shareholder
meeting where legally required. All proxy votes are counted
and the level of proxy votes including abstentions lodged
for each resolution are reported after each resolution and
published on the Company’s website.
Shareholder relations
The Board is accountable to shareholders for the performance
and activities of the Company and welcomes the opportunities
to engage with shareholders.
Within the terms of the regulatory framework, the
Company has conducted regular dialogue with institutional
shareholders through ongoing meetings with institutional
investors and research firms to discuss strategy, operating
performance and financial performance. Contact in the UK
is principally with the Chief Executive Officer and the Finance
Director. The Chairman attends certain investor meetings in
the UK and typically participates in the USA investor meetings.
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 Board is kept informed of the views and opinions of
those with an interest in the Company through reports from
the Chief Executive Officer and the Finance Director, as well
as reports from the Company’s joint 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,
latest news including financial results, investor presentations
and Stock Exchange announcements.
Rightmove plc annual report 2014 31
Strategic reportGovernanceFinancial statements Governance | Corporate governance report continued
Audit Committee report
This report provides an overview of the work of the Committee
and details how it has discharged its duties during the year.
I will be available at the AGM to answer any questions
about the work of the Audit Committee.
Ashley Martin
Chairman of the Audit Committee
Dear shareholder
The Audit Committee (the Committee) is an essential part of
Rightmove’s governance framework to which the Board has
delegated oversight of the Group’s financial reporting, internal
controls and compliance and the quality of the external audit
process. The Committee also regularly reviews and considers
the requirement for an internal audit function within the Group.
In addition to our normal activities set out below, the
Committee has in 2014, focused on business continuity and
cyber risk including a review of the Disaster Recovery and
Business Continuity Plan for our Milton Keynes office, a
discussion of the results of a Cyber Maturity Assessment
performed by KPMG LLP (KPMG) and the approval of
updated Information and System Security Policies designed
to protect our knowledge and intellectual property. In 2015
this work will be extended to include a review of the London
office Disaster Recovery and Business Continuity Plan.
Historically, the Committee has assessed that the need for
an internal audit function would be of limited benefit, given the
simplicity of the Group structure, the simple financial model
and strong system of internal controls. However, in addition to
the assurance obtained from management and the external
auditors, the Committee has increasingly over the past few
years obtained extended assurance from work performed by
external consultants in certain specialist risk areas.
As Rightmove continues to grow and expand the breadth
of its service offering, the Committee has recommended to
the Board that for 2015, it now transitions to an outsourced
internal audit function to be known as ‘Rightmove Assurance’.
The decision to fully outsource has been made on the basis
that it will be more cost effective, provide access to a greater
depth of expertise covering a broad range of risks and will
also be scalable allowing Rightmove to increase resource as
and when required.
During November and December 2014 we conducted
a tender process for these services, and in December
confirmed the appointment of PricewaterhouseCoopers LLP
(PwC) as the service provider for Rightmove Assurance. PwC
will perform an initial two year cycle of work commencing in
January 2015, focusing on both core financial processes and
controls and specialist reviews of key risk areas.
Ashley Martin
Chairman of the Audit Committee
Composition and attendance at meetings
Committee members
Number of meetings attended
Ashley Martin (Chairman of the Committee)
Judy Vezmar
Jonathan Agnew
5 out of 5
5 out of 5
5 out of 5
The Committee is comprised entirely of independent
non-executive directors, the biographical details which
can be found on pages 24 to 25. The Board is satisfied that
Ashley Martin has recent and relevant financial skills and
experience necessary to fulfill his role as Chairman of
the Committee.
The Finance Director and the Head of Finance are
normally invited to attend the meetings as well as the external
auditor, KPMG. Other relevant people from the business
are also invited to attend certain meetings in order to
provide a deeper level of insight into certain key issues
and developments. During the year Peter Williams and
Rakhi Parekh, non-executive directors, attended three
meetings and one meeting by invitation, respectively.
The Committee regularly meets separately with the external
auditors without others being present.
The quorum for meetings of the Committee is two members.
Appointments to the Committee are for a period of up to three
years, extendable by no more than two additional three year
periods, so long as members continue to be independent.
Principal activities of the Committee during the year
The principal activities of the Committee through the year,
and the manner in which it discharged its responsibilities
were as follows:
Financial reporting
The primary role of the Committee in relation to financial
reporting is to review with both management and the external
auditor the appropriateness of the half year results statement
and the Annual Report and financial statements including,
amongst other matters:
32
rightmove.co.uk
• The quality and appropriateness of accounting policies
and practices;
• The clarity of the disclosures and compliance with relevant
financial reporting standards and governance reporting
requirements;
• Key accounting issues or matters in which significant
judgements have been applied; and
• Whether the Annual Report and accounts taken as a
whole is fair, balanced and understandable and provide
the information necessary for shareholders to assess
the Group’s performance, business model and strategy.
At the request of the Board, the Committee was asked to
consider whether the 2014 Annual Report and accounts,
taken as a whole, are fair, balanced and understandable and
capable of being understood by shareholders, and has
concluded that this is the case.
The significant areas of judgement considered by the
Committee in relation to the 2014 Annual Report and how
these were addressed were:
Revenue recognition
The timing of revenue recognition in relation to the billing of
subscription fees and additional products and services and
the accounting for any membership offers to customers with
discounted or free periods. This was a prime area of audit focus
with KPMG performing detailed analytical procedures using
computer assisted audit techniques throughout the year on
amounts billed to the two largest customer groups (Agency and
New Homes), investigating any anomalies and outliers identified
and providing detailed reporting to the Committee in this regard.
The Committee discussed any reported anomalies
highlighted by KPMG ensuring that adequate explanations
were received from management in line with their business
understanding.
In addition the Committee received regular updates from
management discussing current customer offers and their
impact on revenue recognition.
Share-based incentives and the related deferred
tax balances
It is the responsibility of the Remuneration Committee to
address, and report upon, compensation matters including
share-based incentives granted to directors and employees
of the Group. However, the Committee considers in its review
of the financial statements the measurement and accounting
treatment relating to such schemes as more fully explained
in Note 24 to the accounts due to the choice of valuation
method and judgement required in calculating inputs used
to calculate fair value under IFRS 2.
Schemes subject to external performance conditions
were valued using the Monte Carlo model by the Company’s
remuneration advisors, New Bridge Street, a trading name
of Aon plc. They also provided an external source of key
inputs used to calculate the initial fair value of new grants,
such as volatility, dividend yield and risk free rates.
Key management assumptions such as leaver provisions
and achievement of performance conditions were reviewed
and discussed by the Committee.
The assumptions used in calculating the closing
deferred tax asset were reviewed and the reasons for the
decrease discussed and the financial disclosures reviewed
by the Committee.
As these are both areas of higher audit risk the Committee
also received detailed verbal and written reporting from KPMG
on this matter.
Internal audit
The Group did not have an internal audit function during 2014.
As part of its review of risk management in late 2013, the
Committee considered the need for an internal audit function
and concluded that, given the simplicity of the Group
structure, its single country focus, the open and accountable
culture with clear authority limits, the straightforward financial
model and strong system of internal controls, that it was
not yet appropriate for the business. During the year the
Committee has gained assurance from reports from
management and the external auditors with regard to internal
control and risk management, supplemented by extended
assurance reviews by external consultants in key risk areas.
This decision has however been kept under regular review,
and given the growth in the size and breadth of the business,
as set out in the Chairman of the Committee’s letter,
Rightmove will be transitioning to a fully outsourced internal
audit model for 2015.
External audit
KPMG has been the Group’s auditors since 2000. Following
the 2012 revision of the UK Corporate Governance Code by
the Financial Reporting Council, a decision was made by
the Committee to formally tender the provision of audit and
taxation services to the Group. A comprehensive tender
and review process was concluded in March 2013. The
Committee was satisfied that the skills and depth of industry
knowledge in the team remained very strong and combined
with the fresh perspective of the new audit partner decided
that KPMG should be re-appointed as the Group’s auditor.
The external auditor is required to rotate the audit partner
responsible for the Group audit every five years. The current
lead partner has been in place for two years.
The effectiveness of the external audit process is
dependent on a number of matters. These include the quality
of processes for recruitment and training of staff within the
audit firm and the degree of rigour applied in the review
processes of the work undertaken, together with appropriate
audit risk identification at the start of the audit cycle.
Rightmove plc annual report 2014 33
Strategic reportGovernanceFinancial statements Governance | Corporate governance report continued
KPMG submitted a detailed audit plan, identifying their
assessment of key risks. For the 2014 financial year the
primary risks identified were in relation to:
• Revenue recognition due to the value billed and the variety
of differing contract terms; and
• Share-based incentives and the related deferred tax
balances due to the choice of valuation method and inherent
management judgement required in these areas.
The Committee challenged the work undertaken by the external
auditors to test management’s assumptions and estimates
around these areas. The Committee also assessed the
effectiveness of the audit process in addressing these matters
through the reporting it received from the auditors at both the
half year and year end. In addition the Committee also sought
feedback from management, without the auditors present, on
the effectiveness of the external audit process. For the 2014
financial year, management were satisfied that there had been
appropriate focus and challenge on the primary areas of audit
risk and the Committee concurred with this view.
The Committee assessed the effectiveness of KPMG’s
overall internal processes to deliver a high quality audit service
and concurred that appropriate processes were in place and
being followed.
Non-audit services
The Committee also discussed its responsibilities to safeguard
audit objectivity and independence as well as the needs of the
business and agreed that it was practical in certain limited
cases for the auditor to be assigned to other non-audit project
work due to their knowledge and expertise of the business.
The Committee agreed a policy that management be given
authority to incur non-audit fees up to 50% of the annual
agreed audit and tax fee in any financial year without the prior
approval of the Committee. In 2014 the non-audit fees were
£7,000 in relation to other advisory services and were £11,000
in relation to tax compliance and advice and are fully disclosed
in Note 6 of the financial statements.
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, evaluating and managing the
significant risks to the Group. These procedures have
been in place for the whole of the financial year ended
31 December 2014 and up to the date of the approval of
these financial statements and they are reviewed regularly.
During the year, the Committee has overseen
a comprehensive review and update of the Disaster Recovery
and Business Continuity Plan for the Milton Keynes office.
This included an unannounced disaster recovery test with
only a small number of follow up actions identified.
KPMG performed a Cyber Maturity Assessment review
comparing Rightmove with what is considered to be best
practice across a number of comparable listed businesses.
The outcome of this assessment was that the core
processes are considered good with some minor
improvements recommended.
The Committee has also approved updated Information
and System Security Policies, known collectively as
‘Protecting our Knowledge’. These have been communicated
throughout the business with ongoing initiatives in place to
maintain awareness.
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 directors, 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;
• An organisational structure with clearly defined lines of
responsibility and delegation of authority;
• Clearly defined policies for capital expenditure and
investment exist, including appropriate authorisation levels,
with larger capital projects, acquisitions and disposals
requiring Board approval;
• A comprehensive disaster recovery plan based upon
co-hosting of the rightmove.co.uk website across three
separate locations, which is regularly tested and reviewed;
• A treasury function which manages cash flow forecasts and
cash on deposit and counterparty risk and is responsible for
monitoring compliance with banking agreements, where
appropriate; and
34
rightmove.co.uk
• 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 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.
Going concern
The Board is required under the Code to consider whether or
not it is appropriate to adopt the going concern basis in
preparing the Group and the Company financial statements.
As part of its normal business practice the Group prepares
annual and longer term financial plans. In addition, a going
concern paper was prepared and presented to the Committee
in February 2015 prior to it recommending the approval of the
financial statements and notes to the accounts for the year
ended 31 December 2014 to the Board.
After making enquiries, the Board has a reasonable
expectation that the Group and the Company have adequate
cash resources and banking facilities to continue in operational
existence for the foreseeable future. During the year £103.4m
of cash was returned to shareholders. Accordingly, the Board
continues to adopt the going concern basis in preparing the
Annual Report and financial statements. Further information is
provided in Note 1 to the financial statements.
Nomination Committee report
Scott Forbes
Chairman of the Nomination Committee
Dear shareholder
In 2014 the Nomination Committee’s (the Committee’s) focus
has been on organisation and succession planning, in
response to the fact that three of our non-executive directors
were in their third term of service to the Board.
Following an externally facilitated Board strategy review
and evaluation conducted in 2012, a Board refreshment plan
was recommended by the Committee and agreed by the
Board. The plan was implemented to ensure that the non-
executive directors’ range of skills and experience were
appropriate and relevant to those required by the Group. The
plan also considered the timing of appointments to avoid gaps
in time when any necessary skills and experience were
temporarily absent. Korn/Ferry International, an executive
search firm, referenced the Board strategy review and
commenced a search for two new non-executive directors
during 2013; one with consumer digital experience and the
other with significant plc board and business to consumer
experience with a preference for candidates that would
continue to support the Group’s diversity policy.
Peter Williams and Rakhi Parekh were appointed to the
Board in February 2014 and July 2014, respectively. Their
collective skills and experience reflect the requirements
identified in the Board strategy review and agreed by the
Board. As consistent with the Board refreshment plan, the
Board size temporarily increased from eight to ten directors in
2014 to ensure a seamless transition. The Board will reduce
to eight directors after the 2015 AGM as Jonathan Agnew and
Judy Vezmar will not stand for re-election following the
completion of their third term of service to the Board.
We have also taken the opportunity to review the
composition of the Board committees with Peter Williams
being appointed to the Remuneration Committee in
November 2014, in advance of his appointment as Chairman
of the Remuneration Committee, following Jonathan Agnew’s
retirement from the Board after the 2015 AGM.
The Board has accepted the Committee’s
recommendation to make the following changes to the
composition of the Board committees immediately effective
following the 2015 AGM:
• In addition to his appointment as Chairman of the
Remuneration Committee, Peter Williams will succeed
Jonathan Agnew as Senior Independent Director;
• Peter Williams will also be appointed to both the Audit and
Nomination Committees;
• Rakhi Parekh will be appointed to the Remuneration and
Audit Committees; and
• Ashley Martin will be appointed to the Nomination Committee
and step down from the Remuneration Committee.
I will be available at the AGM to answer any questions about
the work of the Nomination Committee.
Scott Forbes
Chairman of the Nomination Committee
Rightmove plc annual report 2014 35
Strategic reportGovernanceFinancial statements Governance | Corporate governance report continued
Composition and attendance at meetings
Committee members
Number of meetings attended
Scott Forbes
(Chairman of the
Nomination Committee)
Jonathan Agnew
Judy Vezmar
Colin Kemp
4 out of 4
4 out of 4
4 out of 4
4 out of 4
Membership
The Committee is comprised entirely of non-executive
directors, the biographical details which can be found on
pages 24 to 25. As at 31 December 2014 three out of the four
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 Nomination Committee Chairman,
the Chief Executive Officer is normally invited to attend the
meeting to discuss the annual organisation and succession
plan. During the year Rakhi Parekh and Peter Williams, non-
executive directors, attended two meetings and one meeting
by invitation, respectively.
The Chairman of the Company may not chair the
Nomination Committee in connection with any discussion
about the appointment of his successor to the chairmanship
of the Company. 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 members continue to
be independent.
Principal activities of the Committee during 2014
During the year the Committee has:
• Reviewed the Board composition;
• Considered the appointment of two new non-executive
directors;
• Reviewed the Board Committees composition;
• Approved the plans for the organisation and succession of
the executive directors and senior management;
• Agreed the process for and considered the outcome of the
Board’s annual evaluation;
• Considered the diversity of the Board and agreed the policy
regarding gender composition on the Board; 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 programme to meet their individual needs.
This covers for example: the operation and activities of the
Group (including meeting with members of the senior
management team, spending a day on the road with a sales
director meeting our customers and attendance at an Agency
seminar), the role of the Board and the decision making
matters reserved to it, the responsibilities of the Board
committees; and the strategic challenges and opportunities
facing the Group.
There are procedures in place for individual Board
members to receive training and to seek the advice and
services of independent professional advisers, at the Group’s
expense, where specific expertise or training is required in
furtherance of their duties.
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.
For the year under review the Board conducted an internal
evaluation of its own performance and that of its committees
and individual directors led by the Chairman and assisted by
the Company Secretary. The results of the evaluation was
reviewed and discussed with the Board at its meeting in
December 2014.
The Board concluded that the Board evaluation demonstrates
consistent and valuable contributions from all directors.
The Board evaluation emphasised a high degree of board
effectiveness, commitment, good working relationships and a
strong succession plan as evidence by the approach to
replacement of retiring non-executive directors. No major areas
for improvement were highlighted within the 2014 review process.
The Board intends to continue to create additional opportunities
for informal discussion between Board members outside of
the formal Board meetings and has arranged an extended off-
site strategic planning meeting as part of the 2015
Board calendar.
An externally facilitated review of the performance of the Board
and its committees will again be conducted during 2015.
36
rightmove.co.uk
Governance | Directors’ report
Rightmove plc (the Company) is incorporated as a public
limited company and is registered in England with the
registered number 6426485. The Company’s registered office
is Turnberry House, 30 Caldecotte Lake Drive, Caldecotte,
Milton Keynes MK7 8LE.
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 2014.
Pages 37 to 39, comprise the Directors’ Report that 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.
Share capital
The shares in issue (including 2,505,430 shares held in
treasury in both years) at the year end comprised 99,993,317
(2013: 103,115,735) ordinary shares of £0.01, being
£999,933 (2013: £1,031,000). 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 41 to 66.
Strategic report
The Strategic Report can be found on pages 4 to 23.
This report sets out the development and performance of
the Group’s business during the financial year, the position
of the Company at the end of the year and a description of
the principal risks and uncertainties facing the Company.
Dividend
An interim dividend of 13.0p (2013: 11.0p) per ordinary
share was paid in respect of the half year period on
7 November 2014 to shareholders on the register of
members at the close of business on 10 October 2014.
The directors are recommending a final dividend for the
year of 22.0p (2013: 17.0p) per ordinary share, which
together with the interim dividend of 13.0p, makes a
total for the year of 35.0p (2013: 28.0p), amounting to
£33,991,000 (2013: £27,920,000). Subject to shareholders’
approval at the Annual General Meeting (AGM) on 7 May
2015, the final dividend will be paid on 5 June 2015 to
shareholders on the register of members at the close of
business on 8 May 2015.
Share buyback
The Company’s share buyback programme continued
during 2014. Of the 15% authority given by shareholders
at the 2014 AGM, a total of 3,122,418 (2013: 2,780,380)
ordinary shares of £0.01 each were purchased in the year to
31 December 2014, being 3.1% (2013: 2.7%) of the shares
in issue (excluding shares held in treasury) at the time the
authority was granted. The average price paid per share was
£23.66 (2013: £21.77) with a total consideration paid
(inclusive of all costs) of £74,384,000 (2013: £60,961,000).
Since the introduction of the new parent company in
January 2008, a total of 31,912,091 shares have been
purchased of which 2,505,430 have been transferred into
treasury with the remainder having been cancelled.
A resolution seeking to renew this authority will be put to
shareholders at the AGM on 7 May 2015.
Shares held in trust
As at 31 December 2014, 596,499 (2013: 740,324) ordinary
shares of £0.01 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 2014 of £5,965 (2013: £7,403) and a market
value of £13,409,000 (2013: £20,285,000). The shares held
by the EBT may be used to satisfy share-based incentives for
the Group’s employee share plans. During the year 182,125
(2013: 2,663,705) shares were transferred to Group employees
following the exercise of share-based incentives. Additionally
38,300 shares were purchased by the EBT for transfer to the
Rightmove Share Incentive Plan in January 2015.
The terms of the EBT provide that dividends payable on
the shares held by the EBT are waived.
Rightmove plc annual report 2014 37
Strategic reportGovernanceFinancial statements Governance | Directors’ report continued
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 and
Transparency Rules. The information below was correct as at
the date of notification, where indicated this was not in the
current 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 rights %(1)
Marathon Asset
Management LLP(2)
Baillie Gifford & Co(2)
Axa Investment
Managers SA(2)
Indirect
5,930,755 6.1
Indirect
Indirect
5,873,614 6.0
5,510,468 5.7
BlackRock Inc(2)
Standard Life
Investments
Kames Capital
Indirect
Financial Instrument (CFD)
Direct
Indirect
Direct
Indirect
Financial Instrument (CFD)
4,777,310
644,472
831,055
4,000,946
2,994,633
724,404
150,396
4.9
0.7
0.9
4.1
3.1
0.7
0.2
(1) The above percentages are based upon the voting rights share capital
(being the shares in issue less shares held in treasury) of 97,239,189.
(2) Date of notification was not in the 2014 financial year.
Directors
The directors of the Company as at the date of this report are
named on pages 24 to 25 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 changes to
the UK Corporate Governance Code in September 2010,
all directors who have served during the year and remain
a director as at 31 December 2014 will retire and offer
themselves for re-election at the forthcoming AGM, with
the exception of Jonathan Agnew and Judy Vezmar, who
have notified the Company of their intention not to stand for
re-election at the next AGM, due to their having completed
three consecutive terms of three years as non-executive
directors of the Company.
Rakhi Parekh will offer herself for election, this being her
first AGM following her appointment to the Board as
non-executive director on 28 July 2014.
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 agreements 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 at 31 December 2014, 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 41 to 66. At 31 December 2014
all of the executive directors were deemed to have a non-
beneficial interest in 596,499 ordinary shares of £0.01 each
held by the trustees of 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 website. Further details are disclosed in
Note 2 to the financial statements on page 79.
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 100 Liverpool Street, London, EC2M 2RH on
7 May 2015 at 10am. The Notice of Annual General Meeting
will be published in March 2015.
The resolutions being proposed at the 2015 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. A resolution will also
be proposed to renew the directors’ authority to purchase
a proportion of the Company’s own shares.
38
rightmove.co.uk
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 that they face.
Signed by the Board:
Nick McKittrick
Chief Executive Officer
27 February 2015
Robyn Perriss
Finance Director
One of the items of special business to be addressed at
this AGM relates to the requirement in the Companies
(Shareholders’ Rights) Regulations 2009, which came into
force on 3 August 2009 that all general meetings must be held
on not less than 21 clear days’ notice unless shareholders
approve a shorter notice period. At the 2014 AGM, a
resolution was passed allowing the Company to call general
meetings (other than AGMs) on not less than 14 clear days’
notice. As this authority will expire at the 2015 AGM, a
resolution will be proposed to renew this authority.
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
reappointment of KPMG LLP as auditor of the Group and for
the Audit Committee to determine their remuneration will be
proposed at the forthcoming AGM of the Company.
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 19 to 23.
Fair, balanced and understandable
The Board has concluded that the 2014 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 performance, business
model and strategy.
Rightmove plc annual report 2014 39
Strategic reportGovernanceFinancial statements
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 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 and
prudent;
• state whether they have been prepared in accordance with
IFRSs as adopted by the EU; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
parent Company will continue in business.
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 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.
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rightmove.co.uk
Governance | Directors’ remuneration report
Annual statement by the Chairman of the Remuneration Committee
Jonathan Agnew
Chairman of the Remuneration Committee
Dear Shareholder
I am pleased to present our Directors’ Remuneration Report
for Rightmove plc (the Company) together with its subsidiary
companies (the Group) for the year ended 31 December 2014.
The report is divided into two distinct sections, the
remuneration policy and the annual report on remuneration.
In accordance with the new regulations you were asked to
vote separately on these two reports at our AGM held on
7 May 2014. The remuneration policy for the next three years
received overwhelming support and therefore, as we do not
propose to make any changes to this policy, we are not
required to put the policy forward for a vote at this year’s AGM
to be held on 7 May 2015. For ease of reference, we present
the policy on pages 43 to 51.
Our remuneration framework is designed to ensure we
reward and incentivise our people to deliver our strategy with
a clear emphasis on performance-related pay to reflect the
culture of the Group. The overall policy provides below market
levels of fixed pay but with above market levels of variable
pay opportunity, subject to the achievement of challenging
performance measures linked to the Group KPIs. Variable pay
is biased toward long-term sustainable performance, through
a high level of annual bonus deferral into shares, long-term
incentive awards and share ownership guidelines. We believe
that the remuneration policy which you approved in 2014
continues to remain appropriate.
As described in the Strategic Report, our 2014 results
show strong organic revenue and profit growth. The increase
in profit achieved this year once again demonstrates the
strength of the Rightmove business model and brand and the
effectiveness of our management team.
Performance and reward
In light of the combination of strong Group and executive
directors’ performance during the year, the Remuneration
Committee considers the remuneration paid to the executive
directors to reflect fairly their performance during the year.
As a result of the financial and operational results of the
Group, including growth in underlying operating profit of 20%,
the annual bonus entitlement for executive directors was 70%
of the maximum for 2014.
With regard to the Group’s longer-term performance,
reflecting the successful implementation of its growth strategy
over the last three financial years, the 2012 Performance
Share Plan awards (measuring performance from 1 January
2012 to 31 December 2014) will vest in part as a result of
delivering normalised EPS(1) growth of over 100% and TSR
growth of 88.7% over the performance period. The EPS
performance significantly exceeded the maximum growth
target set of 50%. Whilst the Company achieved a growth in
TSR of 15% above the FTSE 250 Index, this was below the
maximum outperformance required of 25% and thus resulted
in 69% of this part of the award vesting. Overall vesting of
92.35% of the 2012 award is considered by the Committee
to be a result that fairly reflects the performance achieved
over the three year period.
(1) Diluted underlying EPS but with a standard UK tax rate applied.
Rightmove plc annual report 2014 41
Strategic reportGovernanceFinancial statements Governance | Directors’ remuneration report continued
Annual statement by the Chairman of the Remuneration Committee continued
Remuneration policy for 2015
The Committee continues to believe that the current
remuneration policy of providing below market fixed pay
(base salary, pension and minimal benefits) and above market
variable pay opportunity (short and long-term incentives) for
delivery of challenging performance targets remains
appropriate for a growth orientated Group.
In summary, the key elements to the remuneration policy
are as follows:
• We remain committed to a pay model of below comparative
median benchmarks on fixed pay and an above median
incentive opportunity.
• Executive directors are to receive inflationary adjustments
to base salary levels in line with all employees. Up to 6% of
base salary is contributed to the executive director Group
pension scheme.
• The annual bonus opportunity provides that 60% of any
Further details in relation to the remuneration policy, which is
expected to operate for at least another two years are set out
on pages 43 to 51. We are committed to maintaining an open
and transparent dialogue with shareholders. We have valued
the engagement with, and support of shareholders and we
remain focused on disclosing clearly how much our executive
directors earn and how this is linked closely to performance.
As explained in the Nomination Committee report, I will be
stepping down from my position of Remuneration Committee
Chairman after this year’s AGM and will be succeeded by
Peter Williams. I have much enjoyed my time on the Board of
Rightmove, including my role as Chairman of the Committee.
bonus earned is deferred into the Company’s shares for a
period of two years.
Jonathan Agnew
Chairman of the Remuneration Committee
• Annual award levels under the Company’s Performance
Share Plan are granted at 200% of salary with challenging
underlying earnings per share growth targets.
• Clawback will continue to operate in relation to both
deferred annual bonus awards and Performance Share Plan
awards. The mechanism through which the clawback can
be implemented 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 existing share ownership guidelines will be 200% of
base salary for the Chief Executive Officer and 100% of
base salary for other executive directors.
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rightmove.co.uk
• Executive directors should have below market levels of base
salary, minimal benefits (and only benefits which are made
available on the same basis to all Rightmove employees),
but with above market levels of variable pay potential. This
arrangement is designed to best align the interests of the
executive directors with the interests of shareholders and
to reflect the performance-driven culture of the Group. The
Company will generally review market levels of remuneration
for executive directors with the assistance of external,
independent remuneration consultants and with
shareholder consultation every three years.
• Having reviewed executive director remuneration against
the market every three years, further changes to
remuneration should be made infrequently and those
changes made each year should, in most instances, be
directly linked to the policies applied to all employees
(specifically with regard to cost of living rises in base salary
and changes in benefits).
• Executive directors should be principally rewarded for the
overall success of the business for which they have
collective responsibility. The Group has key short-term and
medium/long-term goals and executive directors should be
incentivised against these goals.
• Executive directors should not be able to gain significantly
from short-term successes which subsequently prove not
to be consistent with growing the overall value of the
business. Hence a majority of any bonus payable in relation
to short-term strategic goals 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.
The table overleaf provides an overview of the Committee’s
remuneration policy, which has been designed to reflect the
principles described above:
Remuneration Policy Report (unaudited)
Introduction
This report sets out the Company’s policy on directors’
remuneration for the forthcoming year, and, so far as
practicable, for subsequent years, as well as information
on remuneration paid to directors for the financial year ended
31 December 2014. This 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 2012 UK Corporate Governance Code (the Code).
In accordance with the Act this report has been divided
into two sections: a Policy Report and an Annual Report
on Remuneration. The Policy Report was put to a binding
shareholder vote at the 2014 AGM and received more than
98% votes in favour with an ‘Effective Date’ of 7 May 2014 for
the purposes of complying with the Act. In practice, however,
the Remuneration Committee (herein referred to as the
Committee throughout this report) applied the policy detailed
below from the start of 2014 and expects to apply it
throughout the three year policy period that commenced from
the Effective Date. For ease of reference, the Policy Report
has been represented, albeit with some changes to
references and with the removal of the performance scenario
charts. A copy of the original report can be found on the
Company website at plc.rightmove.co.uk. The Annual Report
on Remuneration will be subject to an advisory vote at the
2015 AGM. The parts of the report which have been audited
have been highlighted as required by the Act.
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 has been developed
after taking into account Rightmove’s pay philosophy that
our executives should be rewarded with demonstrably lower
than market base salaries and benefits and higher than
market equity rewards contingent upon the achievement of
challenging performance targets in accordance with the ‘best
practice’ principles set out in the Code and the views of our
major shareholders.
The key principles of the Committee’s policy are as follows:
• Remuneration arrangements should be simple to explain,
understand and administer.
• Remuneration arrangements should be designed to provide
executive directors with the opportunity to receive a share in
the future growth and development of the Group which is
regarded as fair by both other employees and shareholders.
This approach should allow the Company to attract and
retain the dynamic, self-motivated individuals who are
critical to the success of the business.
Rightmove plc annual report 2014 43
Strategic reportGovernanceFinancial statements Governance | Directors’ remuneration report continued
Remuneration policy
Element of
remuneration
Purpose and link
to strategy
Operation
Maximum
opportunity
Performance
criteria
The Committee considers both
individual and Group performance
in a broad context when
determining base salary increases.
The current salaries are set out
on page 53.
These salary levels will be eligible
for increases during the period
that the remuneration policy
operates from the Effective Date.
During this time, salaries may
be increased each year (in
percentage of salary terms) in line
with those of the wider workforce
(after taking into account the
annual salary budget and
performance-related increases
within the overall salary budget).
Increases beyond those linked
to the workforce (in percentage of
salary terms) may be awarded in
certain circumstances such as
where there is a change in
responsibility, experience or a
significant increase in the scale of
the role and/or size, value and/or
complexity of the Group.
The value of benefits may vary
from year to year depending on
the cost to the Company from
third party providers.
Not applicable
Company contributions of up to
6% of base salary subject to the
employee contributing a minimum
of 3% of base salary.
Not applicable
Salary
To provide a base
salary which will
attract and retain high
calibre executives to
execute the Group’s
business strategy.
Benefits
To provide simple,
cost-effective,
employee benefits
which are the same
as those offered to
the wider workforce.
Pension
To provide a
basic, cost-effective,
long-term retirement
benefit.
Base salaries are normally
reviewed annually, with changes
effective from 1 January.
When considering the executive’s
eligibility for a salary increase,
the Committee considers the
following points:
• size and responsibilities of
the role;
• individual and Group
performance;
• increases awarded to the
wider workforce; and
• broader economic and
inflationary conditions.
Executive directors are
benchmarked against external
market data periodically (generally
every three years). Relevant
market comparators are selected
for comparison, which include
other companies of a similar size
and complexity. The Committee
considers benchmark data,
alongside a broad review of the
individual’s skills and experience,
performance and internal relativities.
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, Nick McKittrick
and Robyn Perriss are members
of the Group’s medical cash plan.
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.
The Company does not
contribute to any personal pension
arrangements.
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 entire
saving to the executive’s pension.
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rightmove.co.uk
Maximum
opportunity
Maximum (% salary):
125% of base salary.
Element of
remuneration
Purpose and link
to strategy
Operation
Annual bonus
including
Deferred
Share Bonus
Plan (DSP)
To incentivise and
recognise execution
of the business
strategy on an annual
basis.
Rewards the
achievement of
annual financial and
operational goals.
The annual bonus comprises a
cash award (40% of any bonus
earned) and a DSP award (60%
of any bonus earned).
Deferred shares will vest after
two years and be potentially
forfeitable during that period.
Payments under the annual
bonus plan may be subject to
clawback in the event of a material
misstatement of the Group’s
financial results or misconduct.
Maximum (% salary):
200% of base salary.
Performance
Share
Plan (PSP)
To incentivise and
reward executives for
the achievement of
superior returns to
shareholders over a
three year period,
and to retain key
individuals and align
interests with
shareholders.
Following shareholder approval
at the 2011 AGM, the PSP was
established. The PSP permits
annual awards of nil cost options,
contingent shares and forfeitable
shares which vest after three
years subject to continued service
and the achievement of
challenging performance
conditions.
A dividend equivalent provision
operates enabling dividends to be
paid (in cash or shares) on shares
at the time of vesting.
PSP awards may be subject to
clawback in the event of a
material misstatement of the
Group’s financial results or
misconduct.
Performance
criteria
The bonus is determined based
on performance against a range of
key performance indicators.
The primary bonus metric will
be profit-based (e.g. underlying
operating profit before tax) 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 53 to 54.
25% of the awards vest for
hitting the threshold performance
target. Bonus is earned on a
graduated basis from threshold to
maximum performance levels.
Awards vest based on three year
performance against challenging
financial targets for EPS and
relative TSR performance.
Financial targets will determine
vesting in relation to at least half
of an award.
25% of the awards vest for
hitting the threshold performance
target.
The performance period for
financial targets and relative TSR
targets is three financial years,
starting with the year in which the
award is granted.
Rightmove plc annual report 2014 45
Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
Element of
remuneration
Purpose and link
to strategy
Operation
Maximum
opportunity
Performance
criteria
None
Participation in the Sharesave
Plan is based on HMRC rules
which limit monthly savings
towards share purchases under
three year savings contracts to
£500 per calendar month.
All-employee
Sharesave
Plan
Provides all
employees with
the opportunity to
become owners in
the Company on
similar terms.
Share
ownership
guidelines
To provide alignment
between the
executives
and shareholders.
Non-
executive
directors
To provide a
competitive fee
which will attract and
retain high calibre
individuals and
reflects their relevant
skills and experience.
Executive directors are entitled
to participate in the Group’s
Sharesave Plan on the same
terms as all other employees.
Periodic invitations are made
to participate in the Sharesave
Plan.
Participants commit to a
savings contract over a three year
period through which a grant of
share options is made (by
reference to projected savings
over a three year savings
contract) with an exercise price
set at up to a 20% discount to
the share price at the date of
grant. On the maturity of the
savings contracts, participants
can elect to:
(i) use the accumulated savings
to exercise the option; or
(ii) request the return of their
savings.
Executive directors are required to
retain at least half of any share
awards vesting or exercised (after
selling sufficient shares to meet
the exercise price and to pay any
tax liabilities due) until they have
met the shareholding guideline.
The Committee will regularly
monitor progress towards the
guideline.
The fees for non-executive
directors (including the Company
Chairman) are reviewed
periodically (generally every three
to four years).
The Remuneration Committee
will consider the Chairman’s fee,
whilst the non-executive directors’
fee is considered by the wider
Board excluding the non-
executives.
Fee levels for each role are
determined after considering the
responsibility of the role, the skills
and knowledge required and the
expected time commitments.
Periodic benchmarking against
relevant market comparators,
reflecting the size and complexity
of the role, is used to provide
context when setting fee levels.
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rightmove.co.uk
Shareholding guideline:
• CEO – 200% of base salary;
• COO & FD – 100% of
base salary.
Not applicable
Fees for the Chairman and non-
executive directors’ are set out
on page 55.
The Chairman and non-executive
None
directors’ fee increases in future
years are expected to increase (in
percentage terms) in line with the
basic level of pay rise received by
employees within the business.
Fee increases beyond the level
detailed above may take place if
fee levels are considered to have
become out of line with the
responsibilities and time
commitments of individual roles.
Flexibility is retained to go above
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.
Discretions maintained by the Committee in
operating its incentive plans
The Committee will operate the annual bonus plan, PSP
and Sharesave Plan 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 the 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.
All previous share options, PSP, DSP and Sharesave
awards that were granted but remain outstanding at
31 December 2014 (detailed on pages 61 to 64), remain
eligible to vest based on their original award terms.
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 before
tax(1) 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(1) before
tax 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 market share target and
other revenue, 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, as a media group,
brings to our customers. Therefore a challenging target to
increase this audience is considered appropriate by the
Committee. The other revenue target will measure growth
in revenue from businesses other than Agency and New
Homes. Since some of these will be at an early stage, 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 EPS
and relative TSR performance conditions. EPS is considered
the most appropriate financial metric for this particular
business 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 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 pay out 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 FTSE250 Index (the Index within which the Company
currently resides) 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.
Rightmove plc annual report 2014 47
Strategic reportGovernanceFinancial statements Governance | Directors’ remuneration report continued
Shareholders’ views
The Committee considers it vitally important to maintain
open and transparent communication with the Company’s
shareholders. The Committee will consult with major
shareholders before any material change in remuneration
policy is approved. The views of shareholders received at
the AGM, during meetings with investors and through other
contact during the year, are considered by the Committee
and contribute to the development of the overall
remuneration policy.
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 overleaf:
The targets for awards to be granted under the PSP in 2015
are consistent with the policy set out above and are
set out in the Annual Report on Remuneration.
Performance targets do not apply to Sharesave 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.
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 increase
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, other than the all-employee
Sharesave Plan, 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.
(1) Before share-based payments and NI on share-based incentives.
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Element of remuneration
Policy
Base salary
Benefits
Pension
Annual bonus
Long-term incentives
Buy-out awards
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 individual’s continued performance and
development in the role.
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.
A defined contribution at the level provided to current executive directors.
An annual bonus would operate in the same manner as outlined for the current executives (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.
The bonus maximum 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 executives 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.
A new appointment will be eligible to receive an award under the PSP policy outlined in the policy table.
Share awards may be granted shortly after an appointment (subject to the Company not being in a close
period) and would be measured against the same performance criteria as the current executives.
The ongoing award maximum 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 under the same terms as all
other employees.
the form of remuneration (cash or shares);
timing of expected payment/vesting; and
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:
•
•
• 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.
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Strategic reportGovernanceFinancial statements Governance | Directors’ remuneration report continued
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 or senior executives 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.
For Nick McKittrick a payment in lieu of notice will be
related to base salary, benefits and projected annual bonus
pursuant to the Group’s targets being achieved for the year
(pro-rated for any unexpired period of notice where
appropriate). The Committee is aware that the provision of
annual bonus with a payment in lieu of notice is no longer
considered in line with best practice. The provision within
Nick McKittrick’s contract is considered a legacy issue which
would not be repeated in any future director’s service contract.
For Peter Brooks-Johnson and Robyn Perriss a payment
in lieu of notice will be restricted to base salary and benefits.
The treatment for share-based incentives previously
granted to an executive director will be determined based
on the relevant plan rules. The default treatment will be for
outstanding awards to lapse on cessation of employment.
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.
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.
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
For awards granted under the PSP (approved by
Appointment are summarised overleaf:
shareholders in 2011) ‘good leaver’ status may be
determined, in certain prescribed circumstances, such as
death, ill health, disability, redundancy, transfer or sale of the
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Date of appointment
Letter of Appointment(1)
(months)
at 27 February 2015
Date of contract/
Notice
Length of service
Executive directors
Nick McKittrick (Chief Executive Officer)(2)
5 March 2004
7 February 2006
Peter Brooks-Johnson(3)
Robyn Perriss(4)
Non-executive directors
Scott Forbes (Chairman)
10 January 2011
22 February 2011
30 April 2013
1 May 2013
13 July 2005
21 February 2006
Jonathan Agnew (Senior Independent Director)
16 January 2006
12 December 2005
Colin Kemp
Ashley Martin
Judy Vezmar
Peter Williams
Rahki Parekh
3 July 2007
4 December 2007
11 June 2009
9 June 2009
16 January 2006
12 December 2005
3 February 2014
3 February 2014
28 July 2014
28 July 2014
12
12
12
10 years 11 months
4 years 1 month
1 year 10 months
3
3
3
3
3
3
3
9 years 7 months
9 years 2 months
7 years 7 months
5 years 8 months
9 years 2 months
1 year 1 month
7 months
(1) The service contracts and the Letters of Appointment for all directors appointed prior to 28 January 2008, were transferred from Rightmove Group
Limited to Rightmove plc with effect from this date on completion of a Scheme of Arrangement under the Companies Act 1985.
(2) Nick McKittrick joined the Group in December 2000 and was appointed to the Board on 5 March 2004. His service with the Group at the date of
this report is 14 years and 2 months.
(3) 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 9 years and 1 month.
(4) 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 7 years and 8 months.
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.
Rightmove plc annual report 2014 51
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Governance | Directors’ remuneration report continued
Annual Report on Remuneration
Role and membership
Terms of reference
The primary role of the Committee is to make
recommendations to the Board as to the Company’s
broad policy and framework for the remuneration of the
executive directors, the Chairman of the Board and the
Company Secretary. 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 2014 and continue to be
members. During 2014 the Committee met four times and
attendance at the meetings is shown below:
Committee Members
Jonathan Agnew
Ashley Martin
Judy Vezmar
Colin Kemp
Peter Williams(1)
Number of meetings attended
4 out of 4
4 out of 4
4 out of 4
4 out of 4
1 out of 1
(1) Peter Williams was invited to join the Committee in November 2014 and has
attended all subsequent Committee meetings.
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 four 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 their
recommendations regarding the remuneration of executive
colleagues and the first layer of management below Board
level. No executive director is involved in deciding their own
remuneration.
During the year Rakhi Parekh, non-executive director,
attended two meetings by invitation.
External advisers
New Bridge Street (NBS), a trading name 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 £18,142.
During 2014 NBS 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 four times during the year to consider
and, where appropriate, approve key remuneration items
including the following:
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rightmove.co.uk
Pay and incentive plan reviews
• Annual review and approval of executive directors’ base
salaries and benefits;
• Reviewed year end business performance against relevant
performance targets to determine annual bonus payouts
and vesting of long-term incentives;
• Reviewed and approved overall remuneration policy for
executive directors for 2015, including appropriate
benchmarks and performance measures for the annual
performance-related bonus and 2015 PSP awards to
ensure measures are aligned with strategy and that targets
are appropriately stretching;
• Ongoing monitoring of senior management remuneration
structures;
• Approval of share awards granted under the Deferred Share
Bonus Plan (DSP) and the Rightmove Performance Share
Plan (PSP);
• Approval of the Chairman’s fee; and
• Approval of the Rightmove Share Incentive Plan (SIP).
Governance
• Reviewed and approved the Directors’ Remuneration Report;
• Reviewed the 2014 AGM voting and feedback from
institutional investors;
• Evaluated the Committee’s performance during the year;
and
• Reviewed the Committee’s terms of reference.
Application of policy for year ending
31 December 2015
Salaries
The executive directors’ salaries for the 2015 financial year
are set out in the table below:
Salary
1 January 2015
Salary
31 December 2014
Change
Executive directors
Nick McKittrick
£408,000
£400,000
Peter Brooks-Johnson
£341,700
£335,000
Robyn Perriss
£270,300
£265,000
2%
2%
2%
The 2% increase in executive directors’ salaries is in line with
the average workforce increase for 2015 across the Group.
Pension and other benefits
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. Nick McKittrick has chosen not to participate
in this arrangement. 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 2015 financial year will be
consistent with the policy detailed on page 45 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 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 measures have been
selected to reflect a range of financial and strategic targets
that 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 before tax(1)
Strategic targets
Market share
Other revenue(2)
70%
15%
15%
(1) Operating profit before share-based payments and NI on
share-based incentives.
(2) Revenue excluding Agency and New Homes.
Rightmove plc annual report 2014 53
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Governance | Directors’ remuneration report continued
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 2015
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 on-target performance.
The weighting of the performance measures to be used
for the 2015 annual bonus have been adjusted to 15% based
on market share (2014: 20%) and 15% on other revenue
(2014: 10% on innovation revenue). This rebalancing is felt to
reflect the increased emphasis on the delivery of additional
revenue streams.
The targets themselves, as they relate to the 2015 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 the time.
Long-term incentives
To ensure that the Company’s total remuneration is
competitive overall, following a wide reaching shareholder
pre-consultation exercise, subject to achieving demanding
performance targets, the award levels under the PSP were
increased to 200% of base salary for all executive directors
from 2014.
Consistent with current market practice and previous
years, awards to the executive directors under the PSP in
2015 will be subject to a mixture of EPS (75% of awards)
and relative TSR (25% of the awards) performance
conditions. The 2015 targets are as follows:
EPS condition
The Group’s EPS growth will be measured over the period of
three financial years (2015 to 2017). 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 Company, the
following range of targets will apply to the 2015 awards:
Underlying basic EPS growth
from 2015 to 2017(1)
% of award vesting
(maximum 75%)
Less than 30%
30%
60%
0%
18.75%
75%
Between 30% and 60%
Straight-line vesting
(1) The benchmark underlying basic EPS for the financial year 2014 from which
these targets will be measured is 100.3p.
As in prior years, the targets that are intended to operate
for the 2015 PSP awards were set to be appropriately
demanding in light of the Group’s internal planning, external
market expectations for future growth and the record high
base point from which growth would be measured. In the
current trading environment, particularly in the housing sector,
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 revised range of targets
are appropriately demanding, and no less challenging to the
range of targets set for 2014 awards given the current
housing market context.
Relative TSR condition
The vesting schedule for the relative TSR element of executive
directors’ 2015 PSP awards is set out below. It is consistent
with the TSR condition used for previous grants under the
share-based incentive schemes. Performance is measured
over three financial years.
TSR performance of the Company
relative to the FTSE250 Index(1)
% of award vesting
(maximum 25%)
Less than the Index
Equal to the Index
25% higher than the Index
0%
6.25%
25%
Intermediate performance
Straight-line vesting
(1) If the FTSE250 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.
54
rightmove.co.uk
Chairman and non-executive directors’ fees
In 2009, the Board decided to increase fees for the non-
executive directors in future years annually, directly in line with
the basic level of pay rise received by employees within the
business until such time as it is considered appropriate to
conduct a wider review of non-executive remuneration.
Accordingly the Board approved an increase of 2% to the
annual fees payable to the non-executive directors. The
Committee approved a 2% increase in the annual fees
payable to the Chairman.
The Chairman’s fee has been set at £117,042
(2014: £114,747). The basic non-executive fee has been
set at £46,817 (2014: £45,899) with an additional £5,852
(2014: £5,737) fee per annum paid for the chairing of the
Audit and Remuneration Committees and a further £5,852
(2014: £5,737) fee paid to the Senior Independent Director.
Jonathan Agnew and Judy Vezmar will continue to receive
fees until their retirement from the Board in May 2015.
Statement of shareholder voting at AGM
At the AGM on 7 May 2014, 99.83% of shareholders voted in
favour of the Directors’ Remuneration Report and 98.55%
voted in favour of the 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 Remuneration Report
and Remuneration Policy:
Votes
for
% Votes
Votes
for
against
% Votes
against
Votes
withheld(1)
73,555,594
99.83
127,287
0.17
184,293
72,611,825
98.55
1,071,102 1.45
184,247
Remuneration
Report
Remuneration
Policy
(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, 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 2014, the Company’s share price ended the year at £22.48
down 18% year on year (the FTSE250 Index was up 1%).
On a three year basis the share price has increased by 80%
and has continued to outperform the FTSE250 Index over
that period as shown in the graphs on page 56.
Total shareholder return (TSR)
The first graph on the next page compares the TSR of
Rightmove’s shares against the FTSE250 Index for the
period from 1 January 2012 to 31 December 2014. 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 £100 invested in Rightmove’s shares and in the
FTSE250 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. The FTSE250 Index was chosen as the
comparator because Rightmove is a current constituent of
this index. It was used as a comparator in the performance
condition applying to PSP awards in previous years and it
will also be used as the criteria applied to 25% of the PSP
awards to be granted in March 2015.
The graphs on the next page illustrate, for statutory
purposes, the TSR of Rightmove’s shares against
the FTSE250 Index for the three and six years to
31 December 2014.
Rightmove plc annual report 2014 55
Strategic reportGovernanceFinancial statements Governance | Directors’ remuneration report continued
TSR graph – 3 years
TSR graph – 6 years
i
e
v
o
m
t
h
g
R
o
t
d
e
s
a
b
e
R
£
250
200
150
100
50
0
88%
73%
1
1
c
e
D
2
1
r
p
A
2
1
l
u
J
2
1
t
c
O
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D
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p
A
4
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J
4
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t
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4
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e
D
i
e
v
o
m
t
h
g
R
o
t
d
e
s
a
b
e
R
£
600
550
500
450
400
350
300
250
200
150
100
50
0
377%
98%
9
0
c
e
D
0
1
r
p
A
0
1
l
u
J
0
1
p
e
S
0
1
c
e
D
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1
r
p
A
1
1
l
u
J
1
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e
S
1
1
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e
D
2
1
r
p
A
2
1
l
u
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2
1
p
e
S
2
1
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e
D
3
1
r
p
A
3
1
l
u
J
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1
p
e
S
3
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e
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4
1
r
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A
4
1
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J
4
1
p
e
S
4
1
c
e
D
Rightmove
FTSE250
Source: Thomson Reuters
Rightmove
FTSE250
Source: Thomson Reuters
This graph shows the value, by 31 December 2014, of £100 invested in Rightmove on
31 December 2011, compared with the value of £100 invested in the FTSE250 Index,
on a daily basis.
This graph shows the value, by 31 December 2014, of £100 invested in Rightmove on
31 December 2009, compared with the value of £100 invested in the FTSE250 Index,
on a daily basis.
Total remuneration for the Chief Executive Officer
The table below shows the total remuneration figure for the Chief Executive Officer over a six year performance period.
The total remuneration figure includes the annual bonus and long-term incentive awards which vested based on performance
in those years:
Year
2014
2013
2012
2011
2010
2009
Executive
Nick McKittrick
Nick McKittrick
Ed Williams(1)
Ed Williams
Ed Williams
Ed Williams
Ed Williams
Total single figure
bonus outturn
incentive outturn
£
(% of maximum)
(% of maximum)
Annual
Long-term
1,599,610
2,199,335
1,531,515
2,219,882
4,934,942
652,800
627,641
70%
85%
n/a
90%
100%
100%
100%
92.35%
100%
100%
100%
100%
–(2)
–(2)
(1) Ed Williams was Chief Executive Officer until his retirement on 30 April 2013. Nick McKittrick was appointed Chief Executive Officer at this time.
(2) 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 £2,026,674 and £4,151,532 of
awards with no performance conditions, which vested in 2009 and 2010 respectively.
56
rightmove.co.uk
Directors’ remuneration (audited)
The remuneration of the directors of the Company during the year for time served as a director is as follows:
Fixed pay
Performance-related pay
Salary/Fee
Benefits(1)
Pension
£
£
£
Fixed pay
subtotal
£
Annual
bonus(2)
£
Long-term
incentives
(PSPs)(3)
£
Performance
Total
related pay remuneration
in 2014
subtotal
£
£
Executive directors
Nick McKittrick
400,000
2,055
–
402,055
350,000
847,555 1,197,555 1,599,610
Peter Brooks-Johnson
335,000
1,734
25,383
362,117
293,125
559,279
852,404 1,214,521
Robyn Perriss
265,000
1,715
20,309
287,024
231,875
109,678(6)
341,553
628,577
Non-executive directors
Scott Forbes
Jonathan Agnew
Colin Kemp
Ashley Martin
Judy Vezmar
Peter Williams
Rakhi Parekh
114,747
57,373
45,899
51,636
45,899
42,074(4)
19,831(5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
114,747
57,373
45,899
51,636
45,899
42,074
19,831
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
114,747
57,373
45,899
51,636
45,899
42,074
19,831
(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 2014 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 2015 (including dividend roll up), which are
dependent on the three year performance period ended 31 December 2014 and multiplying by the year end closing share price of £22.48.
(4) Fee pro-rated from appointment on 3 February 2014.
(5) Fee pro-rated from appointment on 28 July 2014.
(6) These relate to nil cost PSPs granted to Robyn Perriss prior to her appointment as director.
Rightmove plc annual report 2014 57
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Governance | Directors’ remuneration report continued
The remuneration of the directors of the Company during 2013 for time served as a director was:
Fixed pay
Performance-related pay
Salary/Fee
Benefits(1)
Pension
£
£
£
Fixed pay
subtotal
£
Annual
bonus(4)
£
Long-term Performance-
Total
incentives
related pay remuneration
(PSPs)(5)
subtotal
in 2013
£
£
£
385,632
289,224
160,000(2)
1,690
1,685
1,112
–
387,322
409,734 1,402,279 1,812,013 2,199,335
3,000
293,909
307,300
674,180
981,480 1,275,389
2,000
163,112
170,000
169,904(6)
339,904
503,015
Executive directors
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Former executive director
Ed Williams
128,544(3)
692
–
129,236
– 1,402,279 1,402,279 1,531,515
Non-executive directors
Scott Forbes
Jonathan Agnew
Colin Kemp
Ashley Martin
Judy Vezmar
111,405
55,702
44,562
50,132
44,562
–
–
–
–
–
–
–
–
–
–
111,405
55,702
44,562
50,132
44,562
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
111,405
55,702
44,562
50,132
44,562
(1) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.
(2) Robyn Perriss received a salary of £160,000 for her eight month period as an executive director from 1 May 2013 to 31 December 2013.
(3) Ed Williams received a salary of £128,544 for the four month period from 1 January 2013 to 30 April 2013, until his resignation as a director.
(4) The annual bonus amounts relate to the cash amount paid in respect of the full year results for the year ended 31 December 2013 and the nil cost deferred shares
granted in March 2014, which have been valued using the share price at grant date of £26.65.
(5) The value of the nil cost PSPs vesting is calculated by taking the number of nil cost options which vested in March 2014 (including dividend roll up), which were
dependent on the three year performance period ended 31 December 2013 and multiplying by the December 2013 closing share price of £27.40.
(6) These relate to nil cost PSPs granted to Robyn Perriss prior to her appointment as director, which vested in March 2014 (including dividend roll up), which were
dependent on the three year performance period ended 31 December 2013. The figures disclosed in the 2013 report were based on the share price at the year-end
as an estimate for potential value prior to vesting.
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. Nick McKittrick chose to not participate in this
arrangement. Peter Brooks-Johnson and Robyn Perriss are members of the stakeholder pension plan and during 2014 the
Company contributed £25,383 and £20,309 per annum respectively. The Company does not contribute to any personal
pension arrangements.
58
rightmove.co.uk
How was pay linked to performance in 2014?
Annual bonus plan
The incentive for the financial year ended 31 December 2014 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 (70%) and key performance indicators (30%) relating to underlying drivers of long-
term revenue growth.
When comparing performance against the 2014 bonus targets set, the Committee determined that 70% of the maximum
achievable cash and DSP bonus should be paid to the executive directors. Accordingly, a cash bonus of 35% of base salary
will be paid to the executives and 52.50% of base salary will be granted to the executives under the DSP, which will be
deferred until March 2017. More details are provided in the table below:
Measure
Hurdle
As a % of
maximum
bonus opportunity
Actual performance
achieved
Resulting
bonus
% achieved
Financial targets
Underlying operating
profit before tax(1)
Strategic targets
Page impressions
Innovation revenue(2)
Total
Actual targets:
£115m: 25% payout
£123m: 100% payout
70%
Underlying operating profit achieved: £124.6m
The 2014 profit represented a 19.8% growth
on 2013
70%
Increase in page impressions on 2013:
15% growth: 25% payout
25% growth: 100% payout
A target range of revenue generation
from non-core activities
20%
Increase in page impressions achieved: 10%
0%
10%
Threshold hurdle not met.
100%
0%
70%
(1) Operating profit before share-based payments and NI on share-based incentives.
(2) The innovation revenue targets provided for 25% of this part of the bonus to become payable for achieving the threshold performance level through to 100% at
the maximum performance level. The targets largely related to revenue from commercial, removals and other third party advertising services. The specific targets
set for this part of the bonus were considered by the Board to be commercially sensitive given that an understanding of both the nature and scale of our new
business initiatives could be to the advantage of our competitor companies. As a result these targets have not been disclosed and targets for new business
activities for 2015 or subsequent years are not expected to be disclosed.
Long-term incentives
The PSP awards granted in March 2012 were subject to EPS (75% of the awards) and relative TSR (25% of the awards)
performance conditions which related to the three year period ended 31 December 2014.
The vesting schedule for the relative TSR element of executive directors’ 2012 PSP awards is set out below:
Relative TSR condition
Less than the Index
Equal to the Index
25% higher than the Index
% of award vesting
(maximum 25%)
0%
6.25%
25%
Intermediate performance
Straight-line vesting
At the end of the performance period, Rightmove’s TSR was 88.7% compared to 73.9% for the FTSE250 Index. As this level
of outperformance is between the performance targets (i.e. outperformed Index by 14.8%) 17.35% of awards (out of the
maximum 25%) will vest from 2 March 2015.
Rightmove’s EPS growth is measured over a period of three financial years (2012 to 2014). The EPS figure used is
equivalent to Rightmove’s reported diluted underlying EPS but with a standard UK tax rate applied (Normalised EPS) and the
vesting schedule is set out overleaf:
Rightmove plc annual report 2014 59
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Governance | Directors’ remuneration report continued
Normalised EPS growth
from 2012 to 2014
Less than 30%
30%
50%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 30% and 50%
Straight-line vesting
At the end of the performance period, Normalised EPS was 92.6p which from a Normalised EPS base of 47.5p results
in growth of 95% and exceeded the maximum 50% EPS growth target and will result in full vesting of this part of the award
(maximum of 75%) from 2 March 2015.
Share awards granted during the year
On 3 March 2014 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded shares under the PSP, which vest
in March 2017, and are subject to a mixture of EPS (75% of the awards) and relative TSR (25% of the awards) performance with
the greater weighting on EPS to reflect its particular relevance to the performance of the business.
Executive
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Basis of grant
Number of shares
Face value of award(1)
200% of base salary
200% of base salary
200% of base salary
30,018
25,140
19,887
£799,980
£669,981
£529,989
(1) Based on the average mid market share price for the three consecutive days prior to grant, taken from the Daily Official List, of £26.65.
The vesting schedule for the relative TSR element of
executive directors’ 2014 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.
Rightmove’s EPS growth will be measured over a period of
three financial years (2014-2016). 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
% of award vesting
(maximum 25%)
directors’ awards granted in 2014:
Relative TSR condition
Less than the Index
Equal to the Index
25% higher than the Index
0%
6.25%
25%
Intermediate performance
Straight-line vesting
60
rightmove.co.uk
Underlying basic EPS growth
from 2014 to 2016
Less than 40%
Equal to 40%
Between 40% and 70%
% of award vesting
(maximum 75%)
0%
18.75%
Between 18.75% and 75%
on a straight-line basis
Equal to or greater than 70%
75%
The benchmark underlying basic EPS for the financial year
2013 from which these targets will be measured is 81.04p.
Share-based incentives held by the directors and not exercised as at 31 December 2014
Executive directors
Nick McKittrick
Share-based
incentives held
1 January
2014
Date
granted
Granted
in year
Exercise
price
Exercised
in year
Average
share
price at
date of
exercise
Share-based
incentives held at
31 December
2014
Vesting
date
Expiry
date
5/3/2009
(Unapproved)
5/3/2010
(Unapproved)
4/5/2011
(PSP)
2/3/2012
(DSP)
2/3/2012
(PSP)
1/10/2012
(Sharesave)
8/3/2013
(DSP)
8/3/2013
(PSP)
3/3/2014
(DSP)
3/3/2014
(PSP)
1/10/2014
(Sharesave)
279,755
114,165
49,289
–
–
–
£2.24
£6.66
£0.00
–
–
–
–
–
–
279,755(1)
5/3/2012
4/3/2019
114,165(2)
5/3/2013
4/3/2020
49,289(3)
4/3/2014
3/3/2016
20,183
–
£0.00
(20,183)(4)
£23.21
–
2/3/2014
1/3/2015
39,303
–
£0.00
694
–
£12.95
15,184
32,279
–
–
£0.00
£0.00
–
9,224(9)
£0.00
–
30,018(10) £0.00
–
456(11) £19.72
–
–
–
–
–
–
–
–
–
–
–
–
–
–
39,303(5)
2/3/2015
1/3/2017
694(6) 1/11/2015 30/4/2016
15,184(7)
8/3/2015
7/3/2016
32,279(8)
8/3/2016
7/3/2018
9,224
3/3/2016
2/3/2017
30,018
3/3/2017
2/3/2019
456
1/11/2017 30/4/2018
Total
550,852
39,698
(20,183)
570,367
Rightmove plc annual report 2014 61
Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
Share-based incentives held by the directors and not exercised as at 31 December 2014 continued
Share-based
incentives held
1 January
2014
Date
granted
Granted
in year
Exercise
price
Exercised
in year
Average
share
price at
date of
exercise
Share-based
incentives held at
31 December
2014
Vesting
date
Expiry
date
Peter Brooks-Johnson
14/3/2006
(Approved)
10/10/2007
(Unapproved)
5/3/2009
(Unapproved)
5/3/2010
(Unapproved)
4/5/2011
(PSP)
2/3/2012
(DSP)
2/3/2012
(PSP)
1/10/2012
(Sharesave)
8/3/2013
(DSP)
8/3/2013
(PSP)
3/3/2014
(DSP)
3/3/2014
(PSP)
1/10/2014
(Sharesave)
2,439
75,000
139,286
52,553
23,697
–
–
–
–
–
£4.10
£5.22
£2.24
£6.66
£0.00
–
–
–
–
–
Between
14/3/2009 &
2,439(12) 14/3/2011 13/3/2016
75,000(13) 15/3/2011 9/10/2017
139,286(1)
5/3/2012
4/3/2019
52,553(2)
5/3/2013
4/3/2020
23,697(3)
4/3/2014
3/3/2016
–
–
–
–
–
14,114
–
£0.00
(14,114)(4)
£23.21
–
2/3/2014
1/3/2015
25,935
–
£0.00
694
–
£12.95
11,689
–
£0.00
24,210
–
£0.00
–
6,918(9)
£0.00
–
25,140(10)
£0.00
–
456(11) £19.72
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25,935(5)
2/3/2015
1/3/2017
694(6) 1/11/2015 30/4/2016
11,689(7)
8/3/2015
7/3/2016
24,210(8)
8/3/2016
7/3/2018
6,918
3/3/2016
2/3/2017
25,140
3/3/2017
2/3/2019
456
1/11/2017 30/4/2018
388,017
Total
369,617
32,514
(14,114)
62
rightmove.co.uk
Share-based incentives held by the directors and not exercised as at 31 December 2014 continued
Robyn Perriss
Share-based
incentives held
1 January
2014
Date
granted
Granted
in year
Exercise
price
Exercised
in year
Average
share
price at
date of
exercise
Share-based
incentives held at
31 December
2014
Vesting
date
Expiry
date
4/5/2011
(PSP)
3/10/2011
(Sharesave)
2/3/2012
(DSP)
2/3/2012
(PSP)
8/3/2013
(DSP)
8/3/2013
(PSP)
3/3/2014
(DSP)
3/3/2014
(PSP)
1/10/2014
(Sharesave)
5,972
910
–
–
£0.00
£9.88
–
–
–
–
5,972(3)
4/3/2014
3/3/2016
910(14) 1/11/2014 30/4/2015
2,668
–
£0.00
(2,668)(4)
£23.21
–
2/3/2014
1/3/2015
5,086
–
£0.00
2,172
14,928
–
–
£0.00
£0.00
–
4,353(9)
£0.00
–
19,887(10) £0.00
–
912(11) £19.72
–
–
–
–
–
–
–
–
–
–
–
–
5,086(5)
2/3/2015
1/3/2017
2,172(7)
8/3/2015
7/3/2016
14,928(8)
8/3/2016
7/3/2018
4,353
3/3/2016
2/3/2018
19,887
3/3/2017
2/3/2019
912
1/11/2017 30/4/2018
Total
31,736
25,152
(2,668)
54,220
(1) The options granted on 5 March 2009 were exercisable from 5 March 2012 at an exercise price of £2.24, subject to TSR performance criteria which were met in full.
(2) The unapproved options granted on 5 March 2010 were exercisable from 5 March 2013 at an exercise price of £6.66 subject to the relative TSR and Normalised
EPS growth performance conditions which were met in full.
(3) On 4 May 2011, the executive directors were awarded nil cost options under the PSP, which vested in full in 2014 and were subject to a mixture of EPS and relative
TSR performance which was met in full.
(4) The nil cost deferred shares granted under the DSP on 2 March 2012 were exercisable from 2 March 2014 subject to annual bonus targets which were met in full.
Nick McKittrick exercised 20,183 shares in November 2014 and subsequently sold 9,506 shares to satisfy the taxation liability at a market value of £23.21,
retaining the balance of 10,677.
Peter Brooks-Johnson exercised 14,114 shares in November 2014 and subsequently sold 6,647 shares to satisfy the taxation liability at a market value of £23.21,
retaining the balance of 7,467.
Robyn Perriss exercised 2,668 shares in November 2014 and subsequently sold 1,257 shares to satisfy the taxation liability at a market value of £23.21, retaining
the balance of 1,411.
(5) On 2 March 2012, Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded 39,303, 25,935 and 5,086 shares respectively under the PSP, which
vest in 2015 and were subject to a mixture of EPS (75% of the award) and relative TSR (25% of the award) performance. 92.35% of the awards are expected to vest
as described on pages 59 to 60. This will result in 5,380 shares lapsing in March 2015.
(6) On 1 November 2012, Nick McKittrick and Peter Brooks-Johnson were granted 694 Sharesave options. The options vest in 2015 and have an exercise
price of £12.95.
(7) On 8 March 2013, following achievement of the 2012 annual bonus targets, the executive directors were granted nil cost deferred shares under the DSP,
which vest in 2015.
Rightmove plc annual report 2014 63
Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
(8) On 8 March 2013 the executive directors were awarded nil cost shares under the PSP, which vest in 2016.
The vesting schedule for the relative TSR element of executive directors’ 2013 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.
Relative TSR condition
Less than the Index
Equal to the Index
25% higher than the Index
Intermediate performance
% of award vesting (maximum 25%)
0%
6.25%
25%
Straight-line vesting
Rightmove’s EPS growth will be measured over a period of three financial years (2013 to 2015). The EPS figure used will be equivalent to the Normalised EPS.
The following vesting schedule will apply for executive directors’ awards granted in 2013:
Normalised EPS growth from 2013 to 2015
% of award vesting (maximum 75%)
Less than 22.5%
22.5%
40%
Between 22.5% and 40%
0%
18.75%
75%
Straight-line vesting
Assuming no change in the enacted corporation tax rate of 24% before the end of the three year performance period, the benchmark Normalised EPS for the
financial year 2012 from which these growth targets will be measured is 63.01p.
(9)
On 3 March 2014 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded 9,224, 6,918 and 4,353 nil cost deferred shares respectively under the
DSP, which vest in 2016. The average mid market share price for the three consecutive preceding days taken from the Daily Official List and used to calculate the
number of shares awarded was £26.65.
(10) On 3 March 2014 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded 30,018, 25,140 and 19,887 nil cost shares respectively under the PSP,
which vest in 2017, further details are described on page 60.
(11) On 1 November 2014, Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were granted 456, 456 and 912 Sharesave options respectively. The options
vest in 2017 and have an exercise price of £19.72.
(12) On 14 March 2006, 7,317 pre-admission options were granted to Peter Brooks-Johnson under the Rightmove Approved Executive Share Option Plan. The options
vested as to one third of the number of option shares on each of the third, fourth and fifth anniversaries of the date of the option grant. Of the 2,439 pre-admission
approved options outstanding as at 31 December 2014, all options have vested and are eligible for exercise.
(13) The unapproved options granted on 10 October 2007 were exercisable from 15 March 2011 at an exercise price of £5.22.
(14) In November 2011 prior to her appointment as Finance Director, Robyn Perriss was granted 910 Sharesave options. The options vested in 2014 and have an
exercise price of £9.88.
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 2015 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.
64
rightmove.co.uk
Directors’ interests in shares
The interests (both beneficial and family interests) of the directors in office at 31 December 2014 in the share capital of the
Company were as follows:
Executive directors
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Non-executive directors
Scott Forbes
Jonathan Agnew
Ashley Martin
Judy Vezmar
Peter Williams
Colin Kemp
Total
Interests in
Interests in
ordinary shares of £0.01
share-based incentives
At
31 December 2014
At
1 January 2014
Outstanding
PSP & DSP
awards
(unvested)
Outstanding
options
(unvested)
141,027
130,350
126,008
22,483
1,411
15,016
–
93,892
46,426
1,150
1,150
912
319,300
619,300
5,000
2,060
5,000
2,060
16,343
16,343
3,728
1,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Outstanding
options
(vested but
unexercised)
443,209
292,975
6,882
–
–
–
–
–
–
512,352
788,069
266,326
3,212
743,066
• The Company’s shares in issue (including 2,505,430 shares held in treasury) as at 31 December 2014 comprised 99,993,317 (2013: 103,115,735)
ordinary shares of £0.01 each.
• The mid market share price of the Company was £22.48 as at 31 December 2014 (the last day of trading in 2014). The lowest and highest share
prices during the year were £19.81 and £28.05 respectively.
• The executive directors are regarded as being interested, for the purposes of the Companies Act 2006, in 596,499 (2013: 740,398) ordinary shares of £0.01
each in the Company currently held by the EBT as they are, together with other employees, potential beneficiaries of the EBT.
• The directors’ beneficial holdings represent 0.5% of the Company’s shares in issue as at 31 December 2014 (2013: 0.8%) (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 Policy Report on page 46. The interests of the executive
directors in office at 31 December 2014 in the share capital of the Company as a percentage of base salary were as follows:
Executive directors
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Number of
Value of
Base salary
shares held at
Value of shares at
shares as a %
1 January 2015
31 December 2014
31 December 2014
of base salary
£408,000
141,027
£3,170,287
£341,700
£270,300
22,483
1,411
£505,418
£31,719
777%
140%
12%
Rightmove plc annual report 2014 65
Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
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 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.
Chief Executive Officer
Salary
Benefits
Annual bonus
Average of all employees
Salary
Benefits
Annual bonus
2014
£
2013
£
% change
400,000
385,632
2,055
1,690
3.7%
22%
350,000
409,734
(14.6)%
42,983
42,317
749
3,546
761
3,056
1.6%
(1.5)%
16.1%
Relative importance of the spend on pay
The table below shows the total pay for all of 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.
Employee costs (refer Note 7)
Dividends to shareholders (refer Note 12)
Purchase of own shares (refer Note 23 )
Income tax (refer Note 10 )
Average number of employees (refer Note 7 )
Revenue
Underlying operating profit(1)
(1) Before share-based payments and NI on share-based incentives.
External directorships
No executive directors held any non-executive roles during the year.
Year ended
31 December 2014
Year ended
31 December 2013
% change
£21,647,000
£19,218,000
£29,490,000
£25,126,000
£73,867,000
£60,537,000
£25,857,000
£22,680,000
388
349
£167,012,000
£139,935,000
£124,592,000
£103,962,000
13%
19%
22%
14%
11%
19%
20%
66
rightmove.co.uk
Governance | Independent auditor's report to the members of Rightmove plc only
Opinions and conclusions arising from our audit
1. Our opinion on the financial statements is
unmodified
We have audited the financial statements of Rightmove plc
for the year ended 31 December 2014 set out on pages 70
to 107. 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 2014 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.
2. Our assessment of risks of material misstatement
We summarise below the risks of material misstatement that
had the greatest effect on our audit, our key audit procedures
to address those risks 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. Our findings are the result of procedures
undertaken in the context of and solely for the purpose of our
statutory audit opinion on the financial statements as a whole
and consequently are incidental to that opinion, and we do
not express discrete opinions on separate elements of the
financial statements.
Revenue recognition (£167,012,000)
Refer to page 33 (Corporate governance report), page 81
(accounting policy) and pages 84 to 86 (financial disclosures)
• The risk: Revenue primarily consists of subscription fees
and customer spend on additional advertising products
in respect of properties listed on rightmove.co.uk and is
recognised over the period of subscription or as additional
advertising products are used. Individual contracts exist
with each customer, which include a variety of differing
terms and conditions. In addition, Rightmove operate a
number of membership offers during the year, some of
which include discounted or free periods. Given the variety
of individual contract terms and that revenue is the most
material figure in the financial statements, we consider a
significant risk exists in relation to revenue recognition;
specifically that the billing of customers is in line with the
appropriate contract, with resulting revenue recognised
appropriately, and that membership incentives are
recognised in the period to which they relate.
• Our response: Our audit procedures included testing the
design, implementation and operating effectiveness, of the
Group’s controls over the billing of customers in line with
contract terms and product usage. For Agency and New
Homes, which are the most significant revenue streams,
we performed detailed procedures using computer assisted
audit techniques to analyse the amounts billed to customers
by product in order to identify trends and investigate any
anomalies and outliers. We considered whether amounts
billed had been recognised as revenue appropriately by
comparing the period of subscription or usage of additional
advertising products to the timing of revenue recognition.
We inspected significant contracts signed in the year on
a sample basis, to assess whether revenue has been
recognised in accordance with the specific contract terms
and conditions and relevant accounting standards. For new
membership offers operated during the year, we challenged
the estimates applied in calculating the impact of discounts
or free periods by inspecting details of the membership
contracts and subscription numbers for the year.
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 use or expiry. We also considered the
adequacy of the Group’s accounting policy and disclosures
(see Notes 1, 2 and 5) in respect of revenue recognition,
and whether disclosures properly reflect the risks inherent
in recognising revenue.
• Our findings: Our testing did not identify weaknesses in the
design and operation of controls that would have required
us to expand the extent of our planned detailed testing.
Our computer assisted audit techniques did not reveal any
unexplained differences and we found that revenue was
recognised in line with the period of subscription or usage of
additional products. We found that revenue was recognised
in respect of the significant contracts selected for testing in
line with the underlying contractual terms and we found no
errors in the Group’s calculation of deferred revenue at the
year end. We found the group’s disclosures to be
proportionate in their description of the assumptions
and estimates made by the group.
Rightmove plc annual report 2014 67
Strategic reportGovernanceFinancial statements Governance | Independent auditor's report to the members of Rightmove plc only continued
3. Our application of materiality and an overview of
the scope of our audit
The materiality for the Group financial statements as a whole
was set at £5.8m, determined with reference to a benchmark
of Group profit before tax of which it represents 4.75%.
We report to the Audit Committee all uncorrected
misstatements we identified through our audit with a value in
excess of £0.29m, in addition to other audit misstatements
below that threshold that we believe warranted reporting on
qualitative grounds. We report misstatements corrected by
management where we believe these will assist the audit
committee in fulfilling its governance responsibilities.
The Group audit team also audits the single wholly owned
subsidiary, Rightmove Group Limited with a component
materiality of £5.0m. The Group procedures covered all of
the operations of the Group, and accordingly 100% of total
Group revenue; 100% of Group profit before taxation and
100% of total Group assets were audited.
4. Our opinion on other matters prescribed by the
Companies Act 2006 is unmodified
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the
Companies Act 2006;
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
• the information given in the corporate governance
statement set out on pages 34 to 35 with respect to internal
control and risk management systems in relation to financial
reporting processes and about share capital structures is
consistent with the financial statements.
Share-based incentives and related deferred tax
charge and asset (£2,728,000, £1,114,000 and
£4,224,000 respectively)
Refer to page 33 (Corporate governance report), pages 80
to 82 (accounting policy) and pages 94 to 95; 100 to 104
(financial disclosures).
• The risk: The Group provides share-based incentive plans
allowing executive directors and other selected senior
management to acquire shares in the parent Company.
Significant focus is placed upon the share-based incentive
charge for the year in the Annual Report, specifically on the
face of the Income Statement. Each scheme differs based
on the terms of the scheme and different schemes have
varying levels of complexity. The choice of valuation
methodology and certain of the key inputs used to calculate
the total charge to be recognised for new grants, specifically
the leaver assumptions and performance conditions, require
significant estimation and judgement in their selection, and
impact on the derived fair value, charge and related deferred
tax balances. As such they are key judgemental areas that
our audit concentrated on.
• Our response: In this area our audit procedures included
evaluating the assumptions and methodologies used by the
Group to value new schemes in the year and to estimate
the number of shares that will eventually be issued. For key
inputs we critically assessed the reasonableness of the
Group’s assumptions by reference to external data and
historical trends, along with reports from the Group’s
external consultants. In addition, we used our own tax
specialists to consider the accuracy of the related deferred
tax charge and asset for the year. We also assessed
whether the Group’s disclosures in these areas (see Note
16 and Note 24) are appropriate.
• Our findings: We found the assumptions and resulting
estimates used in the valuation models to be mildly cautious
in respect of leavers and otherwise balanced and we found
no errors in the calculation of the related deferred tax
charge and asset. We found the Group’s disclosures to be
proportionate in their description of the assumptions and
estimates made by the Group and the sensitivity of the
share-based payments charge to changes in those
assumptions and estimates.
68
rightmove.co.uk
Scope of report and responsibilities
As explained more fully in the Directors’ Responsibilities
Statement set out on page 40, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. A description of
the scope of an audit of accounts is provided on the Financial
Reporting Council’s website at www.frc.org.uk/
auditscopeukprivate. This report is made solely to the
Company’s members as a body and subject to important
explanations and disclaimers regarding our responsibilities,
published on our website at www.kpmg.com/uk/
auditscopeukco2014b, which are incorporated into this
report as if set out in full and should be read to provide an
understanding of the purpose of this report, the work we have
undertaken and the basis of our opinions.
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
27 February 2015
5. We have nothing to report in respect of the
matters on which we are required to report
by exception
Under ISAs (UK and Ireland) we are required to report to you
if, based on the knowledge we acquired during our audit, we
have identified other information in the annual report that
contains a material inconsistency with either that knowledge
or the financial statements, a material misstatement of fact,
or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between the
knowledge we acquired during our 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 performance,
business model and strategy; or
• the Corporate Governance Report does not
appropriately address matters communicated by
us to the Audit Committee.
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.
Under the Listing Rules we are required to review:
• the directors’ statement, set out on page 35, in relation to
going concern;
• the part of the Corporate Governance Statement on pages
26 to 31 relating to the Company’s compliance with the ten
provisions of the 2012 UK Corporate Governance Code
specified for our review.
We have nothing to report in respect of the above
responsibilities.
Rightmove plc annual report 2014 69
Strategic reportGovernanceFinancial statements Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
167,012
139,935
(44,954)
(42,919)
124,592
(2,728)
194
103,962
(2,408)
(4,538)
122,058
97,016
109
(129)
(20)
142
(143)
(1)
122,038
(25,857)
97,015
(22,680)
96,181
74,335
96,181
74,335
97.70
96.62
30.00
29,490
74.11
72.61
25.00
25,126
Consolidated statement of comprehensive income
for the year ended 31 December 2014
Revenue
Administrative expenses
Operating profit before share-based payments and NI
on share-based incentives
Share-based payments
NI on share-based incentives
Operating profit
Financial income
Financial expenses
Net financial expense
Profit before tax
Income tax expense
Profit for the year being total comprehensive income
Attributable to:
Equity holders of the parent
Earnings per share (pence)
Basic
Diluted
Dividends per share (pence)
Total dividends
Note
5
24
24
6
8
9
10
11
11
12
12
70
rightmove.co.uk
Consolidated statement of financial position
as at 31 December 2014
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Income tax payable
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Total equity attributable to the equity holders of the parent
Note
13
14
16
17
18
19
21
22,23
23
23
23
31 December 2014 31 December 2013
£000
£000
1,580
1,565
4,503
1,679
1,593
5,635
7,648
8,907
24,298
11,205
22,838
6,799
35,503
29,637
43,151
38,544
(27,560)
(12,943)
(24,993)
(4,472)
(40,503)
(29,465)
(200)
(200)
(164)
(164)
(40,703)
(29,629)
2,448
8,915
1,000
432
1,016
1,031
401
7,483
2,448
8,915
The financial statements were approved by the Board of directors on 27 February 2015 and were signed on its behalf by:
Nick McKittrick
Director
Robyn Perriss
Director
Rightmove plc annual report 2014 71
Strategic reportGovernanceFinancial statements
Company statement of financial position
as at 31 December 2014
Non-current assets
Investments
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Total equity attributable to the equity holders of the parent
Note
15
16
31 December 2014 31 December 2013
£000
£000
542,804
2,667
541,720
3,357
545,471
545,077
545,471
545,077
19
(50,123)
(24,799)
(50,123)
(24,799)
495,348
520,278
1,000
109,608
384,740
1,031
108,493
410,754
495,348
520,278
22,23
23
23
23
The financial statements were approved by the Board of directors on 27 February 2015 and were signed on its behalf by:
Nick McKittrick
Director
Robyn Perriss
Director
72
rightmove.co.uk
Consolidated statement of cash flows
for the year ended 31 December 2014
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation charges
Amortisation charges
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Financial income
Financial expenses
Share-based payments
Income tax expense
Operating cash flow before changes in working capital
Increase in trade and other receivables
Increase in trade and other payables
Increase in provisions
Cash generated from operating activities
Financial expenses paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of property, plant and equipment
Acquisition of intangible assets
Deferred consideration received
Net cash received/(used) in investing activities
Cash flows from financing activities
Dividends paid
Purchase of own shares for cancellation
Purchase of own shares for share incentive plans
Share-related expenses
Proceeds on exercise of share-based incentives
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Note
13
14
6
6
8
9
24
10
21
13
14
17
12
23
23
23
23
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
96,181
74,335
825
368
1
3
(109)
129
2,728
25,857
770
407
–
–
(142)
143
2,408
22,680
125,983
100,601
(3,151)
2,522
36
(2,691)
1,218
35
125,390
99,163
(129)
(17,070)
(143)
(16,062)
108,191
82,958
133
(727)
(343)
1,667
730
(29,490)
(73,867)
(863)
(472)
177
145
(762)
(314)
–
(931)
(25,126)
(60,537)
–
(387)
3,740
(104,515)
(82,310)
4,406
6,799
(283)
7,082
Cash and cash equivalents at 31 December
18
11,205
6,799
Rightmove plc annual report 2014 73
Strategic reportGovernanceFinancial statements
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
76,732
71,015
(80,228)
536
1,644
(799)
(77,640)
517
1,616
(1,727)
(2,115)
(6,219)
105,944
92,269
103,829
86,050
(29,490)
(73,867)
(472)
(25,126)
(60,537)
(387)
(103,829)
(86,050)
–
–
–
–
–
–
Company statement of cash flows
for the year ended 31 December 2014
Cash flows from operating activities
Profit for the year
Adjustments for:
Financial income
Financial expenses
Share-based payments
Income tax credit
Operating cash flow before changes in working capital
Increase in trade and other payables
Cash generated from operating activities
Cash flows from financing activities
Dividends paid
Purchase of own shares for cancellation
Share-related expenses
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Note
23
27
27
24
19
12
23
23
18
74
rightmove.co.uk
Consolidated statement of changes in shareholders’ equity
for the year ended 31 December 2014
Share
capital
£000
Note
EBT
shares
reserve
£000
Treasury
shares
£000
At 1 January 2013
1,059
(7,911)
(11,917)
Total comprehensive income
Profit for the year
Transactions with owners
recorded directly in equity
Share-based payments
Tax credit in respect of share-based
incentives recognised directly
in equity
Dividends to shareholders
Exercise of share-based incentives
Cancellation of own shares
Share related expenses
24
10
12
23
23
23
–
–
–
–
–
(28)
–
–
–
–
–
5,493
–
–
–
–
–
–
–
–
–
reserves
£000
235
–
–
–
–
–
28
–
Reverse
Other
acquisition
reserve
£000
Retained
earnings
£000
Total
equity
£000
138
25,909
7,513
–
74,335
74,335
–
–
–
–
–
–
2,408
2,408
7,006
(25,126)
(1,753)
(60,537)
(424)
7,006
(25,126)
3,740
(60,537)
(424)
At 31 December 2013
1,031
(2,418)
(11,917)
263
138
21,818
8,915
At 1 January 2014
1,031
(2,418)
(11,917)
263
138
21,818
8,915
Total comprehensive income
Profit for the year
Transactions with owners
recorded directly in equity
Share-based payments
Tax debit in respect of share-based
incentives recognised directly
in equity
Dividends to shareholders
Exercise of share-based incentives
Purchase of shares for share
incentive plan
Cancellation of own shares
Share related expenses
24
10
12
23
23
23
23
–
–
–
–
–
–
(31)
–
–
–
–
–
375
(863)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31
–
–
96,181
96,181
–
–
–
–
–
–
–
2,728
2,728
(816)
(29,490)
(198)
–
(73,867)
(517)
(816)
(29,490)
177
(863)
(73,867)
(517)
At 31 December 2014
1,000
(2,906)
(11,917)
294
138
15,839
2,448
Rightmove plc annual report 2014 75
Strategic reportGovernanceFinancial statements
Company statement of changes in shareholders’ equity
for the year ended 31 December 2014
Share
capital
£000
Treasury
shares
£000
Other
reserves
£000
Note
Reverse
acquisition
reserve
£000
Retained
earnings
£000
Total
equity
£000
At 1 January 2013
1,059
(11,917)
4,153
103,520
430,624
527,439
Total comprehensive income
Profit for the year
Transactions with owners
recorded directly in equity
Share-based payments
Tax credit in respect of share-based incentives
recognised directly in equity
Capital contribution
Dividends to shareholders
Cancellation of own shares
Share related expenses
24
10
23
12
23
23
–
–
–
–
–
(28)
–
–
–
–
–
–
–
–
–
–
–
792
–
28
–
–
71,015
71,015
–
–
–
–
–
–
1,616
1,616
5,503
–
(25,126)
(60,537)
(424)
5,503
792
(25,126)
(60,537)
(424)
At 31 December 2013
1,031
(11,917)
4,973
103,520
422,671
520,278
At 1 January 2014
1,031
(11,917)
4,973
103,520
422,671
520,278
Total comprehensive income
Profit for the year
Transactions with owners
recorded directly in equity
Share-based payments
Tax debit in respect of share-based incentives
recognised directly in equity
Capital contribution
Dividends to shareholders
Cancellation of own shares
Share related expenses
24
10
23
12
23
23
–
–
–
–
–
(31)
–
–
–
–
–
–
–
–
–
–
–
1,084
–
31
–
–
76,732
76,732
–
–
–
–
–
–
1,644
1,644
(516)
–
(29,490)
(73,867)
(517)
(516)
1,084
(29,490)
(73,867)
(517)
At 31 December 2014
1,000
(11,917)
6,088
103,520
396,657
495,348
76
rightmove.co.uk
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 2014 comprise the Company and its interest
in its subsidiaries (together referred to as the Group). Its principal business is the operation of the rightmove.co.uk website, which has the
largest audience of any UK property website (as measured by page impressions).
The consolidated financial statements of the Group as at and for the year ended 31 December 2014 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) and issued by the International Accounting
Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of directors on 27 February 2015.
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.
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 2013.
IFRS 10 Consolidated Financial Statements was adopted in the year to replace IAS 27 Consolidated and Separate Financial Statements.
The adoption of IFRS 10 has had no material impact on the financial statements.
Going concern
Throughout 2014, the Group was debt free and has continued to generate significant cash. The Group has net cash balances of
£11,205,000 at 31 December 2014 (2013: £6,799,000). During the year the business returned £103,400,000 of cash to shareholders.
The Group entered into a 12 month agreement with HSBC for a £10,000,000 committed revolving loan facility on 10 February 2014.
This agreement has been extended for a further 12 months and will expire on 9 February 2016. To date no amount has been drawn under
this facility.
After making enquiries, the Board of directors has a reasonable expectation that the Group and the Company have adequate resources and
banking facilities to continue in operational existence for the foreseeable future. Accordingly, the Board of directors continues to adopt the
going concern basis in preparing the Annual Report and financial statements.
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 4 to 23. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described on pages 13 to 16. 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.
Rightmove plc annual report 2014 77
Strategic reportGovernanceFinancial statements
Notes continued
1 General information continued
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.
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.
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 is included in the following notes:
Note 2 (j)
Revenue recognition and the associated deferral, specifically regarding the period to which services relate, when specific
products have expired and the recognition of revenue from membership offers including discounted or free periods.
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 options granted to employees, the number of options 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-based
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.
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
All business combinations are accounted for by applying the purchase method. Goodwill that arises upon the acquisition of subsidiaries
is included in intangible assets. In respect of business acquisitions that have occurred since 1 January 2004, goodwill represents the
difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.
In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount previously
recorded under UK Generally Accepted Accounting Principles (GAAP). The classification and accounting treatment of business
combinations that occurred prior to 1 January 2004 were not reconsidered in preparing the Group’s opening IFRS statement of financial
position at 1 January 2004.
78
rightmove.co.uk
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
website. 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 and
the Group has sufficient resources to complete development.
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
Software licences
20.0% – 33.3% per annum
20.0% – 33.3% per annum
(c) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. 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 & fittings
Computer equipment
Leasehold improvements
20.0% per annum
20.0% – 33.3% per annum
remaining life of the lease
(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.
Rightmove plc annual report 2014 79
Strategic reportGovernanceFinancial statements
Notes continued
2 Significant accounting policies continued
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 recognised at fair value 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.
Inter-group balances and transactions, and any unrealised income and expenses arising from inter-group transactions, are eliminated in
preparing the consolidated financial statements.
Trade payables are not interest bearing and are recognised at fair value. 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.
(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.
A provision is maintained in respect of lease dilapidations based on an estimated cost to make good per square foot multiplied by the floor
area of each premise.
(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 due.
(ii) Employee share schemes
The Group provides share-based incentive plans allowing executive directors and other selected senior management 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 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.
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.
80
rightmove.co.uk
(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) 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 to the rightmove.co.uk website.
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 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 additional 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.co.uk website 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. Where cash is received in exchange for
entering into a lease with rates above market value, this upfront payment 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, 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.
(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.
Rightmove plc annual report 2014 81
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Notes continued
2 Significant accounting policies continued
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
The Group presents basic, diluted and underlying earnings per share (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 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 2014 and have not been applied in preparing these consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers has been issued in the year, although not yet endorsed in the EU, and an exercise is
underway to assess the impact that this will have on revenue recognition.
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 Board, 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.
82
rightmove.co.uk
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 90.0% (2013: 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 balances on a daily basis to ensure that no more than £30,000,000 is held with any
single institution.
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 105 days (2013: 136 days).
The Group entered into a 12 month agreement with HSBC for a £10,000,000 committed revolving loan facility on 10 February 2014.
This agreement has been extended for a further 12 months and will expire on 9 February 2016. To date no amount has been drawn under
this facility.
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% (2013: 95.0%) 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 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 earnings per share. The Board of directors has a
progressive dividend policy and also monitors the level of dividends to ordinary shareholders in relation to profit growth. The Board’s policy is
to return surplus capital to shareholders through a combination of dividends and share buybacks.
The Company purchases its own shares in the market; the timing of these purchases depends on market conditions. In 2014,
3,122,418 (2013: 2,780,380) shares were bought back and were cancelled at an average price of £23.66 (2013: £21.77).
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.
Rightmove plc annual report 2014 83
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Notes continued
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:
•
•
•
• documentation of controls and procedures;
•
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;
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;
•
•
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 www.rightmove.co.uk; and
The New Homes segment which provides property advertising services to new home developers and housing associations on
www.rightmove.co.uk.
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 and consumer services as well as data and valuation
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 revenues in both years are derived from third parties and there
are no inter-segment revenues.
84
rightmove.co.uk
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.
Year ended 31 December 2014
Revenue
Operating profit(1)
Depreciation and amortisation
Financial income
Financial expenses
Trade receivables(3)
Other segment assets
Segment liabilities
Capital expenditure(6)
Year ended 31 December 2013
Revenue
Operating profit(1)
Depreciation and amortisation
Financial income
Financial expenses
Trade receivables(3)
Other segment assets
Segment liabilities
Capital expenditure(6)
Agency
£000
129,590
–
–
–
–
15,107
–
–
–
107,307
–
–
–
–
13,124
–
–
–
New
Homes
£000
26,407
–
–
–
–
5,122
–
–
–
24,170
–
–
–
–
4,717
–
–
–
Sub
total
£000
155,997
–
–
–
–
20,229
–
–
–
131,477
–
–
–
–
17,841
–
–
–
Other
£000
Central
Adjustments
£000
£000
Total
£000
11,015
–
–
–
–
1,491
–
–
–
8,458
–
–
–
–
1,225
–
–
–
–
124,592
(1,193)
109
(129)
–
21,333
(40,605)
1,070
–
103,962
(1,177)
142
(143)
–
19,347
(29,498)
1,076
–
(2,534)(2)
–
–
–
81(4)
17(5)
(98)(4)(5)
–
–
(6,946)(7)
–
–
–
80(4)
51(5)
(131)(4)(5)
–
167,012
122,058
(1,193)
109
(129)
21,801
21,350
(40,703)
1,070
139,935
97,016
(1,177)
142
(143)
19,146
19,398
(29,629)
1,076
(1) Operating profit is stated after the charge for depreciation and amortisation.
(2) Operating profit for the year ended 31 December 2014 does not include share-based payments charge of £2,728,000 and NI on
share-based incentives credit of £194,000.
(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 made on consolidation for statutory
accounts purposes.
(5) The adjustments column reflects the reclassification of debit balances in accounts payable made on consolidation for statutory
accounts purposes.
(6) Capital expenditure consists of additions of property, plant and equipment and intangible assets (excluding goodwill).
(7) Operating profit for the year ended 31 December 2013 does not include share-based payments charge of £2,408,000 and NI on
share-based incentives of £4,538,000.
Rightmove plc annual report 2014 85
Strategic reportGovernanceFinancial statements
Notes continued
5 Operating segments continued
Geographic information
In presenting information on the basis of geography, revenue and assets are based on the geographical location of customers.
Group
UK
Rest of the world
6 Operating profit
Operating profit is stated after charging:
Employee benefit expense
Depreciation of property, plant and equipment
Amortisation of computer software
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Bad debt impairment charge
Operating lease rentals
Land and buildings
Other
Auditor’s remuneration
Year ended 31 December 2014
Revenue Trade receivables
£000
£000
164,382
2,630
21,594
207
Year ended 31 December 2013
Revenue
Trade receivables
£000
138,380
1,555
£000
19,007
139
167,012
21,801
139,935
19,146
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
21,647
825
368
1
3
341
896
569
19,218
770
407
–
–
235
867
535
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
Fees payable to the Company’s auditor in respect of the audit
Audit of the Company’s financial statements
Audit of the Company’s subsidiaries pursuant to legislation
Total audit remuneration
Fees payable to the Company’s auditor in respect of non-audit related services
Tax compliance services and advisory
All other services
Total non-audit remuneration
15
105
120
11
7
18
15
105
120
12
22
34
86
rightmove.co.uk
7 Employee numbers and costs
The average number of persons employed (including executive directors) during the year, analysed by category, was as follows:
Administration
Management
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Pension costs
Year ended
Year ended
31 December 2014 31 December 2013
Number of
Number of
employees
368
20
388
employees
332
17
349
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
18,621
2,276
750
16,716
2,066
436
21,647
19,218
Social security costs do not include a credit of £194,000 (2013: charge £4,538,000) relating to NI on share-based incentives which has been
disclosed in the Statement of Comprehensive Income.
8 Financial income
Interest income on cash balances
Interest income on amounts held in Escrow
9 Financial expenses
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
106
3
109
136
6
142
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
Other financial expenses
129
143
Rightmove plc annual report 2014 87
Strategic reportGovernanceFinancial statements
Notes continued
10 Income tax expense
Current tax expense
Current year
Adjustment to current tax charge in respect of prior years
Deferred tax charge
Origination and reversal of temporary differences
Adjustment to deferred tax charge in respect of prior years
Reduction in tax rate
Total income tax expense
Income tax debit/(credit) recognised directly in equity
Current tax
Share-based incentives
Deferred tax
Share-based incentives (refer Note 16)
Total income tax debit/(credit) recognised directly in equity
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
26,575
(499)
22,517
(169)
26,076
22,348
(228)
9
–
(219)
150
3
179
332
25,857
22,680
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
(535)
(10,706)
1,351
3,700
816
(7,006)
Total income tax recognised directly in equity in respect of the Company was £516,000 (2013: credit £5,503,000).
88
rightmove.co.uk
Reconciliation of effective tax rate
The Group’s income tax expense for the year is lower (2013: higher) than the standard rate of corporation tax in the UK of 21.5%
(2013: 23.25%). The differences are explained below:
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
Profit for the year
Total income tax expense
Profit excluding income tax
Current tax at 21.5% (2013: 23.25%)
Reduction in tax rate
Non-deductible expenses
Share-based incentives
Adjustment to current tax charge in respect of prior years
Adjustment to deferred tax charge in respect of prior years
96,181
25,857
122,038
26,238
–
92
17
(499)
9
74,335
22,680
97,015
22,556
179
130
(19)
(169)
3
25,857
22,680
The Group’s consolidated effective tax rate on the profit of £122,038,000 for the year ended 31 December 2014 is 21.2% (2013: 23.4%).
The difference between the standard rate and effective rate at 31 December 2014 is primarily attributable to a prior year adjustment in
respect of research and development 0.4% (2013: 0.2%), offset by disallowable expenditure and a reduction in the rate at which the
deferred tax asset is recognised of 0.1% (2013: 0.1%).
11 Earnings per share (EPS)
Year ended 31 December 2014
Basic EPS
Diluted EPS
Underlying basic EPS
Underlying diluted EPS
Year ended 31 December 2013
Basic EPS
Diluted EPS
Underlying basic EPS
Underlying diluted EPS
Weighted average number of ordinary shares (basic)
Issued ordinary shares at 1 January less ordinary shares held by the EBT
Effect of own shares held in treasury
Effect of own shares purchased for cancellation
Effect of share-based incentives exercised
Weighted average
number of
ordinary shares
98,444,757
99,550,632
98,444,757
99,550,632
100,302,258
102,375,057
100,302,258
102,375,057
Total
earnings
£000
96,181
96,181
98,715
98,715
74,335
74,335
81,281
81,281
Pence
per share
97.70
96.62
100.28
99.16
74.11
72.61
81.04
79.40
Year ended
Year ended
31 December 2014 31 December 2013
Number of shares
Number of shares
102,375,411
(2,505,430)
(1,485,561)
60,337
102,492,086
(2,505,430)
(1,232,171)
1,547,773
98,444,757
100,302,258
Rightmove plc annual report 2014 89
Strategic reportGovernanceFinancial statements
Notes continued
11 Earnings per share (EPS) continued
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 and shares held in treasury.
Weighted average number of ordinary shares (basic)
Dilutive impact of share-based incentives outstanding
Year ended
Year ended
31 December 2014 31 December 2013
Number of shares
Number of shares
98,444,757
1,105,875
100,302,258
2,072,799
99,550,632
102,375,057
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 before the charge/(credit) for share-based payments and 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:
Year ended
Year ended
31 December 2014 31 December 2013
£000
£000
Basic earnings for the year
Share-based payments
NI on share-based incentives
Underlying earnings for the year
96,181
2,728
(194)
74,335
2,408
4,538
98,715
81,281
90
rightmove.co.uk
12 Dividends
Dividends declared and paid by the Company were as follows:
2012 final dividend paid
2013 interim dividend paid
2013 final dividend paid
2014 interim dividend paid
2014
2013
Pence per share
£000
Pence per share
–
–
17.0
13.0
–
–
16,768
12,722
14.0
11.0
–
–
£000
14,114
11,012
–
–
30.0
29,490
25.0
25,126
After the reporting date a final dividend of 22.0p (2013: 17.0p) per qualifying ordinary share being £21,269,000 (2013: £16,908,000) was
proposed by the Board of directors.
The 2013 final dividend paid on 6 June 2014 was £16,768,000 being a difference of £140,000 compared to that reported in the 2013
Annual Report, which was due to a decrease in the ordinary shares entitled to a dividend between 31 December 2013 and the final dividend
record date of 7 May 2014.
The 2014 interim dividend paid on 7 November 2014 was £12,722,000 being a difference of £60,000 compared to that reported in the 2014
Half Year Report, which was due to a decrease in the ordinary shares entitled to a dividend between 30 June 2014 and the interim dividend
record date of 10 October 2014.
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
Group
Cost
At 1 January 2014
Additions
Disposals
At 31 December 2014
Depreciation
At 1 January 2014
Charge for year
Disposals
At 31 December 2014
Net book value
At 31 December 2014
At 1 January 2014
Office equipment,
Computer
Leasehold
fixtures & fittings
equipment
improvements
£000
£000
£000
687
64
(38)
3,865
663
(242)
713
4,286
(471)
(73)
38
(2,760)
(695)
241
451
–
–
451
(93)
(57)
–
Total
£000
5,003
727
(280)
5,450
(3,324)
(825)
279
(506)
(3,214)
(150)
(3,870)
207
216
1,072
1,105
301
358
1,580
1,679
Rightmove plc annual report 2014 91
Strategic reportGovernanceFinancial statements
Office equipment,
Computer
Leasehold
Work
fixtures & fittings
equipment
improvements
in progress
£000
£000
£000
£000
Notes continued
13 Property, plant and equipment continued
Group
Cost
At 1 January 2013
Additions
Brought into use
At 31 December 2013
Depreciation
At 1 January 2013
Charge for year
647
40
–
687
3,126
722
17
3,865
(407)
(64)
(2,112)
(648)
At 31 December 2013
(471)
(2,760)
Net book value
At 31 December 2013
At 1 January 2013
216
240
1,105
1,014
Total
£000
4,311
762
(70)
5,003
(2,554)
(770)
(3,324)
1,679
87
–
(87)
–
–
–
–
–
87
1,757
451
–
–
451
(35)
(58)
(93)
358
416
The work in progress consisted of a new finance system that was brought into use during 2013. This resulted in a transfer of £17,000 to
computer equipment and £70,000 to computer software (refer Note 14).
The Company had no property, plant or equipment in either year.
14 Intangible assets
Group
Cost
At 1 January 2014
Additions
Disposals
At 31 December 2014
Amortisation
At 1 January 2014
Charge for year
Disposals
At 31 December 2014
Net book value
At 31 December 2014
At 1 January 2014
92
rightmove.co.uk
Goodwill
£000
732
–
–
732
–
–
–
–
732
732
Computer
software
£000
4,069
343
(227)
Total
£000
4,801
343
(227)
4,185
4,917
(3,208)
(368)
224
(3,208)
(368)
224
(3,352)
(3,352)
833
861
1,565
1,593
Group
Cost
At 1 January 2013
Additions
Brought into use (refer Note 13)
At 31 December 2013
Amortisation
At 1 January 2013
Charge for year
At 31 December 2013
Net book value
At 31 December 2013
At 1 January 2013
Goodwill
£000
732
–
–
732
–
–
–
732
732
Computer
software
£000
3,685
314
70
Total
£000
4,417
314
70
4,069
4,801
(2,801)
(407)
(2,801)
(407)
(3,208)
(3,208)
861
884
1,593
1,616
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 operations which represent 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 aggregate carrying amounts of goodwill allocated to each unit are as follows:
Agency
31 December 2014 31 December 2013
£000
£000
732
732
The carrying value of the £732,000 purchased goodwill in Agency, arising pre-transition to IFRS, is reviewed annually for impairment. Due to
its low level of significance 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 2014 are as follows:
Company
Rightmove Group Limited
Rightmove.co.uk Limited
Rightmove Home Information
Packs Limited
Nature of business
Country of
incorporation
Online property advertising
Dormant
England and Wales
England and Wales
Holding
Class of shares
100%
100%
Ordinary
Ordinary
Dormant
England and Wales
100%
Ordinary
All the above subsidiaries are included in the Group consolidated financial statements.
Rightmove plc annual report 2014 93
Strategic reportGovernanceFinancial statements
Notes continued
15 Investments continued
Company
Investment in subsidiary undertakings
At 1 January
Additions – subsidiary share-based payments charge (refer Note 24)
At 31 December
31 December 2014 31 December 2013
£000
£000
541,720
1,084
540,928
792
542,804
541,720
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 £1,084,000 (2013: £792,000) being recognised in the Company accounts
as a capital contribution to its subsidiary.
16 Deferred tax assets
Deferred tax assets are attributable to the following:
Group
Share-based incentives
Property, plant and equipment
Provisions
Deferred tax assets
Assets
31 December 2014 31 December 2013
£000
£000
4,224
197
82
5,338
213
84
4,503
5,635
The decrease in the deferred tax asset relating to share-based incentives at 31 December 2014 is due to the reduction in the Company’s year
end share price from £27.40 to £22.48 and the exercise of share-based incentives, partly offset by the impact of new share awards in the year.
Company
Assets
31 December 2014 31 December 2013
£000
£000
Share-based incentives being deferred tax assets
2,667
3,357
The decrease in the deferred tax asset is due to the reduction in the Company’s year end share price from £27.40 to £22.48 and the
exercise of share-based incentives, partly offset by the impact of new share awards in the year.
94
rightmove.co.uk
Movement in deferred tax during the year:
Group
Share-based incentives
Property, plant and equipment
Provisions
Company
1 January 2014
in income
directly in equity 31 December 2014
Recognised
Recognised
£000
5,338
213
84
£000
237
(16)
(2)
£000
(1,351)
–
–
£000
4,224
197
82
5,635
219
(1,351)
4,503
Recognised
Recognised
1 January 2014
in income
directly in equity 31 December 2014
£000
£000
£000
£000
Share-based incentives
3,357
(690)
–
2,667
The deferred tax asset at 31 December 2014 has been calculated at the rate of 20% substantively enacted at the balance sheet date.
Movement in deferred tax during the prior year:
Group
Share-based incentives
Property, plant and equipment
Provisions
1 January 2013
in income
directly in equity 31 December 2013
Recognised
Recognised
£000
9,347
227
93
£000
(309)
(14)
(9)
£000
(3,700)
–
–
£000
5,338
213
84
9,667
(332)
(3,700)
5,635
The deferred tax asset arising on equity settled share-based incentives in both years was recognised in profit or loss to the extent that the
related equity settled share-based incentives charge was recognised in profit or loss.
Company
Recognised
Recognised
1 January 2013
in income
directly in equity 31 December 2013
£000
£000
£000
£000
Share-based incentives
7,692
(224)
(4,111)
3,357
Rightmove plc annual report 2014 95
Strategic reportGovernanceFinancial statements
Notes continued
17 Trade and other receivables
Group
Trade receivables
Less provision for impairment of trade receivables
Net trade receivables
Prepayments
Amounts held in Escrow
Accrued income
Interest receivable
Other debtors
31 December 2014 31 December 2013
£000
£000
22,291
(490)
21,801
2,231
–
171
30
65
19,582
(436)
19,146
1,743
1,680
139
41
89
24,298
22,838
Amounts held in Escrow related to the completion proceeds and contingent consideration on the sale on 21 June 2010 of the Group’s
66.7% shareholding in Holiday Lettings Holdings Limited which owned 100% of the shares in the trading entity Holiday Lettings Limited.
These amounts were received in full during the year and comprised completion proceeds of £1,667,000 and accrued interest of £16,000.
Exposure to credit and currency risks and impairment losses relating to trade and other receivables are disclosed in Note 28.
The Company has no trade and other receivables in either year.
18 Cash and cash equivalents
Group
Bank accounts
31 December 2014 31 December 2013
£000
£000
11,205
6,799
Cash balances were held in current accounts during the year and attracted interest at a weighted average rate of 0.6% (2013: 0.7%).
The Company had cash and cash equivalent balances at 31 December 2014 of £180 (2013: £208).
19 Trade and other payables
Trade payables
Trade accruals
Other creditors
Other taxation and social security
Deferred revenue
Inter-group payables
96
rightmove.co.uk
Group
Company
31 December 2014 31 December 2013 31 December 2014 31 December 2013
£000
£000
£000
£000
461
5,163
304
6,983
14,649
–
685
5,704
369
5,961
12,274
–
–
3,126
–
–
–
46,997
–
3,768
–
–
–
21,031
27,560
24,993
50,123
24,799
Exposure to currency and liquidity risk relating to trade and other payables is disclosed in Note 28.
The Company movement in trade and other payables during the year is reconciled as follows:
Trade payables at 1 January
Inter-group dividend settled via reduction in inter-group loan balance
Group relief settled via reduction in inter-group loan balance
Inter-group interest (refer Note 27)
Stamp duty on share buybacks accrued to equity
Movement in working capital in statement of cash flows
31 December 2014 31 December 2013
£000
£000
24,799
(80,228)
(973)
536
45
105,944
21,181
(77,640)
(11,565)
517
37
92,269
50,123
24,799
20 Loans and borrowings
The Group entered into a 12 month agreement with HSBC for a £10,000,000 committed revolving loan facility on 10 February 2014.
This agreement has been extended for a further 12 months and will expire on 9 February 2016. To date no amount has been drawn under
this facility.
The Company had no loans and borrowings in either year.
21 Provisions
The Group booked a provision for lease dilapidations of £36,000 during the year (2013: £35,000) bringing the lease dilapidations provision
to £200,000 (2013: £164,000). The provision is charged throughout the life of the lease and is based on an estimated cost to make good
per square foot multiplied by the floor area of each premise.
The Company had no provisions in either year.
22 Share capital
In issue
At 1 January
Purchase and cancellation of own shares
At 31 December
Authorised – par value £0.01 each
Ordinary shares
of £0.01 each
31 December 2014 31 December 2013
Number of shares
Number of shares
103,115,735
(3,122,418)
105,896,115
(2,780,380)
99,993,317
103,115,735
300,000,000
300,000,000
During 2014, 3,122,418 (2013: 2,780,380) ordinary shares were bought back by the Company and were subsequently cancelled.
Further details are disclosed in Note 23.
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.
Included within shares in issue at 31 December 2014 are 596,499 ordinary shares (2013: 740,324) held by the EBT and 2,505,430
(2013: 2,505,430) held in treasury.
Rightmove plc annual report 2014 97
Strategic reportGovernanceFinancial statements
Notes continued
23 Reconciliation of movement in capital and reserves
Group
At 1 January 2013
Profit for the year
Share-based payments
Tax credit in respect of share-based
incentives recognised directly in equity
Dividends to shareholders
Exercise of share-based incentives
Cancellation of own shares
Share related expenses
Share
capital
£000
1,059
–
–
–
–
–
(28)
–
EBT
shares
reserve
£000
(7,911)
–
–
–
–
5,493
–
–
Treasury
shares
£000
(11,917)
–
–
–
–
–
–
–
Reverse
Other
acquisition
reserves
£000
235
–
–
–
–
–
28
–
reserve
£000
138
–
–
–
–
–
–
–
Retained
earnings
£000
25,909
74,335
2,408
7,006
(25,126)
(1,753)
(60,537)
(424)
Total
equity
£000
7,513
74,335
2,408
7,006
(25,126)
3,740
(60,537)
(424)
At 31 December 2013
1,031
(2,418)
(11,917)
263
138
21,818
8,915
At 1 January 2014
Profit for the year
Share-based payments
Tax debit in respect of share-based
incentives recognised directly in equity
Dividends to shareholders
Exercise of share-based incentives
Purchase of shares for share incentive plan
Cancellation of own shares
Share related expenses
1,031
–
–
(2,418)
–
–
(11,917)
–
–
–
–
–
–
(31)
–
–
–
375
(863)
–
–
–
–
–
–
–
–
263
–
–
–
–
–
–
31
–
138
–
–
–
–
–
–
–
–
21,818
96,181
2,728
(816)
(29,490)
(198)
–
(73,867)
(517)
8,915
96,181
2,728
(816)
(29,490)
177
(863)
(73,867)
(517)
At 31 December 2014
1,000
(2,906)
(11,917)
294
138
15,839
2,448
Share buyback
In June 2007, the Company commenced a share buyback programme to purchase its own ordinary shares. The total number of shares
bought back in 2014 was 3,122,418 (2013: 2,780,380) representing 3.1% (2013: 2.7%) 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 £73,867,000 (2013: £60,537,000). The maximum and minimum prices paid were £27.88 (2013: £26.50)
and £19.38 (2013: £14.49) per share respectively.
EBT shares reserve
This reserve represents the carrying value of own shares held by the EBT. 185,187 (2013: 2,971,962) share-based incentives were exercised
by Group employees during the year at an average price of £1.71 (2013: £3.39) per ordinary share. An additional 2,851 shares were issued
as a result of rolled up dividend payments in relation to performance shares.
In November 2014, the Group established the Rightmove Share Incentive Plan (SIP). Employees were offered 100 shares as a one-off gift,
subject to a three year service period, with effect from 1 January 2015. The EBT purchased 38,300 shares in December 2014 to fund the
share requirements of the SIP.
At 31 December 2014 the EBT held 596,499 (2013: 740,324) ordinary shares in the Company of £0.01 each, representing 0.6%
(2013: 0.7%) of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held in the EBT at
31 December 2014 was £13,409,000 (2013: £20,285,000).
98
rightmove.co.uk
Shares held in EBT at 1 January
Shares purchased for SIP
Share-based incentives exercised in year
Reduction in shares released from EBT due to net settlement (refer Note 24)
Increase in shares released from EBT due to rolled up dividend payments
Shares held in EBT at 31 December
Year ended
Year ended
31 December 2014 31 December 2013
Number of shares Number of shares
740,324
38,300
(185,187)
5,913
(2,851)
3,404,029
–
(2,971,962)
308,257
–
596,499
740,324
Treasury shares
This represents the cost of acquiring 2,505,430 shares held in treasury. These shares were bought back in 2008 at an average price of
£4.76 and may be used to satisfy certain share-based incentive awards.
Other reserves
This represents the Capital Redemption Reserve in respect of own shares brought back and cancelled. The movement of £31,000
(2013: £28,000) is the nominal value of ordinary shares cancelled during the year
Retained earnings
The loss on the exercise of share-based incentives is the difference between the value that the shares held by the EBT were originally
acquired at and the price at which share-based incentives were exercised during the year.
Company
At 1 January 2013
Profit for the year
Dividends to shareholders
Share-based payments
Tax credit in respect of share-based
incentives recognised directly in equity
Capital contribution
Cancellation of own shares
Share related expenses
Share
capital
£000
1,059
–
–
–
–
–
(28)
–
Treasury
shares
£000
(11,917)
–
–
–
–
–
–
–
Reverse
Other
acquisition
reserves
£000
4,153
–
–
–
–
792
28
–
reserve
£000
103,520
–
–
–
–
–
–
–
Retained
earnings
£000
430,624
71,015
(25,126)
1,616
5,503
–
(60,537)
(424)
Total
equity
£000
527,439
71,015
(25,126)
1,616
5,503
792
(60,537)
(424)
At 31 December 2013
1,031
(11,917)
4,973
103,520
422,671
520,278
At 1 January 2014
Profit for the year
Dividends to shareholders
Share-based payments
Tax debit in respect of share-based
incentives recognised directly in equity
Capital contribution
Cancellation of own shares
Share related expenses
1,031
–
–
–
–
–
(31)
–
(11,917)
–
–
–
–
–
–
–
4,973
–
–
–
–
1,084
31
–
103,520
–
–
–
–
–
–
–
422,671
76,732
(29,490)
1,644
(516)
–
(73,867)
(517)
520,278
76,732
(29,490)
1,644
(516)
1,084
(73,867)
(517)
At 31 December 2014
1,000
(11,917)
6,088
103,520
396,657
495,348
Rightmove plc annual report 2014 99
Strategic reportGovernanceFinancial statements
Notes continued
23 Reconciliation of movement in capital and reserves continued
Treasury shares
This represents the cost of acquiring 2,505,430 shares held in treasury. These shares were bought back in 2008 at an average price of
£4.76 and may be used to satisfy certain share-based incentive awards.
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 £1,084,000 (2013: £792,000) in respect of the share-based incentives charge
for employees of Rightmove Group Limited. In addition other reserves include £294,000 (2013: £263,000) of Capital Redemption Reserve.
A movement of £31,000 (2013: £28,000) 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 share-based incentive schemes for executive directors and other selected senior management employees.
Since flotation, the Company has awarded share options under the Rightmove Unapproved Executive Share Option Plan (Unapproved Plan)
and the Rightmove Approved Executive Share Option Plan (Approved Plan). The Group also operates a Savings Related Share Option Scheme
(Sharesave Plan), a Deferred Share Bonus Plan (DSP) and in May 2011 the Rightmove Performance Share Plan (PSP) was introduced.
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.
During 2013 the Group amended the rules of the Unapproved Plan to enable such awards to be net settled whereby the number of shares
released by the EBT and sold to satisfy the award is equivalent to the gain due to the option holder. Consequently no proceeds are received by
the EBT on exercise of unapproved share options.
The total share-based payments charge for the year relating to all share-based incentive plans was £2,728,000 (2013: £2,408,000).
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 £23,000 (2013: £40,000).
The Company charge for the year was £1,644,000 (2013: £1,616,000).
NI is being accrued, where applicable, at a rate of 13.8%, which management expects to be the prevailing rate when the awards are exercised,
based on the share price at the reporting date. NI for the year ended 31 December 2014 relating to all awards was a credit of £194,000
compared to a charge of £4,538,000 in the prior year, due to a reduction in the share price from £27.40 at 31 December 2013 to £22.48 at
31 December 2014.
The total Company NI for the year was a credit of £301,000 and a charge of £4,043,000 in the prior year.
100 rightmove.co.uk
Approved and Unapproved Plans
There has been no award of share options since 5 March 2010.
The assumptions used in the measurement of the fair values at grant date of the Approved and Unapproved Plans are as follows:
Share price
Exercise
Expected
Risk free
Dividend
non-vesting
Fair value
Employee turnover
before vesting/
Grant date
14 March 2006 (Approved)
10 October 2007
at grant date
(pence)
price
(pence)
volatility
Option life
(%)
(years)
413.50
410.00
(Unapproved EPS dependent)(1)
525.00
522.00
5 March 2009
(Unapproved TSR dependent)(1)
226.75
224.00
5 March 2010
(Unapproved TSR dependent)(1)
677.00
666.00
5 March 2010
(Unapproved EPS dependent)(1)
677.00
666.00
27.0
32.0
50.3
49.0
49.0
7.0
6.8
6.5
6.5
6.5
rate
(%)
4.5
5.8
2.6
3.2
3.2
yield
(%)
4.0
2.0
4.4
1.5
1.5
condition
per option
(%)
(pence)
16.0
92.00
17.0
189.00
12.0
69.00
12.0
267.00
12.0
312.00
(1) For details of TSR and EPS performance conditions refer to the Directors’ Remuneration Report on pages 41 to 66.
Expected volatility is estimated by considering historic average share price volatility at the grant date.
Group and Company
Outstanding at 1 January
Exercised
2014
Weighted average
exercise price
(pence)
Number
684,040
(20,909)
378.56
666.00
3,469,875
(2,785,835)
Number
2013
Weighted average
exercise price
(pence)
357.83
352.74
Outstanding at 31 December
663,131
369.53
684,040
378.56
Exercisable at 31 December
663,131
369.53
684,040
378.56
The weighted average market value per ordinary share for options exercised in 2014 was £23.73 (2013: £19.97).
The options outstanding at 31 December 2014 have an exercise price in the range of £2.24 to £6.66 in both years and a weighted average
contractual life of 4.3 years (2013: 5.3 years).
The share-based payments charge for approved and unapproved executive share options for the year ended 31 December 2014 is
£nil (2013: £91,000).
The Company charge for the year was £nil (2013: £49,000).
Rightmove plc annual report 2014 101
Strategic reportGovernanceFinancial statements
Notes continued
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:
Grant date
3 October 2011
1 October 2012
1 October 2013
1 October 2014
Share price
Exercise
Expected
Risk free
Dividend
non-vesting
Fair value
at grant date
(pence)
price
(pence)
volatility
Option life
(%)
(years)
1200.00
1577.00
2371.00
2144.00
988.00
1295.00
1896.00
1972.00
42.9
34.8
27.3
25.3
3.3
3.3
3.3
3.3
rate
(%)
2.8
0.5
0.7
1.0
yield
(%)
1.3
1.3
1.1
1.4
condition
per option
(%)
(pence)
25.0
25.0
25.0
25.0
446.00
475.00
659.00
430.00
Employee turnover
before vesting/
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.
Group and Company
Outstanding at 1 January
Granted
Forfeited
Exercised
2014
Weighted average
exercise price
(pence)
Number
97,620
51,929
(15,124)
(18,393)
1446.19
1972.00
1633.11
963.46
2013
Weighted average
Number
118,229
38,643
(12,327)
(46,925)
exercise price
(pence)
884.47
1896.00
1041.95
506.64
Outstanding at 31 December
116,032
1733.49
97,620
1446.19
Exercisable at 31 December
5,131
988.00
1,300
553.00
The weighted average market value per ordinary share for Sharesave options exercised in 2014 was £21.77 (2013: £23.34).
The Sharesave options outstanding at 31 December 2014 have an exercise price in the range of £9.98 to £19.72
(2013: £5.53 to £18.96) and a weighted average contractual life of 2.3 years (2013: 2.4 years).
The share-based payments charge for Sharesave options for the year ended 31 December 2014 is £148,000 (2013: £121,000).
The Company charge for the year was £3,000 (2013: £2,000).
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.
140,618 PSP awards were made on 3 March 2014 (the Grant Date) subject to EPS and TSR performance. Performance will be measured
over three financial years (1 January 2014 – 31 December 2016). The vesting in March 2017 (Vesting Date) of 25% of the 2014 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
2014 PSP award will be dependent on the satisfaction of an EPS growth target measured over a three year performance period. 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.
102 rightmove.co.uk
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 period between the Grant Date and the Vesting Date.
Grant date
Share price
Exercise
at grant date
(pence)
price
(pence)
Expected
volatility
(%)
Option
life
(years)
4 May 2011 (TSR dependent)(1)
1039.00
4 May 2011 (EPS dependent)(1)
1039.00
2 March 2012 (TSR dependent)(1)(2) 1391.00
2 March 2012 (EPS dependent)(1) 1391.00
8 March 2013 (TSR dependent)(1) 1781.00
8 March 2013 (EPS dependent)(1) 1781.00
3 March 2014 (TSR dependent)(1) 2688.00
3 March 2014 (EPS dependent)(1) 2688.00
nil
nil
nil
nil
nil
nil
nil
nil
42.9
n/a
34.8
n/a
27.3
n/a
25.3
n/a
2.8
2.8
3.0
3.0
3.0
3.0
3.0
3.0
Employee turnover
before vesting/
Risk free
Dividend
non-vesting
Fair value
rate
(%)
1.4
1.4
0.5
0.5
0.4
0.4
1.0
1.0
yield
(%)
condition
per option
(%)
(pence)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.1
3.1
3.7
3.7
4.8
4.8
4.8
4.8
739.00
1039.00
708.00
1391.00
1003.00
1781.00
1219.00
2688.00
(1) For details of TSR and EPS performance conditions refer to the Directors’ Remuneration Report on pages 41 to 66.
(2) The TSR performance condition for PSPs with a grant date of 2 March 2012 was determined to be 17.35% out of the maximum 25% for the
TSR element of share awards. The EPS element, being a maximum of 75% of the share awards, was met in full as a result of delivering
normalised EPS growth of over 100%. 92.35% of the awards are expected to vest. This will result in 9,145 shares lapsing in March 2015.
Expected volatility is estimated by considering historic average share price volatility at the Grant Date.
Group and Company
Outstanding at 1 January
Granted
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2014
Weighted average
exercise price
(pence)
Number
391,057
140,618
(18,924)
(74,386)
438,365
84,408
–
–
–
–
–
–
2013
Weighted average
Number
288,424
119,065
(16,432)
–
391,057
–
exercise price
(pence)
–
–
–
–
–
–
The weighted average market value per ordinary share for options exercised in 2014 was £23.50.
The PSP awards outstanding at 31 December 2014 have a weighted average contractual life of 2.9 years (2013: 3.1 years).
The share-based payments charge for the year ended 31 December 2014 is £1,903,000 (2013: £1,471,000).
The Company charge for the year was £1,224,000 (2013: £1,054,000).
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.
Rightmove plc annual report 2014 103
Strategic reportGovernanceFinancial statements
Notes continued
24 Share-based payments continued
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 senior management (the Grant Date) as follows:
Grant date
4 March 2011
2 March 2012
8 March 2013
3 March 2014
Share price
Exercise
Expected
Risk free
Dividend
non-vesting
at grant date
Award date
(pence)
price
(pence)
term
(years)
2 March 2012(1)
8 March 2013(2)
3 March 2014(3)
–(4)
1039.00
1391.00
1781.00
2688.00
nil
nil
nil
nil
2.8
3.0
3.0
3.0
rate
(%)
1.4
0.5
0.4
1.0
yield
(%)
1.4
1.3
1.4
1.0
condition
(%)
3.4
4.1
5.3
5.6
Fair value
per share
(pence)
1000.00
1338.00
1708.00
2605.00
Employee turnover
before vesting/
(1) Following the achievement of the 2011 internal performance targets, 76,048 nil cost deferred shares were awarded to executives and
senior management on 2 March 2012 (the Award Date) with the right to the release of the shares deferred until March 2014.
(2) Following the achievement of 90% of the 2012 internal performance targets, 63,331 nil cost deferred shares were awarded to executives
and senior management on 8 March 2013 (the Award Date) with the right to the release of the shares deferred until March 2015.
(3) Following the achievement of 85% of the 2013 internal performance targets, 34,878 nil cost deferred shares were awarded to executives
and senior management on 3 March 2014 (the Award Date) with the right to the release of the shares deferred until March 2016.
(4) Based on the 2014 internal performance targets, the Remuneration Committee determined that 70% of the maximum award in respect of
the year will be made in March 2015. The number of shares to be awarded will be determined based on the share price at the Award Date in
March 2015.
Group and Company
Outstanding at 1 January
Awarded
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2014
Weighted average
exercise price
(pence)
Number
133,933
34,878
(6,403)
(71,499)
90,909
2,435
–
–
–
–
–
–
2013
Weighted average
Number
217,652
63,331
(7,848)
(139,202)
133,933
–
exercise price
(pence)
–
–
–
–
–
–
The weighted average market value per ordinary share for deferred shares exercised in 2014 was £23.43 (2013: £20.44).
The DSP awards outstanding at 31 December 2014 have a weighted average contractual life of 2.1 years (2013: 2.1 years).
The share-based payments charge for the year ended 31 December 2014 is £677,000 (2013: £725,000).
The Company charge for the year was £417,000 (2013: £511,000).
104 rightmove.co.uk
25 Operating lease commitments
Non-cancellable operating lease rentals are payable as follows:
31 December 2014
31 December 2013
Plant & machinery
Land & buildings
Plant & machinery
Land & buildings
Group
Less than one year
Between one and five years
More than five years
£000
339
308
–
647
£000
949
2,026
589
Total
£000
1,288
2,334
589
£000
949
2,682
882
Total
£000
1,197
2,861
882
3,564
4,211
4,513
4,940
£000
248
179
–
427
The Company had no operating lease commitments in either year.
26 Capital commitments
The Group and Company had no capital commitments in either year.
27 Related party disclosures
Inter-group transactions with subsidiaries
During the year the Company was charged interest of £536,000 (2013: £517,000) by Rightmove Group Limited in respect of balances
owing under the inter-group loan agreement dated 30 January 2008.
As at 31 December 2014 the balance owing under this agreement was £46,983,000 (2013: £21,031,000) including capitalised interest
(refer Note 19).
On 31 October 2014 Rightmove Group Limited declared an interim dividend of 62p per ordinary share to the Company. The dividend
of £80,228,000 (2013: £77,640,000) was settled via a reduction in the inter-group loan balance owed by Rightmove plc to
Rightmove Group Limited.
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 41 to 66.
During the year the directors and former directors in office in total had gains of £858,000 (2013: £13,539,000) arising on the exercise of
share-based incentive awards.
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 41 to 66.
Rightmove plc annual report 2014 105
Strategic reportGovernanceFinancial statements
Notes continued
28 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:
Group
Net trade receivables
Amounts held in Escrow
Accrued interest receivable
Other debtors
Cash and cash equivalents
Note
17
17
17
17
18
31 December 2014 31 December 2013
£000
£000
21,801
–
30
65
11,205
19,146
1,680
41
89
6,799
33,101
27,755
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:
Group
UK
Rest of the world
Note
31 December 2014 31 December 2013
£000
£000
21,594
207
19,007
139
17
21,801
19,146
The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was:
Group
Property advertisers
Other
Note
31 December 2014 31 December 2013
£000
£000
20,827
974
18,325
821
17
21,801
19,146
The Group’s most significant customer accounts for £1,154,000 (2013: £1,574,000) of the trade receivables carrying amount.
Impairment losses
The ageing of trade receivables at the reporting date was:
Group
Not past due
Past due 0 – 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due older
106 rightmove.co.uk
31 December 2014
31 December 2013
Gross
£000
14,362
4,776
2,371
425
357
Impairment
£000
(49)
(61)
(28)
(76)
(276)
Gross
£000
12,663
3,607
2,710
429
173
22,291
(490)
19,582
Impairment
£000
(30)
(44)
(109)
(189)
(64)
(436)
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Group
At 1 January
Charged during the year
Utilised during the year
At 31 December
31 December 2014 31 December 2013
£000
£000
436
341
(287)
490
447
235
(246)
436
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.
Liquidity risk
The following are the contractual maturities of undiscounted financial liabilities, including undiscounted estimated interest payments:
Group
At 31 December 2014
Trade payables being non-derivative financial liabilities
Group
At 31 December 2013
Trade payables being non-derivative financial liabilities
The Company had no non-derivative financial liabilities in either year.
Carrying
amount
£000
Contractual
cash flows
£000
6 months
or less
£000
461
(461)
(461)
685
(685)
(685)
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 2014 all the Group’s sales and more than 95.0% (2013: 95.0%) of the Group’s purchases were Sterling denominated and accordingly
it has no significant currency risk.
Interest rate risk
The Group and the Company have exposure to interest rate risk on their cash balances. As at 31 December 2014 the Group had total cash
of £11,205,000 (2013: £6,799,000).
Fair values
The fair values of all financial instruments in both years are equal to the carrying values.
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 2014 and the
reporting date.
Rightmove plc annual report 2014 107
Strategic reportGovernanceFinancial statements
Advisers and shareholder information
Contacts
Chief Executive Officer:
Chief Operating Officer:
Finance Director:
Company Secretary:
Website:
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Jenny Warburton
www.rightmove.co.uk
Financial calendar 2015
2014 full year results
Annual General Meeting
Final dividend record date
Final dividend payment
Half year results
Interim dividend
27 February 2015
7 May 2015
8 May 2015
5 June 2015
29 July 2015
6 November 2015
Registered office
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in
England no. 6426485
Corporate advisers
Financial adviser
UBS Investment Bank
Joint brokers
UBS Limited
Numis Securities Limited
Auditor
KPMG LLP
Bankers
Barclays Bank Plc
HSBC Bank plc
Santander UK Plc
Solicitors
Slaughter and May
Pinsent Masons
Registrar
Capita Asset Services*
*Shareholder enquiries
The Company’s registrar is 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:
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Capita Asset Services is a trading name of Capita Registrars Limited.
Capita shareholder helpline: 0871 664 0300
(calls cost 10p per minute plus network extras)
(Overseas: +44 20 8639 3399)
Email: shareholderenquiries@capita.co.uk
Share portal: www.capitashareportal.com
Through the website of our registrar, Capita Asset Services, shareholders
are able to manage their shareholding online and facilities include
electronic communications, account enquiries, amendment of address
and dividend mandate instructions.
108 rightmove.co.uk
the biggest
home moving
audience and the
largest number
of properties in
the UK
Rightmove is the UK’s largest property portal.
Our aim is to be the place for all UK home hunters to
find details of all properties available to buy or rent.
Our platforms provide an easy to use but sophisticated
online property search. With the depth of information
that they provide, home hunters can immediately identify
their preferred properties.
The service is directed at four key membership groups:
• estate agents
• lettings agents
• new homes developers
• overseas homes agents offering properties outside
the UK but interested in advertising to UK-based
home hunters.
Designed and produced by The Team www.theteam.co.uk
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the UK’s
number one
property
website
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Caldecotte, Milton Keynes
MK7 8LE
Registered in England no 6426485
rightmove plc
rightmove plc
annual report 2014
annual report 2014