Rightmove plc Annual report 2015
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How Britain has moved
in the last 15 years
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Caldecotte, Milton Keynes
MK7 8LE
Registered in England no 6426485
Rightmove is
the UK’s largest
property portal
Our aim is to
empower the
UK’s decisions
around property
Contents
Strategic report
Governance
Financial statements
1 Highlights
2 Our strategy
3
At a glance
4 Chairman’s statement
6
13
17 Risk management
18 Principal risks and uncertainties
19
Corporate responsibility
Chief Executive’s review
Financial review
Corporate governance report
24 Directors and offi cers
26
38 Directors’ report
41
42
67
Statement of directors’ responsibilities
Directors’ remuneration report
Auditor’s report
70
71
72
73
74
75
76
77
Consolidated statement of comprehensive
income
Consolidated statement of fi nancial position
Company statement of fi nancial position
Consolidated statement of cash fl ows
Company statement of cash fl ows
Consolidated statement of changes in
shareholders’ equity
Company statement of changes in
shareholders’ equity
Notes forming part of the fi nancial
statements
108 Advisers and shareholder information
Designed and produced by The Team www.theteam.co.uk
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Strategic report | Highlights
Financial highlights
Revenue
Underlying operating profi t(1)
Underlying operating margin(1)
+15%
Revenue up 15% to £192.1m
(2014: £167.0m) with growth
achieved across all
business areas
+16%
Underlying operating profi t(1)
up 16% to £144.3m
(2014: £124.6m)
75%
Underlying operating margin(1)
of 75.1% (2014: 74.6%)
Underlying earnings per share(2)
Final dividend
Cash returned to shareholders
+21%
Underlying earnings per share(2)
up 21% to 121.4p (2014: 100.3p)
+23%
Final dividend of 27p (2014: 22p)
per ordinary share making a total
dividend of 43p for the year
(2014: 35p), up 23%
£112.5m
£112.5m (2014: £103.4m) of
cash returned to shareholders
through dividends and share
buybacks in the year
Operational highlights
SOLD
Advertisers
Properties displayed(3)
Site traffi c
Market share of traffi c(4)
19,752
Agency and New
Homes customers up
448 (+2%) since the
start of the year to an
all-time high of 19,752
(31 December 2014:
19,304)
50%
Nearly 50%(3) more UK
residential properties
on Rightmove than on
any other portal
+14%
Pages viewed up 14%
year-on-year to a
record 17.5bn
(2014: 15.4bn)
77%
Rightmove’s share of
traffi c of the top four
UK property portals
has grown across the
board(4); on a time
basis including desktop
and mobile traffi c it
increased to 77%
(January 2015: 74%)
(1) Before share-based payments and NI on share-based incentives
(2) Before share-based payments, NI on share-based incentives and no related adjustment for tax
(3) Source: AlphaWise, Morgan Stanley Research Jan 2016
(4) Source: Comscore (users, visits, pages and time measures)
(5) For Agency and New Homes customers
Rightmove plc annual report 2015 1
Strategic report | Our strategy
supporting our customers
We provide the most signifi cant
and effective exposure for
customers’ brands and properties.
We are the largest source of
high quality leads and offer
high value-adding products
and packages.
Page 7
building great teams
We continue to build great
teams and make Rightmove
a great place to work.
Page 11
developing our brand
Our strong brand recognition
makes Rightmove the place
that consumers turn to
fi rst and engage with
most when searching and
researching property.
Page 6
continuing to innovate
We continue to innovate
and help drive operational
effi ciencies and empower
customer decisions through
software, data and insight.
Page 9
2
rightmove.co.uk
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Strategic report | At a glance
Our customers
Rightmove’s customers are primarily estate agents, lettings
agents and new homes developers.
Our business model
Rightmove is the UK’s number one
property portal and operates a two-sided
network. On 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.
Home
buyers/
renters
landlords
RIGHTMOVE
Agents/
developers
Advertiser
growth
More leads
INCREASED
VALUE
More
property
inventory
The Rightmove network effect
We benefi t from strong network effects as
our property audience and the properties
our customers advertise creates a
‘virtuous circle’ enhancing the Rightmove
value proposition.
Home
hunters/
audience
growth
Rightmove plc annual report 2015 3
Strategic report | Chairman’s statement
Scott Forbes
Chairman
I am pleased to present Rightmove plc’s results for the year
ended 31 December 2015.
As we report on our 15th consecutive year of growth,
I’d like to pick up on a theme raised in the Strategic Report:
‘Doing the right thing’. This uncompromising principle
supports the ethos of the Group. The philosophy drives our
high achieving network business and what we do for our trade
customers on one side of the network and our web and
mobile visiting consumers on the other side. It also extends to
our focus and behaviours towards all stakeholders including
our investors, analysts, employees and our Board.
The team’s relentless focus and sensitive examination of
our consumer experience has been the catalyst for continual
improvements to site navigation and design. We aim for
simplicity of use and an engaging experience. Of course
our site traffi c is in part a natural consequence of the best
consumer proposition in the market, with almost 50% more
listings than any other UK property portal, but it is in the main
driven by the huge trust built up in our brand over the past 15
years. The team works diligently to maintain a site that delivers
the desired information when it is wanted and in the form it is
wanted and we achieved an enviable 99.997% level of site
availability last year.
Our nearly 20,000 customers have benefi ted from our
ever-growing popularity with the British home moving public.
We have delivered 15 consecutive years of site traffi c growth
for our customers and have been consistently ranked in the
top ten sites in the UK irrespective of cyclical housing
demand. Last year we attracted 200 million more consumer
visits than the previous year and generated a record 50 million
leads for our customers. Rightmove’s popularity is showing
no signs of letting up and we have already set new site traffi c
records this January.
Our customers have also benefi tted from a continuous
roll-out of additional advertising products to reach their
audience of home sellers, landlords and home hunters.
There is a wide range of choice and discretion to shape
and reinforce brand identity on Rightmove to compete for
business and market homes. There is also an increasing range
of valuable tools, support and data available to our customers
to assist them to operate their businesses more effectively
and effi ciently.
Since Rightmove’s strategy does not depend on capital
expenditure or M&A, the Board has a policy of distributing all
of its free cash fl ow each year. In fact, Rightmove has returned
all of its free cash fl ow since inception, totalling nearly £600m,
through a combination of increased dividends and share
buybacks. Our shareholders benefi t from a predictable
business model that is buoyed by our growing market
leadership, together with clear and refreshingly candid
communication from our executives.
Once again, the Board and I are grateful for the confi dence
and support of all our customers and for the talent and
dedication of our employees. Together their efforts have
positioned Rightmove as the essential marketplace for home
hunters to fi nd their next home and for property advertisers
to reach by far the widest possible audience.
4
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Rightmove’s popularity is showing
no signs of letting up and we have
already set new traffi c records
this January.
Financial results
The strength of our business model and core value
proposition underpin record fi nancial results in 2015.
Underlying operating profi t(1) was up 16% to £144.3m
(2014: £124.6m) driven by strong organic revenue growth of
15% to £192.1m (2014: £167.0m) and continued focus on
cost control. Underlying basic earnings per share (EPS)(2)
was up 21% to 121.4p (2014: 100.3p), even greater than
the percentage increase in profi ts and in part attributable to
£76.1m of share buybacks as part of our policy of returning
cash to shareholders.
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 profi t. In 2015, we returned a
further £112.5m (2014: £103.4m) to shareholders through
dividends and share buybacks.
Dividend
The Board previously announced that it would increase the
interim dividend to 16.0p (H1 2014: 13.0p) per ordinary share,
which was paid on 6 November 2015. Consistent with our
policy of increasing the total dividend for the year broadly in
line with earnings, the Board proposes to pay a fi nal dividend
of 27.0p (2014: 22.0p) per ordinary share for a total dividend
for the year of 43.0p (2014: 35.0p), an increase of 23%.
The fi nal dividend, subject to shareholder approval, will be
paid on 3 June 2016 to all shareholders on the register on
6 May 2016.
Corporate governance
One of the Board’s responsibilities is ensuring that the Group
applies good governance to facilitate effective management of
a high growth business. As the Company’s Chairman I am
pleased to note that the Group is continuing to foster an
environment of entrepreneurial leadership and innovation in a
framework of responsible governance and risk management
as set out in the Corporate Governance Report on pages 26
to 37.
Board changes
Jonathan Agnew and Judy Vezmar both retired from the
Board at the Group’s Annual General Meeting in May 2015
after nine years of service. On behalf of the entire Board,
I would like to thank them both for their substantial
contributions to the Group, and wish them every success.
Peter Williams has ably replaced Jonathan Agnew as
Senior Independent Director and Remuneration Committee
Chairman.
Outlook
Our results for 2015 show us continuing to outperform
expectations. Based upon strong customer numbers and
traffi c, and healthy growth in average spend per advertiser at
the start of the year, the Board remains confi dent of continued
success in 2016.
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 2015 5
Strategic report | Chief Executive’s review
Nick McKittrick
Nick
Chief Executive Offi cer
Chief
Rightmove celebrated its 15th birthday in 2015 and together
with the support of nearly 20,000 customers, it has changed
the way Britain searches and researches property.
customers to promote their properties, brands and proposition
more strongly and gain a competitive edge.
As the property industry becomes more digital, Rightmove’s
Our property stock advantage coupled with our brand
strength and innovation have substantially increased our
audience size and engagement this year. We attracted 200
million more visits in 2015 as more people came to search
and research the only place with a million properties for sale
and to rent in the UK.
We help our customers succeed by delivering great
value marketing and by helping drive business effi ciencies.
We have grown our customer base by 2% during 2015 to a
record high and continue to build broader relationships to
support customers’ ambitions. We continue to break records
at the start of 2016 having already generated over 9 million
leads for our customers.
Business model
Rightmove is the UK’s number one property portal and
operates a two-sided network. On 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. We benefi t
from strong network effects as our property audience and the
properties our customers advertise create a ‘virtuous circle’
enhancing the Rightmove value proposition.
Rightmove is free to the consumer and is where home
buyers and renters turn to fi rst as they can see virtually the
whole property market in one place. It is equally compelling to
home sellers and landlords as it is where nearly all home
buyers and renters are searching and researching the market.
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 signifi cant and effective
exposure for their brand and properties, the largest source of
high quality leads together with best in class software
providing market insight and tools that empower their
decisions and help drive business effi ciencies.
Our principal sources of revenue are the monthly
subscription fee paid by customers to advertise all of their
properties and the fee paid for additional advertising products
and packages. Our additional advertising products enable
market leading audience and best in class software is
becoming more valuable to customers. Our customers’ spend
on digital advertising is growing as the property advertising
market continues to shift structurally from offl ine to online and
also as customers choose to reinvest the savings from the
business effi ciencies that our platform and the internet brings.
We expect that our growth will continue to come through
product innovation and pricing.
We also continue to develop a number of smaller adjacent
businesses focused on advertising overseas and commercial
properties and property related data and valuation services.
15 successive years of growth
Rightmove celebrated its 15th birthday in 2015 delivering both
another record year of results and our 15th successive year of
growth. Our customer base grew by 2% to reach an all-time
high of nearly 20,000, our property stock advantage increased
to nearly 50% more than any other UK portal, we attracted an
additional 200 million visits to Rightmove, we generated 16%
more leads for our customers and our underlying operating
profi t grew 16% to a record £144.3m.
It is remarkable how far Rightmove has come. Our progress
is testament to our disciplined focus on the UK property
advertising market and the huge effort Rightmovers have put in
to build this business together with our industry customers.
Rightmove has changed the way Britain searches and
researches property and we look forward to delivering
continued growth and further empowering the UK’s decisions
around property.
Our strategy
The place that consumers turn to fi rst and engage
with most when searching and researching property.
For 15 years we have invested in our brand. However, it is not
just the 15 years of investment that makes Rightmove so
strong, it is the depth of connection that the British public has
with our brand. With our focus on doing the right thing for both
consumers and customers Rightmove has become a trusted
and valuable source of property information.
6
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Rightmove celebrated its 15th
birthday in 2015 delivering both
another record year of results
and our 15th successive year
of growth.
We provide indispensable support for home movers enabling
them to feel confi dent, inspired and more in control. This not
only results in more consumers turning to Rightmove fi rst and
spending more time on Rightmove, but most importantly,
generates more and better quality leads for our customers
leading to better outcomes and value.
We remain relentless in our focus to deliver the fastest,
easiest to use and most engaging experience for home
movers. At the core of our strategy is to have the largest, most
up to date and richest property content together with the best
search and research tools, and the most relevant content to
support home movers in their journey. We are the digital
advertising market leader in the UK for every major property
category: sales; rentals; new homes; overseas and most
recently commercial property.
This year Rightmove has become even more compelling to
consumers and customers as we strengthened our position
on both sides of the network. We are the only place to search
and research virtually the whole property market in the UK and
consumers can view nearly 50%(1) more UK residential
properties on Rightmove than on any other portal. Our
property stock advantage coupled with our brand strength,
innovation and expertise has substantially increased our
audience size and engagement.
There were a record 1.3 billion visits to Rightmove in 2015,
a year on year increase of 18%, and 17.5 billion pages of
property content were viewed. With this substantial increase
our share of traffi c of the top four property portals has grown
across the board(2). Our audience is also compelling to people
selling their homes with 85%(3) now ranking us as the most
important site for marketing their properties in a recent
independent survey.
Traffi c to our research tools grew signifi cantly in 2015 as
sellers and landlords turned to Rightmove fi rst to help inform
their decisions. Our research tools, such as sold prices, are
by far the most widely used in the UK and provide the unique
benefi t of access to our unrivalled catalogue of current and
archived properties. Consumers viewed over 350 million
pages of research content on Rightmove in 2015 which is
up by a third on the previous year.
Our culture of restlessness continues to drive improvement
and innovation. In addition to the hundreds of updates to our
platforms each month, our new launches in the year included
our Valuation Range App, the Rightmove School Checker,
mortgage content to further support home movers in their
journey and we began to roll-out our new look search results
pages and products based on a brand new site architecture.
Looking forward, we will be pressing home our advantage with
further innovation including a new ‘Where can I live?’ search.
We continued to invest in our brand in 2015 with our ‘fi nd
your happy’ advertising campaign. This campaign connects
with the strong positive emotions that moving home often
generates and refl ects our position at the heart of it. Our brand
building focused on national TV, through our ‘always on’
partnership with Channel 4 across their property content.
We added further weight to our presence in London with
more heavyweight TV advertising and through additional
outdoor media across the capital. We also became the
exclusive property partner with the Evening Standard in
addition to our existing exclusive partnership with Time Out.
The popularity of our Overseas property site increased
signifi cantly as we launched a new mobile site, added over
500 new customers and increased the number of properties
advertised by a third. We now advertise over 230,000 properties
across the world with a focus on the most popular British
destinations such as Spain, France, USA, Italy and Portugal. Our
audience for overseas property set new records in 2015 with
searches up over 20% to 98 million and leads up by nearly 50%.
Our Commercial advertising business continues to
grow with 55,000 properties now advertised. It has quickly
established itself as the UK’s largest commercial property
portal with engagement up strongly in the period as the
number of commercial enquiries grew over 30% year on year.
Provide the most signifi cant and effective exposure
for customers’ brands and properties, be the largest
source of high quality leads and offer high value-
adding products and packages.
We generated nearly 50 million leads for our customers, up 16%
on last year, twice as many as our nearest competitor. The better
quality of our leads continues to stand out as they convert to
over four times(4) as many sales and lets for our agency
customers. This is the 15th successive year we have delivered
increased exposure for our customers’ brands and properties.
Rightmove plc annual report 2015 7
the UK’s number
one property website
Rightmove celebrated its 15th birthday in 2015
and together with the support of nearly 20,000
customers, it has changed the way Britain
searches and researches property.
extending our market
leading position
We have extended our property stock
advantage and consumers can now view
nearly 50% more UK residential properties
on Rightmove than on any other portal.
8
rightmove.co.uk
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Strategic report | Chief Executive’s review continued
Revenue
200
150
119.4
100
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192.1
167.0
139.9
50
0
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Product revenue now accounts
for 42% of Agency and New
Homes revenue.
Winning the right to sell a property is the lifeblood of agents. Over
a million home movers highlighted they had a property to sell when
emailing an agent about another property, creating business
opportunities for our customers. We also delivered nearly 200,000
leads from people asking for a valuation on their home, for those
customers who bought our Local Valuation Alert product.
From our beginnings as a simple listings business we have
developed additional advertising products and now provide our
customers with a range of products to promote their brands
and properties more strongly to gain a competitive edge.
We launched our fi rst product in 2007 and we now have a
suite of products across three categories: display advertising,
property promotion and direct response. Product revenue
now accounts for 42% of Agency and New Homes revenue
with the remainder coming from listing fees.
Revenue from products grew by 20% in 2015 to £73.9m.
There is signifi cant headroom to grow product revenue as we
have the opportunity to increase the penetration of existing
products, evolve their value and pricing, and continue to
innovate and introduce new products as customers look to
invest more to drive their brand exposure.
This year average monthly revenue per advertiser (ARPA)
increased by 10% with around two thirds of the ARPA growth
driven by customers spending more on products and
packages. ARPA has grown to over £750 as customers
choose to spend more online and transition away from the
historic use of newspapers where ARPA peaked at circa
£2,500(5) per month back in 2007.
Help drive operational effi ciencies and empower
customer decisions through software, data and insight.
Over the last 15 years Rightmove has helped drive signifi cant
effi ciencies within the property industry by providing our
customers with training, support and a suite of software as
part of their membership to help them in the day to day
running of their businesses.
Using our software customers can:
(cid:129) Easily fi nd a range of comparable properties from over one
million properties currently advertised on Rightmove and
from our archive of over 35 million properties advertised
on Rightmove;
(cid:129) Upload a new vendor’s property onto Rightmove almost
immediately and in the same instant alert relevant home movers
from Rightmove’s database of millions of registered users;
(cid:129) Easily see the level of interest in a property and provide
independent market feedback to their vendors and landlords;
(cid:129) Monitor their market share and ranking versus their local
competition;
(cid:129) Identify potential valuation opportunities faster and more
effi ciently;
(cid:129) See a map of lead activity by street in their local area to
help target potential sellers and landlords; and
(cid:129) Ensure leads are dealt with effectively by using our lead
reporting and call recording functionality.
The digitalisation of the property industry and the effi ciencies
these tools bring helps to reduce cost per offi ce and has also
enabled the growth in the number of agents. Over the last
12 months our membership base has grown by over 2%.
Our software products have become an integral part of the
industry over many years of use and in a recent independent
survey(6) 49% of agents said our software was ‘crucial’ to their
business and would be hard to switch from with a further 39%
saying it was ‘helpful’. Over 50% of agents also cited that our
software makes them more effi cient not just in marketing but in
other areas of their business too.
In 2015 we introduced the next wave of market share analysis
tools to help our customers drive further business effi ciencies and
make better informed decisions. The new functionality and data,
greater fl exibility and unique ‘whole of market’ view has doubled
agent use year on year. We are also delighted that the survey
found that nearly 60% of agents place their trust in us and only use
Rightmove portal software for their insights.
For example, whereas previously our customers would
We care about our customers’ business success and building
have manually gathered valuation and comparable data,
paid for printing and postage of property or development
details and paid a third party to count ‘For Sale’ and ‘Sold’
advertising boards for market share information, they can
now do this electronically.
strong relationships is vital to support their ambitions, especially
in light of the signifi cant digital changes taking place. To that end
we are spending more time with customers than ever before by
expanding our account management team and increasing the
Rightmove plc annual report 2015 9
developing our brand
Our strong brand recognition makes
Rightmove the place that consumers
turn to fi rst and engage with most when
searching and researching property.
increasing our
brand exposure
We continued to invest in our brand
in 2015 with our ‘fi nd your happy’
advertising campaign. Our brand
building focused on national TV,
through our ‘always on’ partnership
with Channel 4.
10
rightmove.co.uk
Strategic report | Chief Executive’s review continued
Underlying operating profit
150
120
90
60
30
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£
104.0
87.5
69.4
144.2
124.6
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team’s effi ciency through better tools. We also continued our
popular agent seminar programme which covers concepts
such as brand building, targeting sellers and customer service
in a digital world. Over 2,000 agents attended one of the 35
seminars we ran across the UK in 2015 from Norwich to
Swansea and from Truro to Inverness.
To help all agents and developers realise the full benefi t
from Rightmove we also set up a telephone training team and
expanded our webinar offering. Our webinars provide
customers with an effi cient way to learn about Rightmove
and our software without leaving their offi ces. We ran over
80 webinars in the year with 2,500 agents and developers
attending with popular topics including Winning Landlords
and The Ultimate Property Listing.
Build great teams and continue to make Rightmove a
great place to work.
From the fi rst Rightmove team of a dozen people to the current
organisation of 435 we are always striving to create one team of
Rightmovers with as few barriers as possible to rapid growth
and innovation. We believe that this comes from a process-light,
highly connected organisation with little constraining hierarchy
and bureaucracy. To enable this we need every Rightmover to
be both individually empowered and accountable.
To ensure we foster a highly connected organisation, we have
taken care to create a physical environment that encourages
open and honest discussion, including social spaces for the
teams to enjoy each other’s company. Our workplace is free
from offi ces and the usual trappings of hierarchy.
We believe in sharing often and early and reinforce this
through events such as ‘townhalls’ which share progress,
successes and challenges. In June 2015 the whole Group spent
a day and a night under canvas together building and reinforcing
cross team connections. The culture is not solely built on these
events, but also from the everyday small gestures and the
authentic care Rightmovers have for one another. Everything
together creates a unique, driven and quirky environment that we
believe results in people feeling there’s no place they’d rather be.
By striving to make Rightmove a great place to work we can
attract and retain the best talent and provide the best service
for consumers and customers.
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Our customer base grew by
2% to reach an all-time high
of nearly 20,000.
Great talent and passion to perform is not enough to make a great
Rightmover; the way in which we behave towards each other, our
customers and partners is vital. How we go about our work is
central to our recruitment, feedback and personal development
processes. We also have a scheme to allow the team to recognise
their peers who embody the behaviours we aspire to.
The biggest infl uence in our restless and inquisitive culture,
of course, comes from our people. Their actions and
behaviours create the sense of belonging and connection
and allows the business to continue to thrive and attract
great people. In our 2015 ‘Have Your Say’ people survey,
again over 90% of Rightmovers think it is a great place to work.
To recognise employees who have been part of the journey
with Rightmove for ten years we create a gnome in their image.
I’m pleased that for such a young company, over 40 gnomes
have pride of place in our offi ce.
I am proud of the vibrant culture and business we have built
together, I would like to thank everyone for everything they have
done to achieve this and look forward to enjoying continued
success in the future.
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 benefi t from this transition and
with our market leading position strengthening, average spend per
advertiser continuing to grow and record January traffi c numbers,
the Board remains confi dent of making further progress in growing
the business organically in 2016 and beyond.
Nick McKittrick, Chief Executive Offi cer
26 February 2016
(1) Source: AlphaWise, Morgan Stanley Research, January 2016
(2) Source: Comscore, December 2015 (users, visits, pages and
time measures)
(3) Source: The Property Academy 2015 Home Moving Trends Survey
(4) Source: Independent software provider to the estate agency industry
(5) Source: Advertising Association Warc report December 2015
(6) Source: Barclays Capital, October 2015
Rightmove plc annual report 2015 11
continuing to innovate
We continue to innovate and invest in our platforms
and drive operational effi ciencies and empower
customer decisions through developments in
software, data and insight.
fi nding the right school
Rightmove’s School Checker shows
school’s in a local area on a map and
provides easy access to inspection
report data for around 30,000 schools.
12
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rightmove.co.uk
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Strategic report | Financial review
Robyn Perriss
Finance Director
Revenue
Revenue grew strongly in 2015 up 15% to £192.1m
(2014: £167.0m). Our Agency business was the main
contributor to the absolute revenue growth with a year on
year increase of £17.5m to £147.1m (2014: £129.6m).
We experienced 3% growth in Agency customer numbers,
despite fl at year on year transactions in the UK housing
market. The majority of the revenue increase came from ARPA
growth, through discretionary sales of additional advertising
products together with increases to core membership prices.
Agency continues to be by far our largest business
contributing 77% (2014: 78%) of our total revenue.
Revenue from our New Homes business grew by 15% to
£30.5m (2014: £26.4m). The majority of revenue growth was
Key performance indicators
driven by the sale of additional advertising products, including
email campaigns and by increases to core membership prices.
Other revenue across our data services, overseas,
commercial and non-property advertising streams
demonstrated healthy growth increasing by 32% to
£14.5m (2014: £11.0m) and constituted 8% (2014: 7%)
of our total revenue.
Underlying operating profi t
Underlying operating profi t(1) increased by 16% to £144.3m
(2014: £124.6m) and underlying operating margin(1) for the
year refl ected further operating leverage gains, increasing to
75.1% (2014: 74.6%).
Number of advertisers
+2%
Agency and New Homes
membership at end of 2015 was
19,752 (2014: 19,304), up 2% year
on year
Average revenue per
advertiser
+10%
£754 per month, up 10%
(2014: £684)
Market share
77%
77% (January 2015: 74%) market
share of the top four UK property
portals by time spent
85% market share of the top four
UK property websites by pages
viewed, up seven percentage
points (December 2014: 78%)
Source: Comscore
Properties displayed
Page impressions
Leads
1.2m
1.2 million properties displayed
on rightmove.co.uk at
31 December 2015 (2014: 1.1 million)
17.5bn
17.5 billion page impressions up
14% from 15.4 billion in 2014
49.8m
49.8 million leads up 16% from
42.8 million in 2014
Rightmove plc annual report 2015 13
supporting our customers
We provide the most signifi cant and effective
exposure for customers’ brands and properties,
the largest source of high quality leads and offer
high value-adding products and packages.
maximise
customer exposure
We generated nearly 50 million
leads for our customers, up
16% on last year. This is the
15th successive year we have
delivered increased exposure
for our customers’ brands
and properties.
14
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Strategic report | Financial review continued
Underlying basic EPS
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Year
14
15
Rightmove continues to see
strong cash generation and
to return all the free cash
generated to shareholders.
This was driven by continued strong revenue growth coupled
with a slightly lower percentage increase in underlying operating
costs(1). Underlying operating costs(1) increased by £5.5m to
£47.9m (2014: £42.4m). £2.4m of the increase related to salary
and associated costs attributable to general wage infl ation and
an increased average headcount of 412 (2014: 388), refl ecting
investment in sales, customer support and technical heads
during the year and the full year impact of staff recruited during
2014. Marketing spend increased by £2.0m in the year as we
continued to invest in promoting the Rightmove brand and
driving home our competitive advantage.
Share-based payments and National Insurance (NI)
In accordance with IFRS 2, a non-cash charge of £3.8m
(2014: £2.7m) is charged to income representing the
amortisation of the fair value of share-based incentives granted.
NI is being accrued, where applicable, at a rate of 13.8%
on the potential employee gain on share-based incentives
granted. Based on a year on year increase in the closing
share price from £22.48 at 31 December 2014 to £41.25
at 31 December 2015 in respect of the outstanding
share-based incentives granted, together with the actual
NI cost on share-based incentives exercised in the year,
there was a charge of £3.3m (2014: credit of £0.2m).
Taxation
The consolidated tax rate for the year ended 31 December
2015 was 20.2% (2014: 21.2%). The effective tax rate was
slightly lower than the UK enacted rate of 20.25% 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 2015 was £75.3m
(2014: £66.2m). £29.8m (2014: £28.6m) related to
corporation tax and Employer’s NI borne by the Group
while the remaining £45.5m (2014: £37.6m) was collected
in respect of payroll taxes and VAT.
Earnings per share (EPS)
Underlying basic EPS(2) increased by 21% to 121.4p
(2014: 100.3p). Basic EPS increased by 17% to 114.0p
(2014: 97.7p). The growth in EPS was driven by the increase
in profi tability in the year together with the benefi t from our
continued share buyback programme which reduced the
weighted average number of ordinary shares in issue to
96.0m (2014: 98.4m).
Balance sheet
Rightmove’s balance sheet at 31 December 2015 showed
total equity of £6.6m (2014: £2.4m) refl ecting growth in profi ts
and retained earnings less the continued 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 13% to £24.6m (2014: £21.8m). Trade and other payables
increased by £4.0m to £31.6m (2014: £27.6m) primarily due
to an increase in deferred revenue in line with trading and an
increase in the accrual for NI charge on share-based
incentives outstanding. Our deferred tax asset, representing
future tax benefi ts from share-based incentives, is higher at
£6.8m (2014: £4.5m) due to a larger potential tax benefi t
being recognised in relation to outstanding share-based
incentives as a result of the growth in the share price during
the year.
Cash fl ow
Rightmove continues to see strong cash generation and
to return all the free cash generated to shareholders.
Predictable cash fl ows refl ect the subscription nature of the
business coupled with low working capital requirements.
Cash generated from operating activities was £143.2m
(2014: £125.4m) representing an operating cash conversion
in excess of 100%.
Rightmove plc annual report 2015 15
Strategic report | Financial review continued
Tax payments increased to £26.9m (2014: £17.1m) and
£0.2m (2014: £0.1m) was paid in relation to bank charges
and facility fees resulting in net cash from operating activities
of £116.1m (2014: £108.2m).
Capital expenditure of £1.8m (2014: £1.1m) refl ects
ongoing investment in our website infrastructure.
During the year £4.0m was placed in money market
deposits in order to obtain a higher interest rate on
cash balances.
Proceeds of £0.4m (2014: £0.2m) were received on the
exercise of share-based incentives and £0.5m (2014: £0.9m)
was applied to purchase shares to fund the Rightmove Share
Incentive Plan which was introduced in January 2015.
During 2015, £76.1m was invested in the repurchase of
our own shares (2014: £73.9m) whilst a further £36.5m
(2014: £29.5m) was paid in dividends refl ecting the increased
fi nal dividend for 2014 and the 3p increase in the interim
dividend this year. This brings the total cash returned to
shareholders in the year to £112.5m.
The closing Group cash and money market deposit
balance at the end of the year was £12.4m (2014: £11.2m).
Use of cash
The Board’s priorities for the use of cash continue to be:
investment in the business; payment of progressive 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 again be in a position to return
surplus cash to shareholders during 2016 through a
combination of dividends and share buybacks.
Robyn Perriss
Finance Director
26 February 2016
(1) Before share-based payments charge of £3,765,000 (2014: £2,728,000) and
NI charge of £3,331,000 (2014: £194,000 credit) on share-based incentives.
(2) Before share-based payments charge of £3,765,000 (2014: £2,728,000) and
NI charge of £3,331,000 (2014: £194,000 credit) on share-based incentives
and no related adjustment for tax.
16
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Strategic report | Risk management
Approach to risk management
The Board has overall responsibility for ensuring that risk is
effectively managed across the Group. The primary method
by which risks are monitored and managed is through the
monthly Executive Committee meetings. The subject of risk
is included on each monthly agenda and any signifi cant new
risks or change in status to existing signifi cant risks is
discussed and actions taken as appropriate.
On a bi-annual basis, risk is reviewed across each
business area. This review includes a detailed assessment
of identifi ed risks, the likelihood of each risk occurring and
the potential impact, together with controls and mitigating
procedures in place. This information is combined to form a
consolidated risk register which is reported to the Executive
Committee for review and challenge, ahead of fi nal review
and approval by the Board. A nominated Director has
responsibility for each risk. The Board reviewed the risk
register at the February 2015 and September 2015
Board meetings.
Key areas of focus
We continue to drive improvements to our risk management
process and the quality of risk information generated, whilst at
the same time maintaining a simple and practical approach.
This year the risk management framework has been reviewed
by Rightmove Assurance, our outsourced internal audit
function, with a presentation to the Audit Committee on key
fi ndings including recommendations to enhance the risk
management approach beyond the specifi c requirements
of the 2014 UK Corporate Governance Code (the Code) and
to implement principal risk dashboards.
Viability statement
In accordance with provision C.2.2. of the Code, the directors
have assessed the viability of the Group over a three year
period, taking into account the Group’s current position and
the potential impact of the principal risks and uncertainties set
out on pages 17 to 18. Based upon the robust assessment of
the principal risks facing the Group, including those that would
threaten its business model, future performance, solvency or
liquidity, the directors have a reasonable expectation that the
Group and the Company will be able to continue in operation
and meet its liabilities as they fall due over the three year
period to 31 December 2018.
numbers, ARPA growth and other ancillary revenue streams
and considers the Group’s profi tability, cash fl ows and
dividend cover over the period.
The plan is subject to robust downside sensitivity analysis
which involves fl exing a number of the main assumptions
underlying the plan. Where appropriate, analysis is carried out
to evaluate the potential fi nancial impact over the period of the
Group’s principal risks actually occurring. Furthermore our
business model is structured so that the Group is not overly
reliant on a small customer base with no single customer
constituting more than 3% of Group sales.
The directors have determined that a three year period to
Also given our signifi cant free cash fl ow, our ability to adjust
31 December 2018 constitutes an appropriate period over
which to provide its viability statement, being the period
considered under the Group’s current three-year strategic
plan. The three-year plan is reviewed by the directors at least
annually and is developed on a segment by segment basis
using a bottom up model. The three-year plan makes certain
assumptions about Agency and New Homes customer
our discretionary share buyback programme further provides
long-term comfort around viability in the face of adverse
economic or competitive conditions.
Whilst this review does not consider all the risks that the
Group may face, the directors consider that this stress-testing
based assessment of the Group’s prospects is reasonable in
the circumstances of the inherent uncertainty involved.
Rightmove plc annual report 2015 17
Strategic report | Principal risks and uncertainties
A description of the principal risks and uncertainties faced
by the Group in 2015, together with the potential impact
and monitoring and mitigating activities is set out in the
table below.
We recognise that the Group is exposed to risks wider than
those listed, however we have disclosed those that we believe
are likely to have the greatest impact on the Group delivering
its strategic objectives and those that have been the subject
of discussion at recent Board and Audit Committee meetings.
Description
Impact
Monitoring and mitigation
Change from prior year
Competitive environment
(cid:129) Increased competition from
existing competitors
(cid:129) 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
New or disruptive
technologies and changing
consumer behaviours
(cid:129) Failure to innovate or adopt
new technologies
(cid:129) Failure to adapt to changing
consumer behaviour
Cyber attack
(cid:129) Unavailability of the website
and other platforms
(cid:129) Corruption or loss of key data
as a result of a security breach
Securing and retaining the
right talent
UK housing market
downturn
(cid:129) Substantially fewer housing
transactions than the norm
may lead to a reduction in
the number of Agent
branches or New Homes
developments
(cid:129) Reduction in the size of the
UK property advertising
market leading to fewer
customers
This may impact on
Rightmove’s ability to
grow revenue due to the
potential loss of:
(cid:129) Audience
(cid:129) Advertisers
(cid:129) Demand for additional
advertising products
(cid:129) Communication of the value of Rightmove membership to
advertisers
(cid:129) Continued investment in our account management teams to ensure
we stay close to our customers and local markets and help our
customers run their businesses more effi ciently
(cid:129) Sustained marketing investment in the Rightmove brand
(cid:129) Sustained investment and innovation in serving both home
hunters and our advertisers
Under-performance and
impact on Rightmove’s
ability to grow revenue due
to the potential loss of:
(cid:129) Audience
(cid:129) Advertisers
(cid:129) Demand for additional
advertising products
(cid:129) Continual improvements to our platforms and product
proposition
(cid:129) Signifi cant and ongoing investment in mobile and tablet platforms
(cid:129) Large in-house technology team with culture of innovation
(cid:129) Innovation lab to develop emerging models and technologies
(cid:129) Ongoing monitoring of consumer behaviour and annual
‘Hackathons’ which allow employees to spend time during work
hours to develop their own online property related ideas
Any loss of website
availability or theft or
misuse of data held within
the Group’s databases
and IT systems could
have both reputational
and fi nancial implications
for the Group
(cid:129) Disaster Recovery and Business Continuity Plans in place,
subject to ongoing testing and regular review
(cid:129) Use of three data centres to load balance and ensure optimal
performance and business continuity capability
(cid:129) Regular backups of key data
(cid:129) Regular testing of the security of the IT systems and platforms
including penetration testing and distributed denial of service
attack procedures
The inability to recruit and
retain talented people could
impact our ability to maintain
our fi nancial performance
and deliver growth
When key staff leave or
retire, there is a risk that
knowledge or competitive
advantage is lost
Underperformance as the
number of agents and
new homes developments
are a major determinant of
Rightmove’s revenue
(cid:129) Ongoing monitoring of external threats through updates
from external specialists and collaboration with other
online organisations
(cid:129) Ongoing succession planning and development of future leaders
(cid:129) Payment of competitive reward, including a blend of short and
long-term incentives for senior management and the ability for
all employees to participate in the success of the Group through
the SIP
(cid:129) Staff communication and engagement
(cid:129) Maintaining the culture of the Group, which generates signifi cant
staff loyalty
(cid:129) Monitoring of housing market leading indicators and trends in
Rightmove membership
(cid:129) Continuing to provide the most signifi cant and effective
exposure for customers’ brands and properties, be the largest
source of high quality leads and offer high value-adding
products and packages and help drive operational effi ciencies
for our customers, thereby embedding the value of our
membership
(cid:129) Maintaining a fl exible cost base that can respond to changing
conditions
(cid:129) Developing revenue streams in related and adjacent markets
18
rightmove.co.uk
Increased risk
Decreased risk
Risk unchanged
Strategic report | Corporate responsibility
Our people
Our people are our most highly valued asset, they are critical
to our success and growth and we are proud of the mixture
of talent and experience they bring. Our open and honest
cultural style comes from our people and the environment
we have created 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 both our customers and consumers.
Recruitment
Recruiting the ‘right’ talent continues to be an important part
of our ability to drive growth. The tightening job market,
particularly in technology skills makes our working environment
and benefi ts ever more important in attracting the right people.
Referrals from existing employees are a valuable source of
new recruits, typically ensuring a higher quality candidate with
a better cultural fi t. 20% of new employees in 2015 were
introduced to Rightmove by an existing employee.
This year we partnered with MK College and the University
of Bedford to offer paid internships to design graduates for
up to six months to provide graduates with valuable work
experience when looking for their fi rst job. This has proved to
be a most successful partnership and Rightmove are looking
to extend this into other areas of the business in 2016.
High quality recruiting is supported by long-term
commitment from Rightmove employees. We are proud to
now have 40 people who have celebrated ten or more years’
service, which represents 10% of our employees and which
we believe backs our impressive people survey results.
People development and training
To foster our culture of highly connected and empowered
employees every new employee attends two offi ce based
‘How Rightmove fi ts together’ days to introduce them to the
business and our customers. They also attend ‘Nexton’, an
off-site residential experience to introduce them to our culture
and values.
Beyond induction, Rightmove is committed to investing in
our employees through extensive training and leadership
programmes that are designed to equip them with the necessary
skills to perform to the best of their ability and provide the best
possible service to our customers and consumers.
We have also developed a suite of internal development
courses for our employees covering both technical and
non-technical skills to further invest in our people and in
recognition of the benefi t in providing continual professional
and personal development for Rightmovers.
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Employee benefi ts
Whilst we believe that that being a great place to work helps
us attract the best talent we also reward our employees with
a range of additional benefi ts.
Rightmove contributes towards a group stakeholder
pension plan. Opt out rates continue to be low and currently
91% of employees are members of the pension plan. We also
offer private healthcare complimented by a cash plan scheme
to all employees.
We want our people to directly benefi t from the success
their talent and hard work brings to Rightmove. All employees
can join the Group’s Save As You Earn Scheme (Sharesave),
which allows employees to save money from their salary with
the option to purchase shares at a discount after three years.
In November 2015, the Group’s seventh Sharesave contract
matured allowing employees to benefi t from the continued
success of the Group over the last three years. 65% of our
employees currently participate in the Sharesave.
In January 2015 we made a free share award of 100
shares to all qualifying employees through the Rightmove
Share Incentive Plan. In December 2015 we communicated to
all employees that we were making a further free share award
of 50 shares to all qualifying employees in January 2016.
We also offer fl exible working arrangements, supporting
part time working and reduced hours to allow our employees
to balance their work and family commitments.
Engagement
We encourage employees involvement and place emphasis
on keeping employees informed of the Group’s activities via
‘townhalls’ and business performance updates with senior
management and quarterly sales conferences. In 2015 to
celebrate our 15th birthday, Rightmove brought the whole
Group together for camping, team building and our annual
summer party.
During 2015, our employee recognition scheme, which is
based around the ‘Rightmove behaviours’ which refl ect 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
‘townhalls’.
Rightmove plc annual report 2015 19
building great teams
We continue to build great teams and
make Rightmove a great place to work.
a great place to work
In our 2015 ‘Have Your Say’
people survey, again over 90%
of respondents think Rightmove
is a great place to work.
20
rightmove.co.uk
Strategic report | Corporate responsibility continued
As it is important to us to know what our employees think
and having received such valuable feedback in the past,
we conduct an annual ‘Have your Say’ people survey.
Again in 2015 we are proud of our outstanding results
from the survey with highlights including:
(cid:129)
91% of respondents saying Rightmove is a great
place to work;
96% of respondents committed to making a real
contribution to the success of Rightmove; and
(cid:129) 92% of respondents enjoy working in their team.
(cid:129)
Despite the outstanding results from the survey, the
management team is working hard to improve the results
in 2016. To recognise the importance of employees in the
continuing success of Rightmove an employee engagement
score will form part of the senior management bonus criteria
in 2016.
Equality and diversity
Rightmove has a fi rm commitment to equality of opportunity in
all our employment policies, practices and procedures. Our
recruitment and selection processes are geared to selecting
the best candidate regardless of their age, gender, sexuality,
full or part time status, disability and marital status.
We recognise that a diverse workforce will provide a wide
array of perspectives that promotes innovation and business
success. Drawing on what is unique about individuals adds
value to the way we do business and helps us anticipate and
provide what our customers want from us.
For the year ended 31 December 2015, one out of three
executive directors were female. Our female representation
on the Board is 25%, with two out of eight Board directors
being female.
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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 2015, 24% (2014: 28%) 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 2015, is set out below:
Human rights
Whilst Rightmove does not have a specifi c human rights
policy, it does have policies such as Equal Opportunities and
an Anti-bribery policy that adhere to internationally proclaimed
human rights principles. There is also a gifts and hospitality
policy and an online register to record all gifts and hospitality
that are accepted by employees.
Charitable activity
We continue to encourage all our employees to devote time
and fundraising efforts to charitable causes that are of
particular importance to them as individuals. During 2015,
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.
In 2015 we contributed £56,000 to UK charities through
matched funding. 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 effi cient means of giving.
Directors
Senior management
All Rightmove
employees
2
6
4
13
213
222
Male
Female
Male
Female
Male
Female
Rightmove plc annual report 2015 21
Strategic report | Corporate responsibility continued
In 2015, we contributed £41,000 to support customer
initiatives via Agents Giving, where we will contribute to the
costs of the setting up of 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 through a
charitable sponsorship fund we set up in 2014 in conjunction
with Agents Giving. In 2015, the fundraising activities by our
customers that we have supported will raise nearly £500,000
for UK charities.
Environment
Rightmove actively considers its environmental impact and we
are conscious of playing our part in tackling climate change.
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 benefi t. Rightmove has worked
hard to increase the number and size of photographs of each
property, improved the size and added functionality to
property fl oor plans and has introduced more comprehensive
map searches and aerial photographs which help home
hunters to identify the specifi c 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 Certifi cates which
allow prospective buyers to evaluate the energy effi ciency of
a property they are considering buying, and to identify
opportunities to improve the energy effi ciency once they
have purchased the property.
As an internet-based Group with most staff employed in
two offi ce 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
established in consultation with local authorities and recycling
partners. All waste bins were removed from the desks in our
London and Milton Keynes offi ces, 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 offi ce locations and by
encouraging participation in our Cycle to Work scheme.
In 2015, our fuel card provider, Allstar, partnered with
Forest Carbon to capture the CO2 emissions from our fl eet of
company cars and turn it into new UK woodlands, under the
Allstar Ecopoint scheme. We pay an amount per month per
car to capture all of the CO2 from each vehicle and with that
Forest Carbon plant woodlands that are quality assured by
the Governments’ Woodland Carbon Code to offset the
emissions from each vehicle. We are provided an e-certifi cate
annually which shows us how many trees have been planted
for us, as well as their location and how much CO2 they are
expected to capture.
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 classifi ed as either direct or indirect
and which are divided further into Scope 1, Scope 2 and
Scope 3 emissions.
Direct GHG emissions are emissions from sources that are
owned or controlled by Rightmove. Indirect GHG emissions
are emissions that are a consequence of the activities of the
Group but that occur at sources owned or controlled by
other entities.
Scope 1 emissions: Direct emissions controlled by the
Group arising from company cars. Whilst the cars are leased,
we are responsible for the emissions and therefore we report
these under Scope 1.
Scope 2 emissions: Indirect emissions attributable to the
Group due to its consumption of purchased electricity.
Scope 3 emissions: Other indirect emissions associated
with activities that support or supply the Group’s operations.
We include emissions arising from our third-party-run
data centres.
22
rightmove.co.uk
Methodology
We have reported on all of the emission sources required under
the Companies Act 2006 (Strategic Report and Directors’
Report) Regulations 2013. We have used the GHG’s Protocol’s
Operational Control consolidation method. We do not have
responsibility for any emission sources that are not included in
the above information.
Health and safety
The Group considers the effective management of health and
safety to be an integral part of managing its business. During
2015, we continued our fi re safety, fi rst 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.
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The Group is required to report Scope 1 and 2 emissions for
its reporting year to 31 December 2015. 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)
2015
Tonnes CO2e(1)
2014
492
342
221
510
317
243
1,055
1,070
(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.
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
fl uctuations 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(1)
per employee
Tonnes CO2e(1)
per employee
2015
2014
1.2
0.8
0.6
2.6
1.3
0.8
0.6
2.7
(1) Based on 412 (2014: 388) 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 effi ciency.
In January 2016, we submitted our fi rst Energy Savings
Opportunity Scheme (ESOS) report, a mandatory energy
assessment introduced by the Government in 2015.
The report has highlighted only one area for improvement
and minor potential savings in relation to sub-metering of
our offi ce air conditioning units.
Rightmove plc annual report 2015 23
Governance | Directors and offi cers
Nick McKittrick
Chief Executive Offi cer
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 Offi cer in April 2013,
having been Chief Operating Offi cer since 2005
and additionally Finance Director since 2009.
His prior experience is in technology consulting
with Accenture.
Peter Brooks-Johnson
Chief Operating Offi cer
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 Offi cer 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 (Chairman)
Current external commitments
Chairman of Innasol Group Limited
Chairman of Ascential plc
Previous roles and relevant experience
Chairman of Orbitz Worldwide until September
2015. Director of NetJets Management Ltd, a
subsidiary of Berkshire Hathaway until October
2009. Chief Executive of Bridge Capital Advisors
Ltd. Scott has over 30 years’ experience in
operations, fi nance 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.
Colin Kemp
Non-Executive Director
Appointment to the Board
3 July 2007
Committee membership
Remuneration, Nomination
Current external commitments
Head of Strategic Projects 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 Cranfi eld MBA
and an Associate of the Chartered Institute
of Marketing.
Rakhi (Parekh) Goss-Custard
Non-Executive Director
Appointment to the Board
28 July 2014
Committee membership
Audit, Remuneration
Current external commitments
Non-executive director of Intu Properties plc
Non-executive director of Be Heard Group plc
Non-executive director of Kingfi sher plc
Previous roles and relevant experience
Rakhi was previously Director of UK Media at
Amazon until 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 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 and
Mosaic Fashions Group.
24
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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
fi nancial operations. She was appointed
Company Secretary in April 2012 (until July
2014) and promoted to the Board as Finance
Director in April 2013. Robyn qualifi ed as a
chartered accountant in South Africa with
KPMG and worked in both audit and
transaction services. Prior to joining Rightmove,
Robyn was Group Financial Controller at the
online media business, Auto Trader.
Peter Williams
Senior Independent
Non-Executive Director
Appointment to the Board
3 February 2014
Committee membership
Remuneration (Chairman), Audit, Nomination
Current external commitments
Chairman of boohoo.com plc
Chairman of Mister Spex GmbH
Senior independent non-executive director
of Sportech plc
Non-executive director of U and I plc
Previous roles and relevant experience
Peter was previously senior independent
director of ASOS plc, Chairman of Jaeger,
held non-executive director roles in Cineworld
Group plc, the EMI group, Blacks Leisure
Group plc, JJB Sports plc, GCap Media plc
and Capital Radio Group plc. In his executive
career, he was Chief Executive at Alpha
Group plc and prior to that, Chief Executive
of Selfridges plc where he also acted as
Chief Financial Offi cer for over 10 years.
Ashley Martin
Non-Executive Director
Appointment to the Board
11 June 2009
Committee membership
Audit (Chairman), Nomination
Current external commitments
Group Chief Financial Offi cer of
Engine Holding LLC
Previous roles and relevant experience
Ashley qualifi ed as a chartered accountant in
1981 and has a career in fi nance 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.
Rightmove plc annual report 2015 25
Governance | Corporate governance report
Introduction
The following sections explain how the Company applies the
main provisions set out in the 2014 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.
Statement of compliance
The Code sets out the principles and provisions relating to
good governance of UK listed companies. We are pleased to
confi rm, 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 https://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:
The statement of corporate governance covers the
following areas:
(cid:129) The structure and role of the Board and its committees;
(cid:129) Relations with the Company’s shareholders and the Annual
General Meeting (AGM); and
(cid:129) The reports of the Audit Committee and Nomination
Committee including Board effectiveness and evaluation.
The report of the Remuneration Committee is set out
separately in the Directors’ Remuneration Report on pages
42 and 43 and 53 to 66.
The Group’s risk management and internal control
framework and the principal risks and uncertainties are
described on pages 17 to 18 and 35. The Directors’ Report
on pages 38 to 40 also contains information required to be
included in this statement of corporate governance.
Responsibility
Specifi c actions during the year
Two day off-site strategy
workshop, including an
external consultant’s input
on emerging models,
consumer trends and
technologies in the portal
market and property
industry to identify any new
threats and opportunities
for Rightmove
Received regular market
updates and reports about
competitor activity
Approval of the Group’s
budget for 2016 and its
three year business plan
to 2018
Meetings by the CEO and
COO with global portal
peers with insights shared
with the Board
Review of cash return policy
and capital structure
Marketing update on
‘fi nd your happy’ campaign
including particular focus
on the London market
Received presentations
from senior management
covering progress of
businesses other than UK
residential home advertising
Regular updates on
business performance
relative to analyst
consensus forecasts
and plan
Reviewed the 2015 AGM
proxy voting fi gures and
made preparations in
respect of the 2015 AGM
Received monthly reports
on shareholder composition
and signifi cant changes to
the shareholder register
Feedback from the
executive directors post
results and investor
roadshows
Presentation by analyst on
their view of Rightmove and
Rightmove peer comparison
Strategy and
direction
Performance
monitoring
Shareholder
engagement
26
rightmove.co.uk
Responsibility
Specifi c actions during the year
Governance
and risk
People and values
Regular management
and review of the risks
appearing on the risk
register including changes
in signifi cant risks affecting
the business and
considering potential
previously unidentifi ed risks.
Presentation by Rightmove
Assurance on risk
management and the new
viability statement
September Board meeting
held in Milton Keynes
providing the opportunity
to interact with employees
and benefi t from interactive
presentations led by
employees across a
number of departments
within the business
Reviewing and approving
the Group’s regulatory
results announcements
and Annual Report
Active review of the risk
register by the Chairman
and by the Board
Received briefi ngs and
presentations from senior
management covering a
wide range of topics
including cyber and security
risks, corporate governance
and legal update and 2016
insurance renewal
programme
Presentations by senior
management to the Board
throughout the year to
ensure exposure to the
Board of the breadth
and depth of talent
supporting business growth
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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.
The Board has adopted a formal schedule of matters requiring
specifi c approval. These include:
(cid:129) The approval of the annual business plan;
(cid:129) Review of Group strategy;
(cid:129) Changes to the Group’s capital structure;
(cid:129) Approval of the dividend policy;
(cid:129) Acquisitions and disposals;
(cid:129) Appointment and removal of offi cers of the Company;
(cid:129) Approval of annual and half-year results and shareholder
communications; and
(cid:129) 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 suffi ciently 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 fi nancial reports on the operational and fi nancial
performance of the business setting out actual and forecast
fi nancial 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 2015 27
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
Audit
Reviews and reports to the Board on
the Group’s fi nancial reporting, internal
control and risk management systems,
the independence and effectiveness of
the external audit process and reviewing
the plan, results and effectiveness of the
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
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 fi nancial and
commercial health of the Group
At least three
members
All members should
be independent
non-executive
directors
At least three
members
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
Three
32 to 35
Two
42 to 43; 53 to 66
Two
36 to 37
Board changes
In May 2015, Jonathan Agnew and Judy Vezmar retired from
the Board and relevant Committees both having served nine
years. All other directors served throughout the year. Peter
Williams became the Senior Independent Director and
Chairman of the Remuneration Committee in May 2015.
Board composition
The Board at the date of this report comprises three executive
directors and fi ve non-executive directors, including the
Chairman. The three executive directors are Nick McKittrick
(Chief Executive Offi cer), Peter Brooks-Johnson (Chief
Operating Offi cer) and Robyn Perriss (Finance Director). The
non-executive directors are Scott Forbes (Chairman), Peter
Williams (Senior Independent Director), Ashley Martin, Colin
Kemp and Rakhi (Parekh) Goss-Custard.
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.
28
rightmove.co.uk
Division of responsibilities
The posts of Chairman and Chief Executive Offi cer 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 Offi cer
(cid:129) The leadership and governance of the Board;
(cid:129) Ensuring its effectiveness by creating and managing constructive relationships between the
executive and non-executive directors;
(cid:129) Ensures there is ongoing and effective communication between the Board and its key
shareholders; and
(cid:129) 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 suffi cient, pertinent,
timely and clear information.
(cid:129) Responsible for the day to day management of the Group;
(cid:129) Responsible for the operations and results of the Group;
(cid:129) Developing the Group’s objectives and strategy and following Board approval, the successful
execution of strategy;
(cid:129) Responsible for the effective and ongoing communication with shareholders; and
(cid:129) Chairing the Executive Committee.
Non-executive directors
(cid:129) Constructively challenge the executive directors; and
(cid:129) Monitor the delivery of the strategy within the risk and control framework set by the Board.
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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, fi nancial and listed company experience of the non-executive
directors is described in the biographical details on pages 24 to 25 and demonstrates a range
of business expertise that provides the right mix of skills and experience given the size of
the Group.
(cid:129) Acting in an advisory capacity to the Chairman;
(cid:129) Deputising for the Chairman if required;
(cid:129) Serving as an intermediary for other directors when necessary;
(cid:129) 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 Offi cer or other
executive directors for which such contact is inappropriate; and
(cid:129) 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.
(cid:129) Monitoring compliance with appropriate Board procedures;
(cid:129) Advising the Board on corporate governance matters;
(cid:129) Assisting the Chairman in ensuring that all the directors have full and timely access
to relevant information; and
(cid:129) 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 2015 29
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.
As at 31 December 2015, 25% (2014: 25%) of Board
members were female. Consequently, the Board has met its
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 judgment and whether there
are relationships or circumstances which are likely to affect,
or could appear to affect, the director’s judgment.
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 (37.5%) and non-executive
directors (62.5%) and that all non-executive directors are fully
independent of management and independent in character
and judgment.
To safeguard their independence, a director is not entitled
to vote on any matter in which they may be confl icted 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 confl ict
of interest exists.
The Chairman is also the Chairman of another publicly
listed company. The executive directors do not hold any
other non-executive directorships or commitments requiring
disclosure under the Code.
Board tenure
as at 31 December 2015
Balance of directors
as at 31 December 2015
2
2
3
1
4
3
1
0-3
years
3-6
years
6-9
years
10+
years
Executive
directors
Chairman
Non-
executive
directors
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 fi rst 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 will seek
re-election at the 2016 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
Rakhi (Parekh)
Goss-Custard
8
8
8
8
8
1(1)
8
8
1(1)
8
8
5
5(2)
N/A
N/A
N/A
2(1)
5
2(5)
2(1)
5
5(3)
5
N/A
N/A
N/A
N/A
1(1)
N/A
5
1(1)
5(4)
5(3)
2
2
N/A
N/A
N/A
–(1)
2
2(5)
–(1)
2(4)
2(3)
(1) Jonathan Agnew and Judy Vezmar retired from the Board and relevant
Committees on 7 May 2015. They attended all meetings up until that date.
(2) The Remuneration Committee Chairman has requested that the Chairman
of the Board attend the Remuneration Committee meetings.
(3) Rakhi (Parekh) Goss-Custard was appointed to the Audit Committee and
Remuneration Committee in May 2015. Prior to that she attended those
meetings by invitation. She was invited to attend two Nomination Committee
meetings on a guest basis.
(4) Peter Williams was appointed to the Audit Committee meetings and
Nomination Committee in May 2015. Prior to that he attended the meetings
by invitation.
(5) Ashley Martin stepped down from the Remuneration Committee and was
appointed to the Nomination Committee in May 2015.
30
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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 5 May 2016 at the offi ces of UBS Limited at
1 Finsbury Avenue, London EC2M 2PP.
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 identifi able. 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.
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In addition to the above meetings, the Chairman conducts
meetings with the non-executive directors without the
executive directors being present when required. Peter
Williams, the Senior Independent Director, chaired a meeting
of the Board at which the performance of the Chairman was
also reviewed, without the presence of the Chairman.
Indemnifi cation of directors
The Articles of Association of the Company allow for a
qualifying third-party indemnity provision between the
Company and its directors and offi cers, which remains in
force at the date of this report. The Group has also arranged
directors’ and offi cers’ 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.
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 fi rms to discuss strategy, operating
performance and fi nancial performance. Contact in the UK is
principally with the Chief Executive Offi cer 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 Offi cer 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 fi nancial results, investor presentations
and Stock Exchange announcements.
Rightmove plc annual report 2015 31
Governance | Corporate governance report continued
The Committee welcomes the changes to the revised
UK Corporate Governance Code and the Financial Reporting
Council’s Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting, published
in September 2014. These changes apply to the Group
for the fi rst time this year and have been areas of focus for
the Committee.
This report also outlines the signifi cant accounting matters
which received our particular focus during the year. It seeks to
explain why the issues are considered signifi cant and together
with the external auditors’ report provides additional context
for understanding the Group’s accounting policies and
fi nancial statements for the year.
In May 2015 Jonathan Agnew and Judy Vezmar retired
from the Board and Committee. On behalf of the Committee,
I would like to thank them for the wisdom and experience they
have brought to the Committee’s deliberations over many
years. We were pleased to welcome Peter Williams and
Rakhi Parekh as members of the Committee from May 2015.
I will be available at the AGM to answer any questions
about the work of the Committee.
Audit Committee report
Ashley Martin
Chairman of the Audit Committee
Dear shareholder
I am pleased to present the 2015 report of the Audit
Committee (the Committee).
The Committee is an essential part of Rightmove’s
governance framework to which the Board has delegated
oversight of the Group’s fi nancial reporting, internal controls,
outsourced internal audit function and the relationship with
the external auditors.
The terms of reference for the Committee were reviewed
during the year with the key responsibilities as follows:
Financial
reporting
(cid:129) Reviewing the fi nancial statements and results
announcements and ensuring compliance with
relevant regulations; and
(cid:129) Ensuring the Group’s accounting policies are
appropriate, consistently applied and supported
by relevant judgments and estimates.
Internal control
and internal
(cid:129) Reviewing the processes and systems to identify
and mitigate both fi nancial and non-fi nancial risks;
Ashley Martin
Chairman of the Audit Committee
(cid:129) Approving the internal audit plan, reviewing the
results and considering the effectiveness of the
internal audit function; and
(cid:129) Reviewing the procedures for detecting and
managing the risk of fraud.
External audit
(cid:129) Make recommendations to the Board on the
appointment of the external auditor, overseeing
the relationship and assessing the effectiveness
of the external audit process.
A signifi cant change in the Group’s internal control framework
last year was the appointment in December 2014 of
PricewaterhouseCoopers LLP (PwC) to provide an
outsourced internal audit function known as ‘Rightmove
Assurance’. During the year we have established a Rightmove
Assurance Terms of Reference and approved a plan for a two
year cycle of work focusing on both core fi nancial processes
and specialist reviews of certain key risk areas. We will
continue to monitor and review the effectiveness of the
Group’s internal control and risk management systems with
the support of this new function.
Composition and attendance at meetings
Committee members
Number of meetings attended
Ashley Martin (Chairman of the Committee)
Judy Vezmar(1)
Jonathan Agnew(1)
Peter Williams(2)
Rakhi (Parekh) Goss-Custard(2)
5 out of 5
1 out of 1
1 out of 1
4 out of 4
4 out of 4
(1) Judy Vezmar and Jonathan Agnew retired from the Board and the
Committee on 7 May 2015.
(2) Peter Williams and Rakhi (Parekh) Goss-Custard were appointed to the
Committee with effect from 7 May 2015.
The Committee is comprised entirely of independent
non-executive directors, the biographical details of whom
can be found on pages 24 to 25. The Board is satisfi ed that
both Ashley Martin and Peter Williams have recent and
relevant fi nancial skills and experience. Both have professional
qualifi cations with the Institute of Chartered Accountants of
England and Wales.
32
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The Finance Director and the Head of Finance are normally
invited to attend the meetings as well as the external auditor,
KPMG and the internal auditor, PwC. 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. The Committee regularly meets
separately with the external and internal 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.
The Committee Chairman briefs the Board on the matters
discussed at each Committee meeting and the effectiveness of
the operation of the Committee was reviewed as part of the
effectiveness review of the Board and its committees in
December 2015.
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), together with the billing of
Overseas customers, investigating any anomalies and outliers
identifi ed 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.
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 are
described below:
As this area is of higher audit risk the Committee also
received detailed verbal and written reporting from KPMG on
this matter. The Committee was satisfi ed with the explanations
provided and conclusions reached.
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Financial reporting
The primary role of the Committee in relation to fi nancial
reporting is to review with both management and the external
auditor the appropriateness of the half-year results statement
and the Annual Report and fi nancial statements including,
amongst other matters:
(cid:129) The quality and appropriateness of accounting policies and
practices;
(cid:129) The clarity of the disclosures and compliance with relevant
fi nancial reporting standards and governance reporting
requirements; and
(cid:129) Key accounting issues or matters in which signifi cant
judgements have been applied.
At the request of the Board, the Committee was asked to
consider whether the 2015 Annual Report and accounts,
taken as a whole, is fair, balanced and understandable and
provides the necessary information for shareholders to assess
the Group’s performance, business model and strategy, and
has concluded that this is the case.
The signifi cant areas of judgment considered by the
Committee in relation to the 2015 Annual Report and how
these were addressed were:
Share-based incentives and the related deferred
tax balance
The external auditors and Committee discussed the
audit plan and assessed the risks associated with share-
based incentives and the related deferred tax balances and
concluded that it was no longer a signifi cant audit risk area.
It remains an area of judgement for management given the
technical complexity of the calculations and the assumptions
around the rate at which the related deferred tax asset is likely
to reverse.
Internal audit
The Group established an outsourced internal audit function
provided by PwC during 2015 known as Rightmove
Assurance. The aim of Rightmove Assurance is to provide
independent and objective assurance on the effectiveness of
internal control, risk management and governance processes.
Rightmove plc annual report 2015 33
Governance | Corporate governance report continued
During the year and in accordance with the approved internal
audit plan, Rightmove Assurance has carried out reviews
in respect of certain core fi nancial processes, the robustness
of the risk management framework in the context of the new
Corporate Governance Code, options in relation to the
provision of mortgage content on the www.rightmove.co.uk
website, the identifi cation and prevention of certain fraudulent
online activities by third parties against Rightmove and the
systems and controls in place to prevent the loss or malicious
publication of Rightmove data. Reports setting out their
principal fi ndings and agreed management actions were
discussed by the Committee.
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 satisfi ed 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, with Karen
Wightman taking over responsibility as lead audit partner
The EU Audit Regulations have not yet been formally
enacted in the UK, however, in October 2015 the Department
for Business Innovation & Skills consultation on the legislative
implementation of the EU Audit Directive and Regulation,
commented that a tender of an audit engagement resulting in
the reappointment of the incumbent auditor for an accounting
period beginning up to 10 years before the application of the
new EU Audit Directive and Regulation, effective 17 June
2016 (‘The EU Regulation’), should be treated as a tender for
the purposes of the transitional provisions. As KPMG were
reappointed in 2013 following a competitive tender process,
we therefore anticipate Rightmove’s next requirement to
tender its audit will be for the 2023 calendar accounting year.
These timeframes will also ensure compliance with the
provisions of the CMA Statutory Audit Services Order 2014.
The external auditor is required to rotate the audit partner
responsible for the Group audit every fi ve years. The current lead
partner, Karen Wightman, has been in place for three years.
The Committee also approved the fees of KPMG during
the year.
Effectiveness of the external audit process
The effectiveness of the external audit process is dependent
on a number of matters. These include the quality, continuity,
experience and training of audit personnel, business
understanding, technical knowledge and the degree of rigour
applied in the review processes of the work undertaken,
together with appropriate audit risk identifi cation at the start
of the audit cycle.
The Committee evaluated the effectiveness of the audit
process in addressing these matters together with input
from management. Areas the Committee considered in this
review included the quality of audit planning and execution,
engagement with the Committee and management, quality
of reporting and capability and experience of the audit team.
For the 2015 fi nancial year, the Committee were satisfi ed
that there had been appropriate focus and challenge on
the primary areas of audit risk and concluded that the
performance of KPMG remained effi cient and effective.
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.
In November 2015 the Committee agreed a policy that
management be given authority to incur permitted non-audit
fees up to 50% of the annual agreed audit fee in any fi nancial
year without the prior approval of the Committee. Thereafter
all additional fees will be referred to the Committee in
advance, subject to a cap on permitted non-audit fees at 70%
of the average audit fees over the three preceding fi nancial
years, in line with the forthcoming new EU Regulations.
Permitted non-audit fees exclude those services prohibited by
the EU requirements, in particular all tax services. Non-audit
services required by legislation are not subject to the cap.
In 2015 the non-audit fees were £5,000 in relation to
other advisory services and were £10,000 in relation to tax
compliance and advice and are fully disclosed in Note 6 of
the fi nancial statements. As a result of the forthcoming
EU regulations on permitted non-audit services, KPMG will
no longer be able to provide tax compliance and advisory
services and we have therefore appointed PwC to provide
these services in 2016.
34
rightmove.co.uk
(cid:129) A comprehensive disaster recovery and business continuity
plan based upon:
– co-hosting of the rightmove.co.uk website across three
separate locations which is regularly tested and reviewed;
– the capability for employees to remote work from home or
a third party location in the event of a loss of one our
premises which has been tested for both our London and
Milton Keynes offi ces during the year.
(cid:129) Regular testing of the security of the IT systems and
platforms, regular backups of key data and ongoing threat
monitoring to protect against the risk of cyber attack;
(cid:129) A treasury function which manages cash fl ow forecasts and
cash on deposit and counterparty risk and is responsible for
monitoring compliance with banking agreements, where
appropriate; and
(cid:129) Whistleblowing and bribery policies of which all employees
are made aware, to enable concerns to be raised either with
line management or, if appropriate, confi dentially outside the
line management.
Through the procedures outlined above, the Board, with
advice from the Committee, has considered all signifi cant
aspects of internal control for the year and up to the date of
this Annual Report. No signifi cant failings or weaknesses were
identifi ed during this review. However, had there been any
such failings or weaknesses, the Board confi rms that
necessary actions would have been taken to remedy them.
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Internal controls
The Board has overall responsibility for the Group’s system of
internal controls and has established a framework of fi nancial
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 fi nancial 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 fi nancial
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
signifi cant risks to the Group. These procedures have
been in place for the whole of the fi nancial year ended
31 December 2015 and up to the date of the approval of
these fi nancial statements and they are reviewed regularly.
The key elements of the system of internal control are:
(cid:129) Major commercial, strategic, competitive and fi nancial risks
are formally identifi ed, quantifi ed and assessed, discussed
with the executive directors, after which they are considered
by the Board;
(cid:129) 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 signifi cant variances;
(cid:129) An organisational structure with clearly defi ned lines of
responsibility and delegation of authority;
(cid:129) Clearly defi ned policies for capital expenditure and
investment exist, including appropriate authorisation levels,
with larger capital projects, acquisitions and disposals
requiring Board approval;
Rightmove plc annual report 2015 35
Governance | Corporate governance report continued
Nomination Committee report
Peter Williams was appointed Senior Independent Director
and Remuneration Committee Chairman in May 2015.
I will be available at the AGM to answer any questions
about the work of the Committee.
Scott Forbes
Chairman of the Nomination Committee
Dear shareholder
I am pleased to present the 2015 report of the Nomination
Committee (the Committee).
The Committee’s role is to regularly review the structure,
size and composition (including the skills, knowledge and
experience) of the Board, with a view to ensuring the
continued ability of the Group to compete effectively in the
marketplace, and make recommendations to the Board with
regard to any changes.
The terms of reference for the Committee were reviewed
during the year with the key responsibilities as follows:
Scott Forbes
Chairman of the Nomination Committee
Composition and attendance at meetings
Committee members
Number of meetings attended
Scott Forbes
(Chairman of the Committee)
Peter Williams
Ashley Martin
Colin Kemp
Rakhi (Parekh) Goss-Custard(1)
2 out of 2
2 out of 2
2 out of 2
2 out of 2
2 out of 2
Board evaluation (cid:129) Evaluate the performance of the Board both
attended the meetings by invitation.
(1) During the year Rakhi (Parekh) Goss-Custard, non-executive director,
collectively and individually against performance
criteria. Determine the level of Board
effectiveness based on the assessment.
Organisation and
succession
planning
(cid:129) Give full consideration to the organisation and
succession plan in order to identify the executive
and non-executive resources required for the
Company to meet its strategic objectives.
In 2015 the Committee reviewed the organisation and
succession plans and conducted its tri-annual, externally
facilitated Board evaluation and Board skills and
composition review.
The external Board evaluation was conducted by Echelon
Compensation Partners (Echelon) and the Board skills and
composition review by Korn Ferry International (Korn Ferry).
Echelon have no other connection with the Company. Korn
Ferry, an executive search fi rm, conducted a Board review
in 2012 and successfully placed Peter Williams and Rakhi
(Parekh) Goss-Custard. Further details on the Board skills
and composition review can be found in the section on Board
effectiveness and evaluation on page 37 of my report below.
Following completion of their third term of service to the
Board, both Jonathan Agnew and Judy Vezmar retired from
the Board and Committees after the 2015 AGM. The Board
now consists of eight directors, including fi ve non-executive
directors, four of which are considered to be independent.
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 2015 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 Committee Chairman,
the Chief Executive Offi cer is normally invited to attend the
meeting to discuss the annual organisation and succession
plan.
The Chairman of the Company may not chair the
Committee in connection with any discussion about the
appointment of his successor 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 2015
During the year the Committee has:
(cid:129) Reviewed the Board composition;
(cid:129) Reviewed the Board committees composition;
(cid:129) Approved the plans for the organisation and succession
of the executive directors and senior management;
36
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The Board skills and composition review involved a series
of Korn Ferry independent interviews with each executive and
non-executive director. Questions were intended to identify
the Group’s strategy and the ideal capabilities and experience
required on the Board that will best support the Group’s effort
to achieve its strategic objectives. The Board skills and
composition review also explored corporate governance
requirements including compliance with the UK Corporate
Governance Code, best practice and diversity policies. Priority
capabilities and experience were cross-referenced against the
profi le of the current Board both at the present time and as
of the anticipated dates that directors will retire in order to
identify gaps against which the Board’s recruitment policy
is based.
The work of Korn Ferry was substantially complete in
December 2015, with the results of the review to be
distributed in a report to the Committee in early 2016.
The Committee will review the report and discuss its
recommendations with the Board as part of an ongoing
process to ensure that the Board operates at a high level of
effectiveness fortifi ed by the most appropriate resources in
support of the Group’s business strategy.
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(cid:129) Agreed the process for and considered the outcome of
the Board’s external evaluation;
(cid:129) Considered the diversity of the Board and agreed the
policy regarding gender composition on the Board; and
(cid:129) 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 specifi c 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 past two years, the Board has
undertaken an internal self-assessment. This year, Echelon,
an external fi rm of consultants, was appointed to undertake
an independent review of the performance of the Board and its
Committees together with a Board skills and composition review
which was undertaken by Korn Ferry.
The external Board evaluation was conducted by Echelon
in the fourth quarter of 2015. The evaluation results including
anonymous ratings and comments were summarised in a report
and discussed by the Committee and Board in December 2015.
The evaluation concluded that the Board and Committees
operate at a high degree of effectiveness with all individuals
contributing with plenty of open debate and challenge from all
directors. Recommendations for continued development included
remaining proactive in the search for the right talent, both at the
Board and executive level; further enhancing Board diversity by
recruiting more female non-executives or non-executives from
different ethnic backgrounds; and ensuring that the Group
strategy continues to be both communicated and understood
at levels beyond the executive management team.
An internally facilitated review of the performance of the Board
and its Committees will again be conducted during 2016.
Rightmove plc annual report 2015 37
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 offi ce
is Turnberry House, 30 Caldecotte Lake Drive, Caldecotte,
Milton Keynes MK7 8LE.
The directors submit their report together with the audited
fi nancial statements for the Company and its subsidiary
companies (the Group) for the year ended 31 December 2015.
Pages 38 to 40, 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.
Strategic report
The Strategic Report can be found on pages 2 to 23. This
report sets out the development and performance of the
Group’s business during the fi nancial 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 16.0p (2014: 13.0p) per ordinary
share was paid in respect of the half year period on
6 November 2015 to shareholders on the register of
members at the close of business on 9 October 2015.
The directors are recommending a fi nal dividend for the
year of 27.0p (2014: 22.0p) per ordinary share, which together
with the interim dividend of 16.0p, makes a total for the
year of 43.0p (2014: 35.0p), amounting to £40,854,000
(2014: £33,991,000). Subject to shareholders’ approval at
the Annual General Meeting (AGM) on 5 May 2016, the fi nal
dividend will be paid on 3 June 2016 to shareholders on the
register of members at the close of business on 6 May 2016.
Share capital
The shares in issue including 2,322,314 shares held in
treasury (2014: 2,505,430) at the year end amounted to
97,741,977 (2014: 99,993,317) ordinary shares of £0.01,
with a nominal value of £977,419 (2014: £999,933). 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 fi nancial statements.
Information on the Group’s share-based incentive schemes
is set out in Note 24 to the fi nancial statements. Details of
the share-based incentive schemes for directors are set out
in the Directors’ Remuneration Report on pages 42 to 66.
Share buyback
The Company’s share buyback programme continued during
2015. Of the 15% authority given by shareholders at the 2015
AGM, a total of 2,251,340 (2014: 3,122,418) ordinary shares
of £0.01 each were purchased in the year to 31 December
2015, being 2.3% (2014: 3.1%) of the shares in issue
(excluding shares held in treasury) at the time the authority
was granted. The average price paid per share was £33.79
(2014: £23.66) with a total consideration paid (inclusive of all
costs) of £76,604,000 (2014: £74,384,000). Since the
introduction of the new parent company in January 2008, a
total of 34,163,431 shares have been purchased, of which,
2,322,314 are held in treasury with the remainder having been
cancelled. A resolution seeking to renew this authority will be
put to shareholders at the AGM on 5 May 2016.
Shares held in trust
As at 31 December 2015, 386,057 (2014: 596,499) ordinary
shares of £0.01 each in the Company were held by The
Rightmove Employees’ Share Trust (EBT) for the benefi t of
Group employees. These shares had a nominal value at
31 December 2015 of £3,861 (2014: £5,965) and a market
value of £15,925,000 (2014: £13,409,000). The shares held
by the EBT may be used to satisfy share-based incentives for
the Group’s employee share plans. During the year, 184,842
(2014: 182,125) shares were transferred to Group employees
following the exercise of share-based incentives. Additionally,
12,700 shares were purchased by the EBT for transfer to the
Rightmove Share Incentive Plan in January 2016.
The terms of the EBT provide that dividends payable on
the shares held by the EBT are waived.
As at 31 December 2015, 37,800 (2014: 38,300)
ordinary shares of £0.01 each in the Company were held by
The Computershare SIP Trust (SIP Trust) for the benefi t of
Group employees. These shares had a nominal value at
31 December 2015 of £378 (2014: £383) and a market value
of £1,559,000 (2014: £863,000). The shares held by the SIP
Trust were awarded as free shares to eligible employees on
1 January 2015 and are held in trust for a period of three
years before an employee is entitled to take ownership of the
shares. During the year, 500 (2014: nil) shares were released
early from the SIP under the SIP rules.
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Substantial shareholdings
As at the date of this report, the following benefi cial 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 notifi ed to
the Company pursuant to Rule 5.1 of the Disclosure and
Transparency Rules. The information provided below was
correct as at the date of notifi cation, where indicated, this was
not in the current fi nancial year. It should be noted that these
holdings are likely to have changed since notifi cation to the
Company. However, notifi cation 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)
BlackRock Inc(2)
Standard Life
Investments(2)
Caledonia (Private)
Investments Pty
Limited
Indirect
5,930,755 6.2
Indirect
Indirect
5,873,614 6.2
5,510,468 5.8
Indirect
Financial Instrument (CFD)
Direct
Indirect
4,777,310
644,472
831,055
4,000,946
5.0
0.7
0.9
4.2
Direct
2,905,192 3.1
Kames Capital
Direct
Indirect
Financial Instrument (CFD)
2,154,897
449,532
255,392
2.3
0.5
0.3
(1) The above percentages are based upon the voting rights share capital
(being the shares in issue less shares held in treasury) of 94,990,407.
(2) Date of notifi cation was not in the 2015 fi nancial year.
Directors
The directors of the Company as at the date of this report
are named on pages 24 to 25 together with their profi les.
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 2015 will retire and offer themselves for
re-election at the forthcoming AGM.
The Board is satisfi ed that the directors retiring and standing
for re-election are qualifi ed 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 as at the date of this report, the directors’ total
remuneration for the year and details of their service contracts
and Letters of Appointment are set out in the Directors’
Remuneration Report on pages 42 to 66. At the date of this
report all of the executive directors were deemed to have a
non-benefi cial interest in 386,057 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 fi nancial statements on page 78.
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 offi ces of
UBS Limited at 1 Finsbury Avenue, London, EC2M 2PP on
5 May 2016 at 10am. The Notice of Annual General Meeting
will be published in March 2016.
The resolutions being proposed at the 2016 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.
Rightmove plc annual report 2015 39
Governance | Directors’ report continued
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 2015
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 2016 AGM,
a resolution will be proposed to renew this authority.
The Company is also seeking approval for the
disapplication of pre-emption rights up to a maximum ten
percent of issued ordinary share capital of the Company
(excuding shares held in treasury), in line with the revised
Statement of Principles of the Pre-Emption Group.
Responsibility statement of the directors in respect
of the annual fi nancial report
We confi rm that to the best of our knowledge:
(cid:129) The fi nancial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, fi nancial position and profi t or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
(cid:129) The management report required by DTR 4.1.8R (contained
in the Strategic Report and the Directors’ Report) includes
a fair review of the development and performance of the
business and the position of the Company and the
undertakings included in the Group taken as a whole,
together with a description of the principal risks and
uncertainties they face.
Signed by the Board:
Nick McKittrick
Chief Executive Offi cer
26 February 2016
Robyn Perriss
Finance Director
Auditor
KPMG LLP has confi rmed its willingness to continue in offi ce
as auditor of the Group. In accordance with section 489 of
the Companies Act 2006, separate resolutions for the
re-appointment of KPMG LLP as auditor of the Group and
for the Audit Committee to determine their remuneration will
be proposed at the forthcoming AGM of the Company.
Audit information
So far as the directors in offi ce 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 22 to 23.
Fair, balanced and understandable
The Board has concluded that the 2015 Annual Report is fair,
balanced and understandable, and provides the necessary
information for shareholders and other readers of the
accounts to assess the Group’s position and performance,
business model and strategy.
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Governance | Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report
and the Group and parent Company fi nancial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and
parent Company fi nancial statements for each fi nancial year.
Under that law, they are required to prepare the Group
fi nancial statements in accordance with IFRSs as adopted by
the EU and applicable law and have elected to prepare the
parent Company fi nancial statements on the same basis.
Under company law, the directors must not approve the
fi nancial statements unless they are satisfi ed that they give a
true and fair view of the state of affairs of the Group and
parent Company and of their profi t or loss for that period. In
preparing each of the Group and parent Company fi nancial
statements, the directors are required to:
(cid:129) select suitable accounting policies and then apply them
consistently;
(cid:129) make judgements and estimates that are reasonable and
prudent;
(cid:129) state whether they have been prepared in accordance
with IFRSs as adopted by the EU; and
(cid:129) prepare the fi nancial 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 suffi cient to show and explain
the parent Company’s transactions and disclose with
reasonable accuracy at any time the fi nancial position of the
parent Company and enable them to ensure that its fi nancial
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 fi nancial information included on
the Company’s website. Legislation in the UK governing the
preparation and dissemination of fi nancial statements may
differ from legislation in other jurisdictions.
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Rightmove plc annual report 2015 41
Governance | Directors’ remuneration report
Annual statement by the Chairman of the Remuneration Committee
Peter Williams
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 2015.
The report is divided into two distinct sections, the
Remuneration Policy Report 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 three year remuneration policy received
overwhelming support. We do not propose to make any
changes to this policy. For ease of reference, we present the
policy on pages 43 to 52.
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 refl ect the
culture of the Group. The overall policy provides below market
levels of fi xed 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 2015 results
show strong organic revenue and profi t growth. The increase
in profi t 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 refl ect fairly their performance during the year.
As a result of the fi nancial and operational results of the
Group, including growth in underlying operating profi t before
tax(1) of 16%, the annual bonus entitlement for executive
directors was 100% of the maximum for 2015. The Company
consolidated its market leading position during the year
despite increased and new competition and also achieved
substantial growth in other revenue streams resulting in a
maximum bonus becoming payable. In aggregate, the
performance over the year signifi cantly outperformed the
business plan and exceeded the maximum incentive plan
targets set at the start of the year and therefore the
Committee were satisfi ed that it was appropriate to pay
maximum bonuses.
With regard to the Group’s longer-term performance,
refl ecting the successful implementation of its growth strategy
over the last three fi nancial years, the 2013 Performance Share
Plan awards (measuring performance from 1 January 2013 to
31 December 2015) will vest in full in March 2016 as a result
of delivering normalised EPS(2) growth of over 79% and
TSR growth of 198% over the performance period, which
signifi cantly exceeded the respective growth targets set
of 40% and Index +25% over the three year period. The
Committee having tested the condition, determined that this
result signifi cantly outperformed the maximum incentive plan
targets set at the start of the performance period placing
Rightmove well into the top quartile of performance across the
FTSE 250 Index, and so was satisfi ed that the awards should
vest in full.
(1) Before share-based payments and NI on share-based incentives.
(2) Diluted underlying EPS but with a standard UK tax rate applied.
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Further details in relation to the remuneration policy, which is
expected to operate for at least another year are set out on
pages 43 to 52. 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.
In 2016 the Committee will turn its attention to the new
three year remuneration policy framework to be put to a vote
at the AGM in 2017.
Peter Williams
Chairman of the Remuneration Committee
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Remuneration policy for 2016
The Committee continues to believe that the current
remuneration policy of providing below market fi xed pay
(base salary, pension and minimal benefi ts) 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:
(cid:129) We remain committed to a pay model of below comparative
median benchmarks on fi xed pay and an above median
incentive opportunity.
(cid:129) Executive directors are to receive infl ationary adjustments
to base salary levels in line with all employees. Up to 6% of
base salary is contributed to the Group pension scheme.
(cid:129) The annual bonus opportunity provides that 60% of any
bonus earned is deferred into the Company’s shares for
a period of two years.
(cid:129) Annual award levels under the Company’s Performance
Share Plan are granted at 200% of salary with challenging
underlying earnings per share growth targets.
(cid:129) 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.
(cid:129) The existing share ownership guidelines will be 200%
of base salary for the Chief Executive Offi cer and 100%
of base salary for other executive directors.
Rightmove plc annual report 2015 43
Governance | Directors’ remuneration report continued
(cid:129) Executive directors should have below market levels of base
salary, minimal benefi ts (and only benefi ts 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 refl ect the performance driven culture of the
Company. 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.
(cid:129) 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 (specifi cally with regard to
cost of living rises in base salary and changes in benefi ts).
(cid:129) 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.
(cid:129) Executive directors should not be able to gain signifi cantly
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 following table provides an overview of the Committee’s
remuneration policy, which has been designed
to refl ect 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 fi nancial year ended
31 December 2015. 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 2014 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 2016
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 benefi ts 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:
(cid:129) Remuneration arrangements should be simple to explain,
understand and administer.
(cid:129) 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.
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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 54.
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
signifi cant increase in the scale of
the role and/or size, value and/or
complexity of the Group.
The value of benefi ts 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.
Benefi ts
To provide simple,
cost-effective,
employee benefi ts
which are the same
as those offered to
the wider workforce.
Pension
To provide a
basic, cost-effective,
long-term retirement
benefi t.
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:
(cid:129) size and responsibilities
of the role;
(cid:129) individual and Group
performance;
(cid:129) increases awarded to the
wider workforce; and
(cid:129) broader economic and
infl ationary 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, all executive
directors 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.
Rightmove plc annual report 2015 45
Governance | Directors’ remuneration report continued
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 fi nancial 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
fi nancial 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 fi nancial 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 profi t-based (e.g. underlying
operating profi t before tax)
with targets set in relation to a
carefully considered business
plan and requiring signifi cant
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 54 to 55
and 60 to 61.
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
fi nancial 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
fi nancial targets and relative TSR
targets is three fi nancial years,
starting with the year in which
the award is granted.
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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
refl ects 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 suffi cient 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,
refl ecting the size and complexity
of the role, is used to provide
context when setting fee levels.
Shareholding guideline:
(cid:129) CEO – 200% of base salary;
(cid:129) COO & FD – 100% of
base salary.
Not applicable
None
Fees for the Chairman and
non-executive directors’ are set
out on page 56.
The Chairman and non-
executive 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.
(1) Before share-based payments and NI on share-based incentives.
Rightmove plc annual report 2015 47
Governance | Directors’ remuneration report continued
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:
(cid:129) The selection of participants in the respective plan;
(cid:129) The timing of grant of an award (if any) and payments;
(cid:129) The size of an award and/or a payment (with limits as
described in the table above);
(cid:129) The extent of vesting based on the achievement of
performance targets and applicable exercise periods
where relevant;
(cid:129) How to deal with a change of control (e.g. the timing of
testing performance targets) or restructuring of the Group;
(cid:129) 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;
(cid:129) Adjustments (if any) required in certain circumstances
(e.g. rights issues, corporate restructuring events and
special dividends); and
(cid:129) 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 diffi cult 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 2015 (detailed on pages 62 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 profi t before
tax(1) is the primary performance metric used as it is aligned to
the Group’s strategy of delivering profi table growth and is a
key fi nancial performance indicator used within the business.
Consistent with previous years, operating profi t 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 profi t(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 traffi c market share
target, Other revenue and a new employee engagement
target, for a minority of the bonus, with a sliding scale used to
determine performance against each measure. Market share
is a measure of the size and engagement of our audience and
the value which Rightmove, 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 profi t 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 fi nancial metric for this particular
business at this stage in its development (since it is the
measure of profi tability 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 fi nancial 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 FTSE 250 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.
(1) Before share-based payments and NI on share-based incentives.
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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:
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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 specifi cally.
In line with the Company’s strategy to keep remuneration
simple and consistent, benefi ts 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.
Rightmove plc annual report 2015 49
Governance | Directors’ remuneration report continued
Element of remuneration
Policy
Base salary
Benefi ts
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 refl ect 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 infl ation, may then be offered to
achieve the desired market positioning over time, subject to individual’s continued performance and
development in the role.
Benefi ts as provided to current executive directors. Where necessary the Committee may approve the
payment of relocation expenses to facilitate recruitment, and fl exibility is retained for the Company to pay
legal fees and other costs incurred by the individual in relation to their appointment.
A defi ned 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 refl ect 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
fi rst 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.
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:
(cid:129) the form of remuneration (cash or shares);
(cid:129) timing of expected payment/vesting; and
(cid:129) 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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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 fi nds
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, benefi ts 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 benefi ts.
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 defi ned 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 refl ect 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
defi ned 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 benefi ts 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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Rightmove plc annual report 2015 51
Governance | Directors’ remuneration report continued
Date of appointment
Letter of Appointment(1)
(months)
at 26 February 2016
Date of contract/
Notice
Length of service
Executive directors
Nick McKittrick (Chief Executive Offi cer)(2)
5 March 2004
7 February 2006
Peter Brooks-Johnson(3)
Robyn Perriss(4)
Non-executive directors
Scott Forbes (Chairman)
Colin Kemp
Ashley Martin
Peter Williams
10 January 2011
22 February 2011
30 April 2013
1 May 2013
13 July 2005
21 February 2006
3 July 2007
4 December 2007
11 June 2009
9 June 2009
3 February 2014
3 February 2014
Rakhi (Parekh) Goss-Custard
28 July 2014
28 July 2014
12
12
12
11 years 11 months
5 years 1 month
2 years 10 months
3
3
3
3
3
10 years 7 months
8 years 7 months
6 years 8 months
2 years 1 month
1 year 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
15 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 10 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 8 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.
52
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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 fi rst layer of management below Board
level. The Committee is also aware of, and advises on, the
employee benefi t 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 2015. During 2015 the
Committee met fi ve times and attendance at the meetings
is shown below:
Committee Members
Number of meetings attended
Peter Williams(1) (Chairman of the Committee)
Jonathan Agnew(2)
Ashley Martin(3)
Judy Vezmar(2)
Colin Kemp
Rakhi (Parekh) Goss-Custard(4)
5 out of 5
2 out of 2
2 out of 2
2 out of 2
5 out of 5
5 out of 5
(1) Peter Williams replaced Jonathan Agnew as the Chairman of the Committee
on 7 May 2015.
(2) Jonathan Agnew and Judy Vezmar retired from the Committee and the
Board at the 2015 AGM on 7 May 2015.
(3) Ashley Martin stepped down from the Committee on 7 May 2015.
(4) Rakhi (Parekh) Goss-Custard was appointed to the Committee on 7 May
2015. Prior to that she attended two Committee meetings by invitation.
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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 fi ve 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 Offi cer may also be invited to meetings
and the Committee takes into consideration their
recommendations regarding the remuneration of executive
colleagues and the fi rst layer of management below Board
level. No executive director is involved in deciding their own
remuneration.
External advisors
New Bridge Street (NBS), a trading name of Aon 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 £27,233.
During 2015 NBS provided services to the Company in
connection with the valuation of share-based incentives
(as required by IFRS 2) and confi rmed that, in its view, these
services did not present a confl ict 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 confl icts of interest.
What has the Committee done during the year?
The Committee met fi ve times during the year to consider and
where appropriate, approve key remuneration items including
the following:
Rightmove plc annual report 2015 53
Governance | Directors’ remuneration report continued
Pay and incentive plan reviews
(cid:129) Annual review and approval of executive directors’ base
salaries and benefi ts;
(cid:129) Reviewed year end business performance against relevant
performance targets to determine annual bonus payouts
and vesting of long-term incentives;
(cid:129) Reviewed and approved overall remuneration policy for
executive directors for 2016, including appropriate
benchmarks and performance measures for the annual
performance related bonus and 2016 PSP awards to ensure
measures are aligned with strategy and that targets are
appropriately stretching;
(cid:129) Ongoing monitoring of senior management remuneration
structures;
(cid:129) Approval of share awards granted under the Deferred Share
Bonus Plan (DSP) and the Rightmove Performance Share
Plan (PSP); and
(cid:129) Reviewed and approved an increase in the Chairman’s fee
following an appropriate benchmarking exercise.
Governance
(cid:129) Reviewed and approved the 2015 Directors’ Remuneration
Report;
(cid:129) Reviewed the 2015 AGM voting and feedback from
institutional investors;
(cid:129) Evaluated the Committee’s performance during the year;
and
(cid:129) Reviewed the Committee’s terms of reference.
Application of policy for year ending
31 December 2016
Salaries
The executive directors’ salaries for the 2016 fi nancial year are
set out in the table below:
Pension and other benefi ts
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 2016 fi nancial year will be consistent
with the policy detailed on page 46 of the remuneration policy
section of this report in terms of maximum bonus opportunity,
deferral and clawback provisions. The mechanism through
which the clawback can be implemented (enabling both the
recovery and withholding of incentive pay) enables the
Committee to (i) reduce the cash bonus earned in a
subsequent year and/or reduce outstanding DSP/PSP
share awards (i.e. withholding provisions may be used to
effect a recovery) or (ii) for the Committee to require that a
net of tax balancing cash payment be made to the Company.
The measures have been selected to refl ect a range of
fi nancial 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 profi t before tax(1)
65%
15%
15%
5%
Salary
Salary
Strategic targets
1 January 2016
31 December 2015
Change
Executive directors
Nick McKittrick
£424,320
£408,000
Peter Brooks-Johnson
£355,368
£341,700
Robyn Perriss
£281,112
£270,300
4%
4%
4%
The 4% increase in executive directors’ salaries is in line with
the average workforce increase for 2016 across the Group.
Traffi c market share
Other revenue(2)
Employee engagement(3)
(1) Operating profi t before share-based payments and NI on
share-based incentives.
(2) Revenue excluding Agency and New Homes.
(3) Based on the results of the annual employee survey.
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In relation to the fi nancial target a challenging sliding scale will
operate with 25% of the maximum bonus opportunity payable
at the threshold underlying operating profi t target relative to
2016 business plan through to 100% becoming payable for
signifi cant outperformance relative to the plan. A greater
proportion of the award will be paid for exceeding on-target
performance. The weighting of this performance measure has
been reduced to 65% (2014: 70%) to allow for a new 5%
employee engagement performance measure, introduced this
year, which has been introduced as Rightmove recognises
that the engagement and commitment of our employees is
considered a key contributor to the Group’s fi nancial success.
The other target weightings are unchanged from 2014 at 15%
traffi c market share and 15% Other revenue.
The targets themselves, as they relate to the 2016 fi nancial
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
2016 will be subject to a mixture of EPS (75% of awards)
and relative TSR (25% of the awards) performance conditions.
The 2016 targets are as follows:
EPS condition
The Group’s EPS growth will be measured over the period of
three fi nancial years (2016 to 2018). The EPS fi gure used will
be equivalent to the Group’s basic underlying EPS (before
share-based payments, National Insurance on share-based
incentives and no related adjustment for tax). With a view to
ensuring appropriately stretching but achievable targets are
set in light of market expectations for the Group, the following
range of targets will apply to the 2016 awards:
Underlying basic EPS growth
from 2016 to 2018(1)
Less than 25%
25%
55%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 25% and 55%
Straight-line vesting
(1) The benchmark underlying basic EPS for the fi nancial year 2015 from which
these targets will be measured is 121.4p.
As in prior years, the targets that are intended to operate
for the 2016 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, 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 satisfi ed that the
range of targets are appropriately demanding, and no less
challenging to the range of targets set for 2015 awards.
Relative TSR condition
The vesting schedule for the relative TSR element of executive
directors’ 2016 PSP awards is set out below. For previous
awards, relative TSR has been assessed against the FTSE
250 Index, refl ecting that the Company was, and continues to
be, a constituent of this Index and towards the middle or top
half of the Index in terms of market capitalisation when the
awards were granted. The Company is now positioned well
into the top quartile of the FTSE 250 Index in terms of market
capitalisation and therefore to ensure that the comparator
group remains refl ective of companies of a comparable size
for the 2016 grant, it was felt that it was more appropriate
to compare the Company’s performance relative to the
FTSE 350 Index. Performance will continue to be measured
over three fi nancial years.
TSR performance of the Company
relative to the FTSE 350 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 FTSE 350 Index’s TSR was 50% over the three year performance
period, then the Company’s TSR would have to be at least 75% for all 25%
of the PSP shares to vest.
Rightmove plc annual report 2015 55
Governance | Directors’ remuneration report continued
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 2015, the Company’s share price ended the year at
£41.25 up 83% year on year (the FTSE 250 Index was up
8.36%). On a three year basis the share price has increased
by 198% and has continued to outperform the FTSE 250
Index over that period as shown in the graphs on page 57.
Total shareholder return (TSR)
The fi rst graph on the next page compares the TSR of
Rightmove’s shares against the FTSE 250 Index and the
FTSE 350 Index for the period from 1 January 2013 to
31 December 2015. 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. Specifi cally,
it illustrates the value of £100 invested in Rightmove’s shares
and in the FTSE 250 Index and the FTSE 350 Index over
that period.
As required by the Act, the Company’s TSR performance
is required to be shown against a recognised broad-based
share index. The FTSE 250 Index was previously chosen as
the comparator because Rightmove was, and continues to
be, a constituent of this Index and it was therefore also the
Index used for the purposes of measuring relative
performance for PSP awards. As Rightmove is currently
ranked towards the top of that Index in terms of market
capitalisation, it is now felt to be more appropriate to use
the FTSE 350 Index for the purpose of comparing TSR
performance against the 2016 PSP awards and therefore
this will be used as the criteria applied to 25% of the PSP
awards to be granted in March 2016.
The graphs on the next page illustrate, for statutory
purposes, the TSR of Rightmove’s shares against the
FTSE 250 Index and the FTSE 350 Index for the three
and seven years to 31 December 2015.
Chairman and non-executive directors’ fees
The Chairman and non-executive fees were last reviewed in a
market context in 2009 with no increases beyond the default
policy level of a cost of living increase in line with the basic
level of pay rise received by employees within the business.
Therefore it was considered appropriate to ask NBS to carry
out a benchmarking exercise in 2015 to ensure that the
Chairman and non-executive director remuneration at
Rightmove took due account of the continued growth of the
Group, current market rates and refl ected the current time
commitment of the Chairman and non-executives in light of
increased responsibilities due to regulatory changes. It was
also considered necessary to revise fees so that the Company
would be able to recruit a Chairman or non-executive
directors of the appropriate calibre in the future allowing for
the current size of the Group. Having assessed these factors,
revised fees were approved.
The basic non-executive fee has been set at £50,000
(2015: £46,817) with an additional £10,000 (2015: £5,852)
fee per annum paid for the chairing of the Audit and
Remuneration Committees and a further £5,000
(2015: £5,852) fee paid to the Senior Independent Director
as detailed in the table below.
No further increases are anticipated for a minimum of three years.
Annual fee
Annual fee
1 January 2016
31 December 2015
Scott Forbes (Chairman)
£170,000
£117,042
Colin Kemp
Ashley Martin
Peter Williams(1)
Rakhi (Parekh) Goss-Custard
£50,000
£60,000
£65,000
£50,000
£46,817
£52,669
£54,410
£46,817
(1) Peter Williams became the Chairman of the Remuneration Committee and the
Senior Independent Director on 7 May 2015 as Jonathan Agnew stepped
down. The fees for 2015 refl ect the pro-rated increased fee from that date.
Statement of shareholder voting at AGM
At the AGM on 7 May 2015, 94.62% of shareholders voted in
favour of the Directors’ Remuneration Report. The Committee
believes this illustrates the strong level of shareholder support
for the remuneration framework. The table below shows
full details of the voting outcomes for the Directors’
Remuneration Report:
Votes
for
% Votes
Votes
% Votes
Votes
for
against
against
withheld(1)
72,049,364
94.62
4,098,699 5.38
203,592
Directors’
Remuneration
Report
(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.
56
rightmove.co.uk
TSR graph – three years
TSR graph – seven years
i
e
v
o
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g
R
o
t
d
e
s
a
b
e
R
£
300
250
200
150
100
50
0
2
1
c
e
D
3
1
c
e
D
4
1
c
e
D
+198%
+52%
£
3000
2500
2000
1500
i
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g
R
o
t
d
e
s
a
b
e
R
+23%
1000
500
0
8
0
c
e
D
5
1
c
e
D
+2511%
+232%
+97%
5
1
c
e
D
9
0
c
e
D
0
1
c
e
D
1
1
c
e
D
2
1
c
e
D
3
1
c
e
D
4
1
c
e
D
Rightmove
FTSE 250
FTSE 350
Source: Thomson Reuters
Rightmove
FTSE 250
FTSE 350
Source: Thomson Reuters
This graph shows the value by 31 December 2015, of £100 invested in Rightmove on
31 December 2012, compared to the value of £100 invested in the FTSE 250 Index
and FTSE 350 Index, on a daily basis.
This graph shows the value by 31 December 2015, of £100 invested in Rightmove on
31 December 2008, compared with the value of £100 invested in the FTSE 250 Index
and FTSE 350 Index on a daily basis.
Total remuneration for the Chief Executive Offi cer
The table below shows the total remuneration fi gure for the Chief Executive Offi cer over a seven year performance period.
The total remuneration fi gure includes the annual bonus and long-term incentive awards which vested based on performance
in those years:
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Year
2015
2014
2013
2012
2011
2010
2009
Executive
Nick McKittrick
Nick McKittrick
Nick McKittrick
Ed Williams(1)
Ed Williams
Ed Williams
Ed Williams
Ed Williams
Total single fi gure
bonus outturn
incentive outturn
£
(% of maximum)
(% of maximum)
Annual
Long-term
2,300,349
1,599,610
2,199,335
1,531,515
2,219,882
4,934,942
652,800
627,641
100%
70%
85%
n/a
90%
100%
100%
100%
100%
92.35%
100%
100%
100%
100%
–(2)
–(2)
(1) Ed Williams was Chief Executive Offi cer until his retirement on 30 April 2013. Nick McKittrick was appointed Chief Executive Offi cer at this time.
(2) The table above includes share-based incentive awards in the period that the associated performance conditions, excluding service conditions are satisfi ed.
Certain pre-fl oat share option awards prior to 2006, which had only service conditions and no performance conditions would have been included in the single
fi gure 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.
Rightmove plc annual report 2015 57
Governance | Directors’ remuneration report continued
Directors’ remuneration (audited)
The information included below up to and including page 65 is 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
Benefi ts(1)
Pension
£
£
£
Long-term
Performance
Total
Fixed pay
subtotal
£
Annual
incentives
related pay remuneration
bonus(2)
(PSPs)(3)
subtotal
in 2015
£
£
£
£
Executive directors
Nick McKittrick
408,000
1,931
–
409,931
510,000 1,380,418 1,890,418 2,300,349
Peter Brooks-Johnson
341,700
1,835
22,860
366,395
427,125 1,035,345 1,462,470 1,828,865
Robyn Perriss
270,300
1,834
21,816
293,950
337,875
638,399(6)
976,274 1,270,224
Non-executive directors
Scott Forbes
Jonathan Agnew
Colin Kemp
Ashley Martin
Judy Vezmar
Peter Williams
Rakhi (Parekh) Goss-Custard
117,042
20,632(4)
46,817
52,669
16,506(4)
54,410(5)
46,817
–
–
–
–
–
–
–
–
–
–
–
–
–
–
117,042
20,632
46,817
52,669
16,506
54,410
46,817
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
117,042
20,632
46,817
52,669
16,506
54,410
46,817
(1) Benefi ts 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 2015 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 2016 (including dividend roll up), which
are dependent on the three year performance period ended 31 December 2015 and multiplying by the year end closing share price of £41.25.
(4) Fee for the year up to retirement from the Board and Committees at the AGM on 7 May 2015.
(5) Fee includes a pro-rated increase from 7 May 2015 for appointment to Remuneration Committee Chairman and Senior Independent Director.
(6) These relate to nil cost PSPs granted to Robyn Perriss prior to her appointment as director.
58
rightmove.co.uk
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The remuneration of the directors of the Company during 2014 for time served as a director was:
Fixed pay
Performance related pay
Salary/Fee
Benefi ts(1)
Pension
£
£
£
Long-term Performance
Total
Fixed pay
subtotal
£
Annual
incentives
related pay remuneration
bonus(2)
(PSPs)(3)
subtotal
in 2014
£
£
£
£
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(2)
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) Goss-Custard
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) Benefi ts in kind for the executive directors relate to private medical insurance and the medical cash plan.
(2) The annual bonus amounts relate to the cash amount paid in respect of the full year results for the year ended 31 December 2014 and the nil cost deferred shares
granted in March 2015, which have been valued using the share price at grant date of £27.83.
(3) The value of the nil cost PSPs vesting is calculated by taking the number of nil cost options of which 92.35% vested in March 2015 (including dividend roll up),
which were dependent on the three year performance period ended 31 December 2014 and multiplying by the December 2014 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.
Defi ned 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 not to participate in this
arrangement. Peter Brooks-Johnson and Robyn Perriss are members of the stakeholder pension plan and during 2015
the Company contributed £22,860 and £21,816 per annum respectively. The Company does not contribute to any personal
pension arrangements.
Rightmove plc annual report 2015 59
Governance | Directors’ remuneration report continued
How was pay linked to performance in 2015?
Annual bonus plan
The incentive for the fi nancial year ended 31 December 2015 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 profi t performance (70%) and key performance indicators (30%) relating to underlying drivers of long-term
revenue growth.
When comparing performance against the 2015 bonus targets set, the Committee determined that 100% of the maximum
achievable cash and DSP bonus should be paid to the executive directors. Accordingly, a cash bonus of 50% of base salary will
be paid to the executives and 75% of base salary will be granted to the executives under the DSP, which will be deferred until
March 2018. More details are provided in the table below:
Measure
Hurdle
Financial targets
Underlying operating
profi t before tax(1)
Actual targets:
£132.6m: 25% payout
£141.6m: 100% payout
Strategic targets
Traffi c market share
Other revenue(2)
Total
Growth in absolute visits on 2014
compared to competitors:
Same absolute growth: 25% payout
50% higher absolute growth:
100% payout
Growth of 20%: 25% payout
Growth of 30%:100% payout
As a % of
maximum
bonus opportunity
Actual performance
achieved
70%
Underlying operating profi t achieved:
£144.3m
The 2015 profi t represented
growth of 16% on 2014
Resulting
bonus
% achieved
70%
15%
Growth in absolute visits of greater than 50%
15%
15%
100%
Revenue increased from £11.0m to £14.5m,
an increase of 32%
15%
100%
(1) Operating profi t before share-based payments and NI on share-based incentives.
(2) The targets relate to all revenue streams except Agency and New Homes.
Long-term incentives
The PSP awards granted in March 2013 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 2015.
The vesting schedule for the relative TSR element of executive directors’ 2013 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 198.0% compared to 52% for the FTSE 250 Index.
As this level of outperformance is more than 25%, these options will vest in full from 8 March 2016.
Rightmove’s EPS growth is measured over a period of three fi nancial years (2013 to 2015). The EPS fi gure 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 opposite:
60
rightmove.co.uk
Normalised EPS growth
from 2013 to 2015
Less than 22.5%
22.5%
40%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 22.5% and 40%
Straight-line vesting
At the end of the performance period, Normalised EPS was 112.9p which from a Normalised EPS base of 63.1p results in
growth of 79%, exceeding the maximum 40% EPS growth target and will result in full vesting of this part of the award
(maximum of 75%) from 8 March 2016.
In aggregate, the performance over the year was considered exceptional by the Committee who were satisfi ed that paying
maximum bonuses was appropriate.
Share awards granted during the year
On 2 March 2015 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded shares under the PSP, which vest
in March 2018, 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 refl ect 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
29,321
24,556
19,425
£816,003
£683,393
£540,598
(1) Based on the average mid market share price for the three consecutive days prior to grant, taken from the Daily Offi cial List, of £27.83.
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 option scheme. Performance will be measured over
three fi nancial years.
Rightmove’s EPS growth will be measured over a period of
three fi nancial years (2015-2017). The EPS fi gure 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).
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The following vesting schedule will apply for executive
% of award vesting
(maximum 25%)
directors’ awards granted in 2015:
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
Underlying basic EPS growth
from 2015 to 2017
Less than 30%
Equal to 30%
Equal to or greater than 60%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 30% and 60%
Straight-line vesting
The benchmark underlying basic EPS for the fi nancial year
2014 from which these targets will be measured is 100.3p.
Rightmove plc annual report 2015 61
Governance | Directors’ remuneration report continued
Share-based incentives held by the directors and not exercised as at 31 December 2015
Share-based
incentives held
1 January
2015
Granted/
(lapsed)
in year
Date
granted
Exercise
price
Exercised
in year
Average
share
price at
date of
exercise
Share-based
incentives held at
31 December
2015
Vesting
date
Expiry
date
Executive directors
Nick McKittrick
5/3/2009
(Unapproved)
279,755
5/3/2010
(Unapproved)
114,165
4/5/2011
(PSP)
49,289
2/3/2012
–
–
–
(PSP)
39,303
(3,007)
£0.00
(36,296)(2) £37.39
£2.24
–
–
279,755
5/3/2012
4/3/2019
£6.66
(114,165)
£37.39
£0.00
(49,289)(1) £37.39
–
–
–
5/3/2013
4/3/2020
4/3/2014
3/3/2016
2/3/2014
1/3/2015
£12.95
–
–
694
1/11/2015 30/4/2016
£0.00
(15,184)(3) £37.34
–
8/3/2015
7/3/2016
1/10/2012
(Sharesave)
8/3/2013
694
(DSP)
15,184
8/3/2013
(PSP)
32,279
3/3/2014
(DSP)
9,224
3/3/2014
(PSP)
30,018
456
1/10/2014
(Sharesave)
2/3/2015
(DSP)
2/3/2015
(PSP)
1/10/2015
(Sharesave)
–
–
–
–
–
–
£0.00
£0.00
£0.00
£19.72
–
7,546(4)
£0.00
–
29,321
£0.00
–
304
£29.60
–
–
–
–
–
–
–
–
–
–
–
–
–
–
32,279
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
7,546
2/3/2017
1/3/2018
29,321
2/3/2018
1/3/2020
304
1/11/2018 30/4/2019
Total
570,367
34,164
(214,934)
389,597
62
rightmove.co.uk
Share-based incentives held by the directors and not exercised as at 31 December 2015 continued
Executive directors
Peter
Brooks-Johnson
Share-based
incentives held
1 January
2015
Granted/
(lapsed)
in year
Date
granted
Exercise
price
Exercised
in year
Average
share
price at
date of
exercise
Share-based
incentives held at
31 December
2015
Vesting
date
Expiry
date
14/3/2006
(Approved)
10/10/2007
(Unapproved)
5/3/2009
2,439
75,000
(Unapproved)
139,286
5/3/2010
(Unapproved)
4/5/2011
52,553
(PSP)
23,697
2/3/2012
–
–
–
–
–
£4.10
(2,439)
£37.39
£5.22
£2.24
£6.66
–
–
–
–
–
–
Between
14/3/2009 &
–
14/3/2011 13/3/2016
75,000
15/3/2011 9/10/2017
139,286
5/3/2012 4/3/2019
52,553
5/3/2013
4/3/2020
£0.00
(23,697)(1) £37.34
–
4/3/2014
3/3/2016
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(PSP)
25,935
(1,984)
£0.00
–
£12.95
(694)
–
–
23,951
2/3/2015
1/3/2017
–
1/11/2015 30/4/2016
£0.00
(11,689)(3) £30.82
–
8/3/2015
7/3/2016
1/10/2012
(Sharesave)
8/3/2013
694
(DSP)
11,689
8/3/2013
(PSP)
24,210
3/3/2014
(DSP)
6,918
25,140
456
3/3/2014
(PSP)
1/10/2014
(Sharesave)
2/3/2015
(DSP)
2/3/2015
(PSP)
1/10/2015
(Sharesave)
–
–
–
–
–
–
£0.00
£0.00
£19.72
£19.72
–
6,320(4)
£0.00
–
24,556(5)
£0.00
–
304
£29.60
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24,210
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
6,320
2/3/2017
1/3/2018
24,556
2/3/2018
1/3/2020
304
1/11/2018 30/4/2019
Total
388,017
29,196
(38,519)
378,694
Rightmove plc annual report 2015 63
Governance | Directors’ remuneration report continued
Share-based incentives held by the directors and not exercised as at 31 December 2015 continued
Share-based
incentives held
1 January
2015
Granted/
(lapsed)
in year
Date
granted
Exercise
price
Exercised
in year
Average
share
price at
date of
exercise
Share-based
incentives held at
31 December
2015
Vesting
date
Expiry
date
Executive directors
Robyn Perriss
4/5/2011
(PSP)
5,972
3/10/2011
(Sharesave)
2/3/2012
910
–
–
£0.00
(5,972)(1) £32.00
–
4/3/2014
3/3/2016
£9.88
(910)(6)
–
–
1/11/2014 30/4/2015
(PSP)
5,086
(389)
£0.00
(4,697)(2) £32.00
£0.00
(2,172)(3) £32.00
8/3/2013
(DSP)
2,172
8/3/2013
(PSP)
14,928
3/3/2014
(DSP)
4,353
3/3/2014
(PSP)
19,887
912
1/10/2014
(Sharesave)
2/3/2015
(DSP)
2/3/2015
(PSP)
–
–
–
–
–
£0.00
£0.00
£0.00
£19.72
–
4,999(4)
£0.00
– 19,425(5)
£0.00
–
–
2/3/2015
1/3/2017
8/3/2015
7/3/2016
14,928
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
4,999
2/3/2017
1/3/2018
19,425
2/3/2018
1/3/2020
–
–
–
–
–
–
–
–
–
–
–
–
Total
54,220
24,035
(13,751)
64,504
(1) 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. Robyn Perriss exercised 6,201 performance shares (which included a dividend roll up of 229 shares) in April 2015, sold
4,558 shares immediately upon exercise at a market value of £32.00 per share and retained 1,643 shares. Nick McKittrick exercised 51,178 performance shares
(which included a dividend roll up of 1,889 shares) in September 2015 and sold all the shares immediately upon exercise at a market value of £37.39 per share.
Peter Brooks-Johnson exercised 24,605 performance shares (which included a dividend roll up of 908 shares) in September 2015, sold 11,588 shares upon
exercise at a market value of £37.34 per share and retained 13,017 shares.
(2) On 2 March 2012, the executive directors were awarded nil cost options under the PSP, of which 92.35% vested in 2015 and were subject to a mixture of EPS
performance which vested at 75% and relative TSR performance which vested at 17.35% out of a maximum possible 25%. Robyn Perriss exercised 4,879
performance shares (which consisted of 4,697 shares representing 389 lapsed shares from the original 5,086 shares awarded and a dividend roll up of 182 shares)
in April 2015, sold 3,586 shares immediately upon exercise at a market value of £32.00 per share and retained 1,293 shares. Nick McKittrick exercised 37,702
performance shares (which consisted of 36,296 shares representing the original 39,303 shares awarded less 3,007 lapsed shares and a dividend roll up of 1,406
shares) in September 2015 and sold all the shares immediately upon exercise at a market value of £37.39 per shares.
(3) The nil cost deferred shares granted under the DSP on 8 March 2013, were exercisable from 8 March 2015 subject to annual bonus targets which were met in full.
Robyn Perriss exercised 2,172 shares in April 2015, subsequently sold 1,596 shares at a market value of £32.00 per share and retained 576 shares.
Peter Brooks-Johnson exercised 11,689 shares in April 2015 and sold all the shares immediately upon exercise at a market value of £30.82 per share.
Nick McKittrick exercised 15,184 shares in September 2015 and sold all the shares immediately upon exercise at a market value of £37.34 per share.
(4) On 2 March 2015 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded 7,546, 6,320 and 4,999 nil cost deferred shares respectively under the
DSP, which vest in 2017. The average mid market share price for the three consecutive preceding days taken from the Daily Offi cial List and used to calculate the
number of shares awarded was £27.83.
(5) On 2 March 2015 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded 29,321, 24,556 and 19,425 nil cost shares respectively under the PSP,
which vest in 2018, further details are described on page 61.
(6) In October 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. In April 2015, Robyn Perriss exercised 910 Sharesave options and retained the shares.
64
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Dilution
All existing executive share-based incentives can be satisfi ed from shares held in the Rightmove Employees’ Share Trust (EBT)
and shares held in treasury. It is intended that the 2016 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.
Directors’ interests in shares
The interests (both benefi cial and family interests) of the directors in offi ce at the date of this report 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
Rakhi (Parekh) Goss-Custard
Total
Interests in
Interests in
ordinary shares of £0.01
share-based incentives
At
At
31 December 2015
1 January 2015
Outstanding
PSP & DSP
awards
(unvested)
Outstanding
options
(unvested)
141,027
141,027
108,388
38,358
5,833
22,483
1,411
87,144
63,592
319,300
319,300
–
2,060
5,000
2,060
–
16,343
3,728
2,500
–
3,728
1,000
–
–
–
–
–
–
–
–
760
760
912
–
–
–
–
–
–
–
Outstanding
options
(vested but
unexercised)
280,449
290,790
–
–
–
–
–
–
–
–
512,806
512,352
259,124
2,432
571,239
(cid:129) The Company’s shares in issue (including 2,322,314 shares held in treasury) as at 31 December 2015 comprised 97,741,977 (2014: 99,993,317) ordinary shares
of £0.01 each.
(cid:129) The closing share price of the Company was £41.25 as at 31 December 2015 (the last day of trading in 2015). The lowest and highest share prices during the year
were £21.21 and £41.80 respectively.
(cid:129) The executive directors are regarded as being interested, for the purposes of the Companies Act 2006, in 386,057 (2014: 596,499) ordinary shares of £0.01 each in
the Company currently held by the EBT as they are, together with other employees, potential benefi ciaries of the EBT.
(cid:129) The directors’ benefi cial holdings represent 0.5% of the Company’s shares in issue as at 31 December 2015 (2014: 0.5%) (excluding shares held in treasury).
(cid:129) 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 47. The interests of the executive
directors in offi ce at 31 December 2015 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
Base salary
shares held at
Value of shares at
1 January 2016
31 December 2015
31 December 2015
Value of
shares as a %
of base salary
£424,320
141,027
£5,817,363
£355,368
£281,112
38,358
£1,582,268
5,833
£240,611
1371%
445%
86%
Rightmove plc annual report 2015 65
Governance | Directors’ remuneration report continued
Percentage increase in the remuneration of the Chief Executive Offi cer
The table below shows the movement in the salary, benefi ts and annual bonus for the Chief Executive Offi cer between the
current and previous fi nancial year compared to that of the total amounts for all employees of the Group for each of these
elements of pay.
The CEO’s salary increased by 2%, being the same infl ationary increase as awarded to all eligible Rightmove employees.
The annual bonus of the CEO increased as a result of the maximum bonus being achieved in relation to the 2015 bonus
targets, compared with a payout of 70% in 2014.
The average salary and annual bonus for all employees shows a small year on year decline due to a mix effect with the
investment in new heads in 2015 primarily being in customer facing roles at lower average salary levels than other Rightmove
employees.
Benefi t costs have fallen for the CEO and all employees following the renegotiation of our health insurance supply contract
on improved terms.
Chief Executive Offi cer
Salary
Benefi ts
Annual bonus
Average of all employees
Salary
Benefi ts
Annual bonus
2015
£
2014
£
408,000
400,000
1,931
2,055
510,000
350,000
42,883
42,983
734
2,364
749
3,546
% change
2.0%
(6.0)%
45.7%
(0.2)%
(2.0)%
(33.3)%
Relative importance of the spend on pay
The table below shows the total pay for all of Rightmove’s employees compared to other key fi nancial indicators. Additional
information on the number of employees, total revenue and underlying operating profi t 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 profi t(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
Year ended
31 December 2015
31 December 2014
% change
£23,464,000
£21,647,000
£36,469,000
£29,490,000
£76,071,000
£73,867,000
£27,636,000
£25,857,000
412
388
£192,129,000
£167,012,000
£144,271,000
£124,592,000
8%
24%
3%
7%
6%
15%
16%
66
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Governance | Independent auditor’s report to the members of Rightmove plc only
Opinions and conclusions arising from our audit
1. Our opinion on the fi nancial statements
is unmodifi ed
We have audited the fi nancial statements of Rightmove plc for
the year ended 31 December 2015 set out on pages 70 to
107. In our opinion:
(cid:129) the fi nancial statements give a true and fair view of the state
of the Group’s and of the parent Company’s affairs as at
31 December 2015 and of the Group’s profi t for the year
then ended;
(cid:129) the Group fi nancial statements have been properly prepared
in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as
adopted by the EU);
(cid:129) the parent Company fi nancial 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
(cid:129) the fi nancial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and,
as regards the group fi nancial 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 fi ndings 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 fi ndings are the result of procedures undertaken
in the context of and solely for the purpose of our statutory
audit opinion on the fi nancial statements as a whole and
consequently are incidental to that opinion, and we do not
express discrete opinions on separate elements of the
fi nancial statements.
Revenue recognition (£192,129,000)
Refer to page 33 (Corporate governance report), page 81
(accounting policy) and pages 84 to 85 (fi nancial disclosures)
(cid:129) 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. Given the variety of individual contract terms
and that revenue is the most material fi gure in the fi nancial
statements, we consider a signifi cant risk exists in relation to
revenue recognition; specifi cally that the billing of customers
is not in line with the contract terms, with resulting revenue
not being recognised appropriately.
(cid:129) 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, New Homes
and Overseas, which cover 95% of revenue recognised in
the year, we performed detailed procedures using computer
assisted audit techniques to analyse the amounts billed to
customers by product in order to identify and investigate any
anomalies and outliers. We considered whether amounts
billed had been recognised as revenue in the correct
accounting period by comparing the period of subscription
or usage of additional advertising products to the timing of
revenue recognition. We inspected signifi cant contracts
signed in the year on a sample basis, to assess whether
revenue has been recognised in accordance with the
specifi c contract terms and conditions and relevant
accounting standards. We assessed the appropriateness
of deferred revenue at the period end with reference to
subscription fee billings in December and specifi c 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 refl ect the
risks inherent in recognising revenue.
(cid:129) Our fi ndings: 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 differences for which we were unable to appropriate
explanation 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 signifi cant 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 2015 67
Governance | Independent auditor’s report to the members of Rightmove plc only continued
We continue to perform audit procedures over risk of
misstatement of share-based incentives charge and related
deferred tax charge and asset. However, as there are no
complex new schemes and the underlying assumptions used,
and the Group’s model for quantifying the expense, are now
better established, we have not assessed this as one of the
risks that had the greatest effect on our audit and, therefore,
it is not separately identifi ed in our report this year.
3. Our application of materiality and an overview
of the scope of our audit
The materiality for the Group fi nancial statements as a whole
was set at £6.7m, determined with reference to a benchmark
of Group profi t before tax of which it represents 4.9%.
We report to the Audit Committee any uncorrected
identifi ed misstatements exceeding £0.34m, in addition to
other identifi ed misstatements that warranted reporting on
qualitative grounds. We report misstatements corrected by
management where we believe these will assist the audit
committee in fulfi lling 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 profi t before taxation and 100% of
total Group assets were audited.
4. Our opinion on other matters prescribed by the
Companies Act 2006 is unmodifi ed
In our opinion:
(cid:129) the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the
Companies Act 2006;
(cid:129) the information given in the Strategic Report and the
5. We have nothing to report on the disclosures
of principal risks
Based on the knowledge we acquired during our audit, we
have nothing material to add or draw attention to in relation to:
(cid:129) the directors’ viability statement on page 17, concerning
the principal risks, their management, and, based on
that, the directors’ assessment and expectations of the
Group continuing in operation over the three years to
31 December 2018; or
(cid:129) the disclosures in note 1 of the fi nancial statements
concerning the use of the going concern basis
of accounting.
6. 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 identifi ed other information in the annual report that
contains a material inconsistency with either that knowledge
or the fi nancial statements, a material misstatement of fact,
or that is otherwise misleading.
In particular, we are required to report to you if:
(cid:129) we have identifi ed material inconsistencies between the
knowledge we acquired during our audit and the directors’
statement that they consider that the annual report and
fi nancial statements taken as a whole is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the group’s position and
performance, business model and strategy; or
(cid:129) the Audit Committee report does not appropriately address
matters communicated by us to the audit committee.
Directors’ Report for the fi nancial year for which the fi nancial
statements are prepared is consistent with the fi nancial
statements; and
(cid:129) information given in the Corporate Governance Statement
set out on page 35 with respect to internal control and risk
management systems in relation to fi nancial reporting
processes and about share capital structures is consistent
with the fi nancial statements.
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
(cid:129) 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
(cid:129) the parent company fi nancial statements and the part of
the Directors’ Remuneration Report to be audited are not
in agreement with the accounting records and returns; or
68
rightmove.co.uk
(cid:129) certain disclosures of directors’ remuneration specifi ed by
law are not made; or
(cid:129) we have not received all the information and explanations
we require for our audit; or
(cid:129) a Corporate Governance Statement has not been prepared
by the company.
Under the Listing Rules we are required to review:
(cid:129) the directors’ statements, set out on pages 17 and 77 in
relation to going concern and longer-term viability; and
(cid:129) the part of the Corporate Governance Statement on pages
26 to 31 relating to the company’s compliance with the
eleven provisions of the 2014 UK Corporate Governance
Code specifi ed for our review.
We have nothing to report in respect of the above
responsibilities.
Scope and responsibilities
As explained more fully in the Directors’ Responsibilities
Statement set out on page 41, the directors are responsible
for the preparation of the fi nancial statements and for being
satisfi ed that they give a true and fair view. A description
of the scope of an audit of fi nancial statements 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 is 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
26 February 2016
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Rightmove plc annual report 2015 69
Consolidated statement of comprehensive income for the year ended 31 December 2015
Revenue
Administrative expenses
Operating profi t before share-based payments and NI
on share-based incentives
Share-based payments
NI on share-based incentives
Operating profi t
Financial income
Financial expenses
Net fi nancial expense
Profi t before tax
Income tax expense
Profi t 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
Year ended
Year ended
31 December 2015 31 December 2014
£000
£000
192,129
167,012
(54,954)
(44,954)
144,271
(3,765)
(3,331)
124,592
(2,728)
194
137,175
122,058
112
(183)
(71)
109
(129)
(20)
137,104
(27,636)
122,038
(25,857)
109,468
96,181
109,468
96,181
114.01
112.74
38.00
36,469
97.70
96.62
30.00
29,490
70
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Consolidated statement of fi nancial position as at 31 December 2015
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Money market deposits
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
18
19
21
22, 23
23
23
23
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31 December 2015 31 December 2014
£000
£000
2,239
1,383
6,791
1,580
1,565
4,503
10,413
7,648
27,523
4,000
8,418
24,298
–
11,205
39,941
35,503
50,354
43,151
(31,618)
(11,863)
(27,560)
(12,943)
(43,481)
(40,503)
(236)
(200)
(236)
(200)
(43,717)
(40,703)
6,637
2,448
977
455
5,205
1,000
432
1,016
6,637
2,448
The fi nancial statements were approved by the Board of directors on 26 February 2016 and were signed on its behalf by:
Nick McKittrick
Director
Robyn Perriss
Director
Rightmove plc annual report 2015 71
Company statement of fi nancial position as at 31 December 2015
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 2015 31 December 2014
£000
£000
544,464
3,581
542,804
2,667
548,045
545,471
548,045
545,471
19
(36,629)
(50,123)
(36,629)
(50,123)
511,416
495,348
977
109,631
400,808
1,000
109,608
384,740
511,416
495,348
22, 23
23
23
23
The fi nancial statements were approved by the Board of directors on 26 February 2016 and were signed on its behalf by:
Nick McKittrick
Director
Robyn Perriss
Director
72
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Consolidated statement of cash fl ows for the year ended 31 December 2015
Year ended
Year ended
31 December 2015 31 December 2014
Note
£000
£000
Cash fl ows from operating activities
Profi t 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 fl ow 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 fl ows from investing activities
Interest received
Acquisition of property, plant and equipment
Acquisition of intangible assets
Deferred consideration received
Money market deposits
Net cash (used)/received in investing activities
Cash fl ows from fi nancing 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 fi nancing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
13
14
6
6
8
9
24
10
21
13
14
18
12
23
23
23
23
109,468
96,181
934
361
–
–
(112)
183
3,765
27,636
825
368
1
3
(109)
129
2,728
25,857
142,235
125,983
(3,230)
4,140
36
(3,151)
2,522
36
143,181
125,390
(183)
(26,869)
(129)
(17,070)
116,129
108,191
117
(1,593)
(179)
–
(4,000)
133
(727)
(343)
1,667
–
(5,655)
730
(36,469)
(76,071)
(507)
(615)
401
(29,490)
(73,867)
(863)
(472)
177
(113,261)
(104,515)
(2,787)
11,205
4,406
6,799
Cash and cash equivalents at 31 December
18
8,418
11,205
Rightmove plc annual report 2015 73
Company statement of cash fl ows for the year ended 31 December 2015
Cash fl ows from operating activities
Profi t for the year
Adjustments for:
Financial income
Financial expenses
Share-based payments
Income tax credit
Operating cash fl ow before changes in working capital
Increase in trade and other payables
Cash generated from operating activities
Cash fl ows from fi nancing activities
Dividends paid
Purchase of own shares for cancellation
Share-related expenses
Net cash used in fi nancing 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
Year ended
Year ended
31 December 2015 31 December 2014
£000
£000
123,757
76,732
(130,263)
547
2,105
(1,465)
(80,228)
536
1,644
(799)
(5,319)
(2,115)
118,474
105,944
113,155
103,829
(36,469)
(76,071)
(615)
(29,490)
(73,867)
(472)
(113,155)
(103,829)
–
–
–
–
–
–
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rightmove.co.uk
Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2015
Share
capital
£000
Note
EBT
shares
reserve
£000
SIP
shares
reserve
£000
shares
£000
Treasury
Other
acquisition
Reverse
reserve
£000
Retained
earnings
£000
Total
equity
£000
At 1 January 2014
1,031
(2,418)
–
(11,917)
Total comprehensive income
Profi t 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 SIP
Cancellation of own shares
Share-related expenses
24
10
12
23
23
23
23
–
–
–
–
–
–
(31)
–
–
–
–
–
375
(863)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
reserves
£000
263
–
–
–
–
–
–
31
–
138
21,818
8,915
–
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
At 1 January 2015
1,000
(2,906)
–
(11,917)
294
138
15,839
2,448
Total comprehensive income
Profi t 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
Transfer of shares to SIP
Exercise of share-based incentives
Purchase of shares for SIP
Cancellation of own shares
Share-related expenses
24
10
12
23
23
23
23
–
–
–
–
–
–
–
(23)
–
–
–
–
–
863
385
(507)
–
–
–
–
–
–
(863)
11
–
–
–
–
–
–
–
–
872
–
–
–
–
–
–
–
–
–
–
23
–
–
109,468
109,468
–
–
–
–
–
–
–
–
3,765
3,765
4,135
(36,469)
–
(867)
–
(76,071)
(533)
4,135
(36,469)
–
401
(507)
(76,071)
(533)
At 31 December 2015
977
(2,165)
(852)
(11,045)
317
138
19,267
6,637
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Rightmove plc annual report 2015 75
Company statement of changes in shareholders’ equity for the year ended 31 December 2015
At 1 January 2014
Total comprehensive income
Profi t 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
Note
Share
capital
£000
1,031
SIP
shares
reserve
£000
Treasury
shares
£000
Other
reserves
£000
Reverse
acquisition
reserve
£000
Retained
earnings
£000
Total
equity
£000
–
(11,917)
4,973
103,520
422,671
520,278
–
–
–
–
–
(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
At 1 January 2015
1,000
–
(11,917)
6,088
103,520
396,657
495,348
Total comprehensive income
Profi t 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
Transfer of shares to SIP
Exercise of share-based incentives
Cancellation of own shares
Share-related expenses
24
10
23
12
23
23
–
–
–
–
–
–
–
(23)
–
–
–
–
–
–
(863)
11
–
–
–
–
–
–
–
–
872
–
–
–
–
–
1,660
–
–
–
23
–
–
123,757
123,757
–
–
–
–
–
–
–
–
2,105
2,105
2,482
–
(36,469)
–
(883)
(76,071)
(533)
2,482
1,660
(36,469)
(863)
–
(76,071)
(533)
At 31 December 2015
977
(852)
(11,045)
7,771
103,520
411,045
511,416
76
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Notes forming part of the fi nancial 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 fi nancial statements of the Company as at and for the year ended 31 December 2015 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 fi nancial statements of the Group as at and for the year ended 31 December 2015 are available upon request to the
Company Secretary from the Company’s registered offi ce 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 fi nancial statements have been prepared and approved by the Board of directors in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union (Adopted IFRSs).
The consolidated fi nancial statements were authorised for issue by the Board of directors on 26 February 2016.
Basis of preparation
On publishing the Company fi nancial statements here together with the Group fi nancial 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 fi nancial statements.
The accounting policies set out below have been consistently applied to both years presented, unless otherwise stated.
The fi nancial statements have been prepared on an historical cost basis.
Changes in accounting policies
The accounting policies applied by the Group in these consolidated fi nancial statements are in accordance with Adopted IFRSs and are
the same as those applied by the Group in its consolidated fi nancial statements as at and for the year ended 31 December 2014.
Going concern
Throughout 2015, the Group was debt free and has continued to generate signifi cant cash. The Group had net cash balances of £8,418,000
at 31 December 2015 (2014: £11,205,000). The Group also had £4,000,000 (2014: £nil) of money market deposits (2014: nil).
The Group agreed to extend a 12 month agreement with HSBC for a £10,000,000 committed revolving loan facility. This agreement will
expire on 9 February 2017. To date, no amount has been drawn under this facility.
During the year, £112,540,000 (2014: £103,357,000) of cash was returned to shareholders via dividends and discretionary share buy backs.
The Board of directors is confi dent that with the existing cash resources and banking facilities in place, coupled with the strength of the
underlying business model, that the Group and the Company will remain cash positive and will have adequate resources to continue in
operational existence for a period of 12 months from the date of signing these accounts.
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 2 to 23. The fi nancial position of the Group, its cash fl ows, liquidity position and
borrowing facilities are described on pages 13 to 16. In addition Note 4 to the fi nancial statements includes the Group’s objectives, policies
and processes for managing its capital; its fi nancial risk management objectives; details of its fi nancial instruments; and its exposures to
credit risk and liquidity risk.
Capital structure
The Company was incorporated and registered in England and Wales on 14 November 2007 under the Companies Act 1985 as a private
company limited by shares with the name Rightmove Group Limited, registered no. 6426485. The Company was re-registered as a public
limited company under the name Rightmove Group plc on 29 November 2007. On 28 January 2008, the Company became the holding
company of Rightmove Group Limited (formerly Rightmove plc, Company no. 3997679) and its subsidiaries pursuant to a Scheme of
Arrangement under s425 of the Companies Act 1985. The shares in the Company were admitted to trading on the Offi cial 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.
Rightmove plc annual report 2015 77
Notes continued
1 General information continued
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 fi nancial statements of subsidiaries are
included in the consolidated fi nancial statements from the date that control commences until the date that control ceases.
Judgements and estimates
The preparation of the consolidated and Company fi nancial 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 signifi cant areas of estimation uncertainty and critical judgements in applying accounting policies that have the
most signifi cant effect on the amounts recognised in the consolidated and Company fi nancial statements is included in the following notes:
Note 2 (j)
Revenue recognition, specifi cally regarding the period to which services relate 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-based incentives granted to employees, the number of share-based incentives that are expected to vest is based
upon estimates of the number of employees that will forfeit their awards through leaving the Group and the likelihood of
any non-market performance conditions being satisfi ed. 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 Signifi cant accounting policies
(a) Investments
Investments in subsidiaries are held at cost less any provision for impairment in the parent Company fi nancial statements.
(b) Intangible assets
(i) Research and development
The Group undertakes research and development expenditure in view of developing new products and improving the existing platforms.
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding, is recognised
in profi t or loss as incurred.
Expenditure on development activities, whereby research fi ndings are applied to a plan or design for the production of a new product
or substantially enhanced website, is capitalised if the new product or the enhanced website is technically and commercially feasible,
the Group has suffi cient resources to complete development, future economic benefi ts are probable and the Group can measure reliably
the expenditure attributable to the intangible asset during its 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 benefi ts embodied in the specifi c asset to which it relates. All other expenditure is expensed
when incurred.
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(ii) 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:
Offi ce equipment, fi xtures and fi ttings 20.0% per annum
Computer equipment
Leasehold improvements
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-fi nancial 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 fl ows are discounted to their present value using a pre-tax discount rate that
refl ects current market assessments of the time value of money and the risks specifi c to the asset. For an asset that does not generate largely
independent cash fl ows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
Goodwill and intangible assets that have an indefi nite useful life are not subject to amortisation but are tested for impairment annually and
whenever there is an indication that they might be impaired. An impairment loss is recognised for the amount by which the carrying value
of the asset exceeds its recoverable amount.
Investments are assessed for possible impairment when there is an indication that the fair value of the investments may be below the
Company’s carrying value. When such a condition is deemed to be other than temporary, the carrying value of the investment is written
down to its fair value and the amount written off is included in profi t 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 fi nancial performance and
the Company’s ability and intention to retain its investment for a period that will be suffi cient to allow for any anticipated recovery in the
investment’s market value.
(e) Financial instruments
Trade receivables do not carry any interest and are initially recognised at fair value and subsequently measured at amortised cost less any
impairment loss. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be
able to collect all amounts due according to the receivables’ original terms.
Trade payables are not interest bearing and are initially recognised at fair value and subsequently measured at amortised cost. Trade
payables are classifi ed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting date.
Money market deposits are recorded initially at fair value and subsequently measured at amortised cost. They represent deposits with
a maturity of over three months.
Inter-group balances and transactions, and any unrealised income and expenses arising from inter-group transactions, are eliminated
in preparing the consolidated fi nancial statements.
Rightmove plc annual report 2015 79
Notes continued
2 Signifi cant accounting policies continued
(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 outfl ow of economic benefi ts will be required to settle the obligation.
Provisions are determined by discounting the expected future cash fl ows at a pre-tax rate that refl ects current market assessment of the time
value of money and the risks specifi c to the liability. The unwinding of the discount is recognised as a fi nance cost.
A provision is maintained in respect of lease dilapidations based on an estimated cost to make good per square foot multiplied by the fl oor
area of each premise.
(h) Employee benefi ts
(i) Pensions
The Group provides access to a stakeholder pension scheme (a defi ned contribution pension plan) into which employees may elect to
contribute via salary exchange. Obligations for contributions to defi ned contribution pension plans are recognised as an employee benefi t
expense in profi t or loss when they are incurred.
(ii) Employee share schemes
The Group provides share-based incentive plans allowing executive directors and other employees to acquire shares in the Company.
An expense is recognised in profi t or loss, with a corresponding increase in equity, over the period during which the employees become
unconditionally entitled to acquire equity settled share-based incentives.
Fair value at the grant date is measured using either the Monte Carlo or Black Scholes pricing model as is most appropriate for each
scheme. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on
weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life
of the instruments (based on historical experience and general option behaviour), expected dividends, and risk-free interest rates (based
on government bonds). Service and non-market performance conditions attached to the awards are not taken into account in
determining the fair value.
For share-based incentive awards with non-vesting conditions, the grant date fair value of the share-based incentives is measured to
refl ect 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 profi t or loss.
(iii) Own shares held by The Rightmove Employees’ Share Trust (EBT)
The EBT is treated as an agent of Rightmove Group Limited and, as such EBT transactions are treated as being those of
Rightmove Group Limited and are therefore refl ected in the Group’s consolidated fi nancial statements. In particular, at a consolidated
level, the EBT’s purchases of shares in the Company are charged directly to equity.
(iv) Own shares held by The Rightmove Share Incentive Plan Trust (SIP)
The SIP is treated as an agent of Rightmove plc and, as such SIP transactions are treated as being those of Rightmove plc and are
therefore refl ected in the Group’s consolidated fi nancial statements. In particular, at a consolidated level, the SIP’s purchases of shares
in the Company are charged directly to equity.
(v) National Insurance (NI) on share-based incentives
Employer’s NI is accrued, where applicable, at a rate of 13.8%, which management expects to be the prevailing rate when share-based
incentives are exercised. In the case of share options, it is provided on the difference between the share price at the reporting date and
the average exercise price of share options. In the case of nil cost performance shares and deferred shares, it is provided based on the
share price at the reporting date.
(i) Treasury shares and shares purchased for cancellation
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs,
is recognised as a deduction from equity. Repurchased shares are either held in treasury or cancelled.
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(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 fi ve years, but are typically for periods of six to 12 months. Revenue is recognised over the period
of the contract or as advertising products are used. Membership offers take place from time to time and may include discounted products
and free periods. These are recognised on a monthly basis over the contract term.
Agency, Overseas and Commercial services are typically billed in advance with revenue deferred until the service commencement date.
New Homes developers are billed monthly in arrears. Where invoices are raised on other than a monthly basis, the amounts are recognised
as deferred or accrued revenue and released to the profi t 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 Offi cer to make decisions about resources to be allocated to the segment and
assess its performance and for which discrete fi nancial information is available.
(l) Leases
Operating lease rentals are charged to profi t 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 profi t or loss except to the extent that
it relates to items recognised directly in equity, in which case, it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period net of any charge or credit posted directly to equity, using tax
rates enacted or substantially enacted at the reporting date and any adjustment to tax payable in respect of previous periods.
Deferred tax is provided in respect of temporary differences between the carrying amounts of assets and liabilities for fi nancial 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 profi t 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 profi ts 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 profi t 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.
Rightmove plc annual report 2015 81
Notes continued
2 Signifi cant accounting policies continued
(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 fi nancial 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 profi t 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 profi t 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 2015 and have not been applied in preparing these consolidated fi nancial statements.
IFRS 15 Revenue from Contracts with Customers was issued in 2014, although not yet endorsed in the EU, and an exercise is underway
to assess the impact that this will have on revenue recognition.
IFRS 16 Operating Leases has been issued in January 2016, although not yet endorsed in the EU, and an exercise is underway to assess
the impact that this will have on the Group’s assets and liabilities.
4 Risk and capital management
Overview
The Group has exposure to the following risks from its use of fi nancial instruments:
credit risk
(cid:129)
(cid:129)
liquidity risk
(cid:129) 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 fi nancial 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 signifi cant
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 refl ect changes in
market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop
a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Audit Committee oversees how management monitors compliance with the Group’s internal controls and reviews the adequacy of the
risk management framework in relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of fi nancial loss to the Group if a customer or banking institution fails to meet its contractual obligations.
The Group’s exposure to credit risk is infl uenced 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% (2014: 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 identifi ed loss exposures.
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The Group’s treasury policy is to monitor cash and deposit 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 diffi culties in meeting the obligations associated with its fi nancial 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 suffi cient
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 suffi cient 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 suffi cient cash on demand to meet operational expenses, before fi nancing activities, for a period of 137 days (2014: 105 days).
The Group agreed to extend a 12 month agreement with HSBC for a £10,000,000 committed revolving loan facility. This agreement will
expire on 9 February 2017. 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% (2014: 95.0%) of the Group’s purchases are Sterling denominated, accordingly, it has no
signifi cant currency risk.
(ii) Interest rate risk
The Group and Company have no interest bearing fi nancial liabilities. The Group is exposed to interest rate risk on cash and deposit balances.
Capital management
The Board of directors’ policy is to maintain an effi cient statement of fi nancial position so as to maintain investor, creditor and market confi dence
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 in line with underlying earnings growth and also monitors the level of dividends to ordinary shareholders in relation to
growth in profi t before tax. 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 2015, 2,251,340
(2014: 3,122,418) shares were bought back and were cancelled at an average price of £33.79 (2014: £23.66).
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.
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 fi nancial 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:
(cid:129)
(cid:129)
(cid:129)
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;
Rightmove plc annual report 2015 83
Notes continued
4 Risk and capital management continued
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
documentation of controls and procedures;
requirements for the periodic assessment of operational risks faced and the adequacy of controls and procedures to address
the risks identifi ed;
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 Offi cer, who
is the Group’s Chief Operating Decision Maker.
The Group’s reportable segments are as follows:
(cid:129)
(cid:129)
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.
Operating costs, fi nancial income, fi nancial 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 profi tability,
relevant disclosures have been shown under the heading of Central in the table below.
The Company has no reportable segments.
Year ended 31 December 2015
Revenue
Operating profi t(1)
Depreciation and amortisation
Financial income
Financial expenses
Trade receivables(3)
Other segment assets
Segment liabilities
Capital expenditure
Year ended 31 December 2014
Revenue
Operating profi t(1)
Depreciation and amortisation
Financial income
Financial expenses
Trade receivables(3)
Other segment assets
Segment liabilities
Capital expenditure
Agency
£000
147,102
–
–
–
–
17,184
–
–
–
129,590
–
–
–
–
15,107
–
–
–
New
Homes
£000
30,475
–
–
–
–
5,626
–
–
–
26,407
–
–
–
–
5,122
–
–
–
Subtotal
£000
Other
£000
Central
Adjustments
£000
£000
Total
£000
177,577
–
–
–
–
22,810
–
–
–
155,997
–
–
–
–
20,229
–
–
–
14,552
–
–
–
–
1,654
–
–
–
11,015
–
–
–
–
1,491
–
–
–
–
144,271
(1,295)
112
(183)
–
25,742
(43,569)
1,772
–
124,592
(1,193)
109
(129)
–
21,333
(40,605)
1,070
–
(7,096)(2)
–
–
–
145(4)
3(5)
(148)(4) (5)
–
192,129
137,175
(1,295)
112
(183)
24,609
25,745
(43,717)
1,772
–
(2,534)(2)
–
–
–
81(4)
17(5)
(98)(4) (5)
–
167,012
122,058
(1,193)
109
(129)
21,801
21,350
(40,703)
1,070
84
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(1) Operating profi t is stated after the charge for depreciation and amortisation.
(2) Operating profi t does not include share-based payments charge of £3,765,000 (2014: £2,728,000) and NI on share-based incentives charge of £3,331,000 (2014:
credit £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 refl ects the reclassifi cation of credit balances in accounts receivable made on consolidation for statutory accounts purposes.
(5) The adjustments column refl ects the reclassifi cation of debit balances in accounts payable made on consolidation for statutory
accounts purposes.
Geographic information
In presenting information on the basis of geography, revenue and assets are based on the geographical location of customers.
Year ended 31 December 2015
Year ended 31 December 2014
Revenue
Trade receivables
Revenue
Trade receivables
£000
188,102
4,027
£000
24,220
389
£000
164,382
2,630
£000
21,594
207
192,129
24,609
167,012
21,801
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Group
UK
Rest of the world
6 Operating profi t
Operating profi t is stated after charging:
Employee benefi t 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
Fees payable to the Company’s auditor in respect of the audit
Audit of the Company’s fi nancial 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
Year ended
Year ended
31 December 2015 31 December 2014
£000
£000
23,464
934
361
–
–
365
874
537
21,647
825
368
1
3
341
896
569
Year ended
Year ended
31 December 2015 31 December 2014
£000
15
105
120
10
5
15
£000
15
105
120
11
7
18
Rightmove plc annual report 2015 85
Notes continued
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 2015 31 December 2014
Number of
employees
Number of
employees
391
21
412
368
20
388
Year ended
Year ended
31 December 2015 31 December 2014
£000
20,313
2,398
753
£000
18,621
2,276
750
23,464
21,647
Social security costs do not include a charge of £3,331,000 (2014: credit £194,000) relating to NI on share-based incentives which has been
disclosed in the Statement of Comprehensive Income.
8 Financial income
Interest income on cash and money market balances
Interest income on amounts held in Escrow
9 Financial expenses
Other fi nancial expenses
Year ended
Year ended
31 December 2015 31 December 2014
£000
112
–
112
£000
106
3
109
Year ended
Year ended
31 December 2015 31 December 2014
£000
183
£000
129
86
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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
Year ended
Year ended
31 December 2015 31 December 2014
£000
£000
27,922
(257)
27,665
(105)
(1)
77
(29)
26,575
(499)
26,076
(228)
9
–
(219)
Total income tax expense
27,636
25,857
Income tax (credit)/debit recognised directly in equity
Current tax
Share-based incentives
Deferred tax
Share-based incentives (refer Note 16)
Reduction in tax rate
Total income tax (credit)/debit recognised directly in equity
Year ended
Year ended
31 December 2015 31 December 2014
£000
£000
(1,876)
(535)
(2,408)
149
(2,259)
1,351
–
1,351
(4,135)
816
Total income tax recognised directly in equity in respect of the Company was a credit of £2,482,000 (2014: £516,000 debit).
Reconciliation of effective tax rate
The Group’s income tax expense for the year is lower (2014: lower) than the standard rate of corporation tax in the UK of 20.3%
(2014: 21.5%). The differences are explained below:
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Profi t for the year
Total income tax expense
Profi t before tax
Current tax at 20.3% (2014: 21.5%)
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
Year ended
Year ended
31 December 2015 31 December 2014
£000
109,468
27,636
137,104
27,764
77
46
7
(257)
(1)
£000
96,181
25,857
122,038
26,238
–
92
17
(499)
9
27,636
25,857
The Group’s consolidated effective tax rate on the profi t of £137,104,000 for the year ended 31 December 2015 is 20.2% (2014: 21.2%).
Rightmove plc annual report 2015 87
Notes continued
10 Income tax expense continued
The difference between the standard rate and effective rate at 31 December 2015 is primarily attributable to a prior year adjustment of
0.2% (2014: 0.4%), offset by disallowable expenditure and a reduction in the rate at which the deferred tax asset is recognised of 0.1%
(2014: 0.1%).
11 Earnings per share (EPS)
Year ended 31 December 2015
Basic EPS
Diluted EPS
Underlying basic EPS
Underlying diluted EPS
Year ended 31 December 2014
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
Less own shares held in treasury at the beginning of the year
Effect of own shares purchased for cancellation
Effect of share-based incentives exercised
Effect of shares purchased by the EBT
Weighted average
number of
ordinary shares
96,014,753
97,097,566
96,014,753
97,097,566
98,444,757
99,550,632
98,444,757
99,550,632
Total
earnings
£000
109,468
109,468
116,564
116,564
96,181
96,181
98,715
98,715
Pence
per share
114.01
112.74
121.40
120.05
97.70
96.62
100.28
99.16
Year ended
Year ended
31 December 2015 31 December 2014
Number of shares
Number of shares
99,396,818
(2,505,430)
(1,034,666)
158,344
(313)
102,375,411
(2,505,430)
(1,485,561)
60,337
–
96,014,753
98,444,757
Weighted average number of ordinary shares (diluted)
For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive shares.
The Group’s potential dilutive instruments are in respect of share-based incentives granted to employees, which will be settled by ordinary
shares held by the EBT, the SIP and shares held in treasury.
Weighted average number of ordinary shares (basic)
Dilutive impact of share-based incentives outstanding
Year ended
Year ended
31 December 2015 31 December 2014
Number of shares
Number of shares
96,014,753
1,082,813
98,444,757
1,105,875
97,097,566
99,550,632
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.
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Underlying EPS
Underlying EPS is calculated before the charge for share-based payments and the charge/(credit) for NI on share-based incentives but
without any adjustment to the tax charge in respect of these items. A reconciliation of the basic earnings for the year to the underlying
earnings is presented below:
Basic earnings for the year
Share-based payments
NI on share-based incentives
Underlying earnings for the year
12 Dividends
Dividends declared and paid by the Company were as follows:
2013 fi nal dividend paid
2014 interim dividend paid
2014 fi nal dividend paid
2015 interim dividend paid
Year ended
Year ended
31 December 2015 31 December 2014
£000
109,468
3,765
3,331
£000
96,181
2,728
(194)
116,564
98,715
2015
2014
Pence per share
£000
Pence per share
–
–
22.0
16.0
–
–
21,162
15,307
17.0
13.0
–
–
£000
16,768
12,722
–
–
38.0
36,469
30.0
29,490
After the reporting date a fi nal dividend of 27.0p (2014: 22.0p) per qualifying ordinary share being £25,547,000 (2014: £21,269,000) was
proposed by the Board of directors.
The 2014 fi nal dividend paid on 5 June 2015 was £21,162,000 being a difference of £107,000 compared to that reported in the 2014
Annual Report, which was due to a decrease in the ordinary shares entitled to a dividend between 31 December 2014 and the fi nal dividend
record date of 8 May 2015.
The 2015 interim dividend paid on 6 November 2015 was £15,307,000 being a difference of £46,000 compared to that reported in the 2015
Half Year Report, which was due to a decrease in the ordinary shares entitled to a dividend between 30 June 2015 and the interim dividend
record date of 9 October 2015.
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 fi nal
dividend in either year and there are no income tax consequences.
Rightmove plc annual report 2015 89
Notes continued
13 Property, plant and equipment
Group
Cost
At 1 January 2015
Additions
At 31 December 2015
Depreciation
At 1 January 2015
Charge for year
At 31 December 2015
Net book value
At 31 December 2015
At 1 January 2015
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
Offi ce equipment,
Computer
Leasehold
fi xtures & fi ttings
equipment
improvements
£000
£000
£000
713
56
769
4,286
1,537
5,823
451
–
451
Total
£000
5,450
1,593
7,043
(506)
(80)
(3,214)
(796)
(150)
(58)
(3,870)
(934)
(586)
(4,010)
(208)
(4,804)
183
207
1,813
1,072
243
301
Offi ce equipment,
Computer
Leasehold
fi xtures & fi ttings
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)
–
2,239
1,580
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
The Company had no property, plant or equipment in either year.
90
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14 Intangible assets
Group
Cost
At 1 January 2015
Additions
At 31 December 2015
Amortisation
At 1 January 2015
Charge for year
At 31 December 2015
Net book value
At 31 December 2015
At 1 January 2015
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
The Company had no intangible assets in either year.
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Goodwill
£000
732
–
732
–
–
–
732
732
Goodwill
£000
732
–
–
732
–
–
–
–
732
732
Computer
software
£000
4,185
179
Total
£000
4,917
179
4,364
5,096
(3,352)
(361)
(3,352)
(361)
(3,713)
(3,713)
651
833
Computer
software
£000
4,069
343
(227)
1,383
1,565
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
Rightmove plc annual report 2015 91
Notes continued
14 Intangible assets continued
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 2015 31 December 2014
£000
732
£000
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 signifi cance, 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 2015 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 fi nancial statements.
Company
Investment in subsidiary undertakings
At 1 January
Additions – subsidiary share-based payments charge (refer Note 24)
At 31 December
31 December 2015 31 December 2014
£000
£000
542,804
1,660
541,720
1,084
544,464
542,804
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 £1,660,000 (2014: £1,084,000) 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
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Assets
31 December 2015 31 December 2014
£000
6,509
179
103
£000
4,224
197
82
6,791
4,503
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The increase in the deferred tax asset relating to share-based incentives at 31 December 2015 is due to the rise in the Company’s year end
share price from £22.48 to £41.25, and the impact of new share awards in the year, partly offset by the exercise of share-based incentives.
Company
Assets
31 December 2015 31 December 2014
£000
£000
Share-based incentives being deferred tax assets
3,581
2,667
The increase in the deferred tax asset is due to the rise in the Company’s year end share price from £22.48 to £41.25, and the impact of
new share awards in the year, partly offset by the exercise of share-based incentives.
Movement in deferred tax during the year:
Group
Share-based incentives
Property, plant and equipment
Provisions
Company
1 January 2015
in income
directly in equity 31 December 2015
Recognised
Recognised
£000
4,224
197
82
£000
26
(18)
21
£000
2,259
–
–
£000
6,509
179
103
4,503
29
2,259
6,791
Recognised
Recognised
1 January 2015
in income
directly in equity 31 December 2015
£000
£000
£000
£000
Share-based incentives
2,667
(86)
1,000
3,581
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively
enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on
26 October 2015. This will reduce the Group’s future tax charge accordingly. The deferred tax asset at 31 December 2015 has been calculated at
the rate of 19% which represents the average expected rate at which this asset will reverse in the future.
Movement in deferred tax during the prior year:
Group
Share-based incentives
Property, plant and equipment
Provisions
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
The deferred tax asset arising on equity settled share-based incentives in both years was recognised in profi t or loss to the extent that the
related equity settled share-based incentives charge was recognised in profi t or loss.
Company
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
Rightmove plc annual report 2015 93
Notes continued
17 Trade and other receivables
Group
Trade receivables
Less provision for impairment of trade receivables
Net trade receivables
Prepayments
Accrued income
Interest receivable
Other debtors
31 December 2015 31 December 2014
£000
25,055
(446)
24,609
2,529
301
25
59
£000
22,291
(490)
21,801
2,231
171
30
65
27,523
24,298
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 deposits
Group
Cash and cash equivalents
Money market deposits
31 December 2015 31 December 2014
£000
8,418
4,000
£000
11,205
–
12,418
11,205
Cash balances with an original maturity of less than three months were held in current accounts during the year and attracted interest at a
weighted average rate of 0.5% (2014: 0.6%).
The cash at bank balance includes £2,227,000 which is restricted to use in accordance with the deeds of the EBT.
Money market deposits with an original maturity of more than three months and less than a year, attracted interest at a weighted average
rate of 0.8%.
The Company had cash and cash equivalent balances at 31 December 2015 of £148 (2014: £180).
19 Trade and other payables
Trade payables
Trade accruals
Other creditors
Other taxation and social security
Deferred revenue
Inter-group payables
31 December 2015 31 December 2014 31 December 2015 31 December 2014
Group
Company
£000
592
7,336
69
7,428
16,193
–
£000
461
5,163
304
6,983
14,649
–
£000
–
4,721
–
–
–
31,908
£000
–
3,126
–
–
–
46,997
31,618
27,560
36,629
50,123
94
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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:
Company
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 fl ows
31 December 2015 31 December 2014
£000
£000
50,123
(129,400)
(3,033)
547
(82)
118,474
24,799
(80,228)
(973)
536
45
105,944
36,629
50,123
20 Loans and borrowings
The Group agreed to extend a 12 month agreement with HSBC for a £10,000,000 committed revolving loan facility. This agreement will
expire on 9 February 2017. To date, no amount has been drawn under this facility.
The Company had no loans and borrowings in either year.
21 Provisions
The Group recorded a provision for lease dilapidations of £36,000 (2014: £36,000) during the year bringing the lease dilapidations provision
to £236,000 (2014: £200,000). The provision is charged throughout the lives of the leases and is based on an estimated cost to make good
per square foot multiplied by the fl oor area of each of the premises.
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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
Ordinary shares
of £0.01 each
31 December 2015 31 December 2014
Number of shares
Number of shares
99,993,317
(2,251,340)
103,115,735
(3,122,418)
97,741,977
99,993,317
Authorised – par value £0.01 each
300,000,000
300,000,000
During 2015, 2,251,340 (2014: 3,122,418) 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 2015 are 386,057 ordinary shares (2014: 596,499) held by the EBT, 37,800 (2014: nil) held
by the SIP and 2,322,314 (2014: 2,505,430) held in treasury.
Rightmove plc annual report 2015 95
Notes continued
23 Reconciliation of movement in capital and reserves
Group
At 1 January 2014
Profi t 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 SIP
Cancellation of own shares
Share-related expenses
Share
capital
£000
1,031
–
–
–
–
–
–
(31)
–
EBT
shares
reserve
£000
(2,418)
–
–
–
–
375
(863)
–
–
SIP
shares
reserve
£000
Reverse
Treasury
Other
acquisition
shares
reserves
reserve
Retained
earnings
£000
£000
£000
£000
–
–
–
–
–
–
–
–
–
(11,917)
–
–
–
–
–
–
–
–
263
–
–
–
–
–
–
31
–
138
–
–
21,818
96,181
2,728
–
–
–
–
–
–
(816)
(29,490)
(198)
–
(73,867)
(517)
Total
equity
£000
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
At 1 January 2015
Profi t for the year
Share-based payments
Tax credit in respect of share-based
incentives recognised directly in equity
Dividends to shareholders
Transfer of shares to SIP
Exercise of share-based incentives
Purchase of shares for SIP
Cancellation of own shares
Share-related expenses
1,000
–
–
(2,906)
–
–
–
–
–
(11,917)
–
–
–
–
–
–
–
(23)
–
–
–
863
385
(507)
–
–
–
–
(863)
11
–
–
–
–
–
–
872
–
–
–
294
–
–
–
–
–
–
–
23
–
138
–
–
15,839
109,468
3,765
2,448
109,468
3,765
–
–
–
–
–
–
–
4,135
(36,469)
–
(867)
–
(76,071)
(533)
4,135
(36,469)
–
401
(507)
(76,071)
(533)
At 31 December 2015
977
(2,165)
(852)
(11,045)
317
138
19,267
6,637
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 2015 was 2,251,340 (2014: 3,122,418) representing 2.4% (2014: 3.1%) 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 £76,071,000 (2014: £73,867,000). The maximum and minimum prices paid were £41.44 (2014: £27.88) and £21.18
(2014: £19.38) per share respectively.
EBT shares reserve
This reserve represents the carrying value of own shares held by the EBT. An additional 3,290 shares were issued as a result of rolled up
dividend payments in relation to performance shares. On 22 December 2015, the EBT used surplus cash held by the EBT to purchase
12,700 shares for use by the SIP. These shares will be transferred to the SIP in 2016.
At 31 December 2015, the EBT held 386,057 (2014: 596,499) ordinary shares in the Company of £0.01 each, representing 0.4% (2014: 0.6%)
of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held in the EBT at 31 December 2015 was
£15,925,000 (2014: £13,409,000).
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Shares held in EBT at 1 January
Shares purchased for SIP
Shares transferred to 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 2015 31 December 2014
Number of shares
Number of shares
596,499
12,700
(38,300)
(181,552)
–
(3,290)
740,324
38,300
–
(185,187)
5,913
(2,851)
386,057
596,499
SIP shares reserve (Group and Company)
In November 2014, the Company established the Rightmove Share Incentive Plan Trust (SIP). This reserve represents the cost of acquiring
shares less any exercises or releases of SIP awards. Employees of the Group were offered 50 free shares (2014: 100), subject to a three year
service period, with effect from 4 January 2016 (1 January 2015). 500 shares were released by the SIP during the year in relation to good
leavers and retirees.
At 31 December 2015 the SIP held 37,800 ordinary shares in the Company of £0.01 each, representing 0.04% of the ordinary shares in issue
(excluding shares held in treasury). The market value of the shares held in the SIP at 31 December 2015 was £1,559,000.
Shares held in SIP at 1 January
Shares transferred into SIP from EBT
SIP releases in the year
Shares held in SIP at 31 December
Year ended
Year ended
31 December 2015 31 December 2014
Number of shares
Number of shares
–
38,300
(500)
37,800
–
–
–
–
Treasury shares (Group and Company)
This represents the cost of acquiring shares held in treasury less any exercises of share-based incentives. These shares were bought back in
2008 at an average price of £4.76 and may be used to satisfy certain share-based incentive awards.
Shares at 1 January
Share-based incentives exercised in year
Reduction in shares released due to net settlement (refer Note 24)
Increase in shares released due to rolled up dividend payments
Shares at 31 December
Year ended
Year ended
31 December 2015 31 December 2014
Number of shares
Number of shares
2,505,430
(199,751)
19,930
(3,295)
2,505,430
–
–
–
2,322,314
2,505,430
Other reserves
This represents the Capital Redemption Reserve in respect of own shares bought back and cancelled. The movement of £23,000
(2014: £31,000) 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, SIP and treasury
shares were originally acquired at and the exercise price at which share-based incentives were exercised or released during the year.
Rightmove plc annual report 2015 97
Notes continued
23 Reconciliation of movement in capital and reserves continued
Company
At 1 January 2014
Profi t 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
At 31 December 2014
At 1 January 2015
Profi t for the year
Dividends to shareholders
Share-based payments
Transfer of shares to SIP
Exercise of share-based incentives
Tax credit in respect of share-based
incentives recognised directly in equity
Capital contribution
Cancellation of own shares
Share-related expenses
Share
capital
£000
1,031
–
–
–
–
–
(31)
–
1,000
1,000
–
–
–
–
–
–
–
(23)
–
SIP
shares
reserve
£000
–
–
–
–
–
–
–
–
–
Treasury
shares
£000
(11,917)
–
–
–
–
–
–
–
Reverse
Other
acquisition
reserves
£000
4,973
–
–
–
–
1,084
31
–
reserve
£000
103,520
–
–
–
–
–
–
–
Retained
earnings
£000
422,671
76,732
(29,490)
1,644
(516)
–
(73,867)
(517)
Total
equity
£000
520,278
76,732
(29,490)
1,644
(516)
1,084
(73,867)
(517)
(11,917)
6,088
103,520
396,657
495,348
–
–
–
–
(863)
11
–
–
–
–
(11,917)
–
–
–
–
872
–
–
–
–
6,088
–
–
–
–
–
–
1,660
23
–
103,520
–
–
–
–
–
–
–
–
–
396,657
123,757
(36,469)
2,105
–
(883)
2,482
–
(76,071)
(533)
495,348
123,757
(36,469)
2,105
(863)
–
2,482
1,660
(76,071)
(533)
At 31 December 2015
977
(852)
(11,045)
7,771
103,520
411,045
511,416
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 £1,660,000 (2014: £1,084,000) in respect of the
share-based incentives charge for employees of Rightmove Group Limited.
In addition, other reserves include £317,000 (2014: £294,000) of Capital Redemption Reserve. A movement of £23,000 (2014: £31,000)
has been recorded in relation to the nominal value of ordinary shares cancelled during the year.
98
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24 Share-based payments
The Group and Company operate share-based incentive schemes for executive directors and employees. Since fl otation, 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 Performance Share Plan (PSP) and, in January 2015, the Rightmove Share Incentive Plan (SIP) 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 and sold to satisfy the award is equivalent to the gain due to the option holder. Consequently no proceeds are received on exercise
of unapproved share options.
The total share-based payments charge for the year relating to all share-based incentive plans was £3,765,000 (2014: £2,728,000).
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 £49,000 (2014: £23,000).
The Company charge for the year was £2,105,000 (2014: £1,644,000).
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 2015 relating to all awards was a charge of
£3,331,000 compared to a credit of £194,000 in the prior year, due to an increase in the share price from £22.48 at 31 December 2014 to
£41.25 at 31 December 2015.
The Company NI charge for the year was £2,605,000 (2014: credit £301,000).
Approved and Unapproved Plans
There has been no award of share options since 5 March 2010 and there has been no share-based incentive charge in either year.
The Group has 546,527 (2014: 663,131) Approved and Unapproved share options outstanding which have vested and are exercisable.
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Group
Outstanding at 1 January
Exercised
Number
(pence)
Number
663,131
(116,604)
369.53
660.65
684,040
(20,909)
2015
Weighted average
exercise price
2014
Weighted average
exercise price
(pence)
378.56
666.00
Outstanding at 31 December
546,527
307.42
663,131
369.53
Exercisable at 31 December
546,527
307.42
663,131
369.53
The weighted average market value per ordinary share for options exercised in 2015 was £37.39 (2014: £23.73).
The options outstanding at 31 December 2015 have an exercise price in the range of £2.24 to £6.66 in both years and a weighted average
contractual life of 3.1 years (2014: 4.3 years).
Rightmove plc annual report 2015 99
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
1 October 2012
1 October 2013
1 October 2014
1 October 2015
Employee turnover
Share price
Exercise
at grant date
(pence)
price
(pence)
1577.00
2371.00
2144.00
3639.00
1295.00
1896.00
1972.00
2960.00
Expected
volatility
(%)
34.8
27.3
25.3
24.7
Option
life
(years)
3.0
3.0
3.0
3.0
Risk free
Dividend
rate
(%)
0.5
0.7
1.0
0.8
yield
(%)
1.3
1.1
1.4
1.0
before vesting/
non-vesting
Fair value
condition
per option
(%)
(pence)
25.0
25.0
25.0
25.0
475.00
659.00
430.00
933.00
Expected volatility is estimated by considering historic average share price volatility at the grant date.
The requirement that an employee has to save in order to purchase shares under the Sharesave Plan is a non-vesting condition. This feature
has been incorporated into the fair value at grant date by applying a discount to the valuation obtained from the Black Scholes pricing model.
The discount has been determined by estimating the probability that the employee will stop saving based on expected future trends in the
share price and past employee behaviour.
Group
Outstanding at 1 January
Granted
Forfeited
Exercised
2015
Weighted average
exercise price
2014
Weighted average
exercise price
Number
(pence)
Number
(pence)
116,032
35,794
(16,406)
(31,401)
1733.49
2960.00
1932.63
1244.84
97,620
51,929
(15,124)
(18,393)
1446.19
1972.00
1633.11
963.46
Outstanding at 31 December
104,019
2273.13
116,032
1733.49
Exercisable at 31 December
2,211
1295.00
5,131
988.00
The weighted average market value per ordinary share for Sharesave options exercised in 2015 was £37.27 (2014: £21.77).
The Sharesave options outstanding at 31 December 2015 have an exercise price in the range of £12.95 to £29.60
(2014: £9.98 to £19.72) and a weighted average contractual life of 2.4 years (2014: 2.3 years).
The share-based payments charge for Sharesave options for the year ended 31 December 2015 is £157,000 (2014: £148,000).
The Company charge for the year was £5,000 (2014: £3,000).
100 rightmove.co.uk
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.
129,645 PSP awards were made on 2 March 2015 (the Grant Date) subject to EPS and TSR performance. Performance will be measured
over three fi nancial years (1 January 2015 to 31 December 2017). The vesting in March 2018 (Vesting Date) of 25% of the 2015 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
2015 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.
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.
Employee turnover
Grant date
Share price
Exercise
at grant date
(pence)
price
(pence)
Expected
volatility
(%)
Option
life
(years)
2 March 2012 (TSR dependent)(1) 1391.00
2 March 2012 (EPS dependent)(1) 1391.00
8 March 2013 (TSR dependent)(1) (2) 1781.00
8 March 2013 (EPS dependent)(1) (2) 1781.00
3 March 2014 (TSR dependent)(1) 2688.00
3 March 2014 (EPS dependent)(1) 2688.00
2 March 2015 (TSR dependent)(1) 3044.00
2 March 2015 (EPS dependent)(1) 3044.00
nil
nil
nil
nil
nil
nil
nil
nil
34.8
n/a
27.3
n/a
25.3
n/a
24.7
n/a
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
Risk free
Dividend
non-vesting
Fair value
before vesting/
rate
(%)
0.5
0.5
0.4
0.4
1.0
1.0
0.8
0.8
yield
(%)
condition
per option
(%)
(pence)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.7
3.7
4.8
4.8
4.8
4.8
5.2
5.2
708.00
1391.00
1003.00
1781.00
1219.00
2688.00
2258.00
3044.00
(1) For details of TSR and EPS performance conditions refer to the Directors’ Remuneration Report on pages 42 to 66.
(2) Both the TSR and EPS performance conditions for PSPs with a grant date of 8 March 2013 have been met in full, and 100% of the awards are expected to vest.
Expected volatility is estimated by considering historic average share price volatility at the Grant Date.
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Group
Outstanding at 1 January
Granted
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2015
Number
438,365
129,645
–
(180,008)
2014
Number
391,057
140,618
(18,924)
(74,386)
388,002
438,365
23,953
84,408
The weighted average market value per ordinary share for options exercised in 2015 was £35.19 (2014: £23.50). The weighted average
exercise price was nil in both years.
The PSP awards outstanding at 31 December 2015 have a weighted average contractual life of 3.1 years (2014: 2.9 years).
The share-based payments charge for the year ended 31 December 2015 is £2,553,000 (2014: £1,903,000).
The Company charge for the year was £1,580,000 (2014: £1,224,000).
Rightmove plc annual report 2015 101
Notes continued
24 Share-based payments continued
Deferred Share Bonus Plan (DSP)
In March 2009 a DSP was established which allows executive directors and other selected senior management the opportunity to earn a
bonus determined as a percentage of base salary settled in nil cost deferred shares. The award of shares under the plan is contingent on the
satisfaction of pre-set internal targets relating to underlying drivers of long-term revenue growth (the Performance Period). The right to the
shares is deferred for two years from the date of the award (the Vesting Period) and potentially forfeitable during that period should the
employee leave employment. The deferred share awards have been valued using the Black Scholes model and the resulting share-based
payments charge is being spread evenly over the combined Performance Period and Vesting Period of the shares, being three years.
The assumptions used in the measurement of the fair value of the deferred share awards are calculated at the date on which the potential
DSP bonus is communicated to directors and senior management (the Grant Date) as follows:
Employee turnover
before vesting/
Grant date
2 March 2012
8 March 2013
3 March 2014
2 March 2015
Share price
Exercise
Expected
Risk free
Dividend
non-vesting
at grant date
Award date
(pence)
price
(pence)
term
(years)
8 March 2013(1)
3 March 2014(2)
2 March 2015(3)
– (4)
1391.00
1781.00
2688.00
3044.00
nil
nil
nil
nil
3.0
3.0
3.0
3.0
rate
(%)
0.5
0.4
1.0
0.8
yield
(%)
1.3
1.4
1.0
1.2
condition
(%)
4.1
5.3
5.6
6.0
Fair value
per share
(pence)
1338.00
1708.00
2605.00
2941.00
(1) 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.
(2) 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.
(3) Following the achievement of 70% of the 2014 internal performance targets, 33,864 nil cost deferred shares were awarded to executives and senior
management on 2 March 2015 (the Award Date) with the right to the release of the shares deferred until March 2017.
(4) Based on the 2015 internal performance targets, the Remuneration Committee determined that 100% of the maximum award in respect of the year
will be made in March 2016. The number of shares to be awarded will be determined based on the share price at the Award Date in March 2016.
Group
Outstanding at 1 January
Awarded
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2015
Number
90,909
33,864
–
(56,464)
2014
Number
133,933
34,878
(6,403)
(71,499)
68,309
90,909
–
2,435
The weighted average market value per ordinary share for deferred shares exercised in 2015 was £32.42 (2014: £23.43). The weighted average
exercise price was nil in both years.
The DSP awards outstanding at 31 December 2015 have a weighted average contractual life of 0.7 years (2014: 0.5 years).
The share-based payments charge for the year ended 31 December 2015 is £917,000 (2014: £677,000).
The Company charge for the year was £519,000 (2014: £417,000).
102 rightmove.co.uk
Share Incentive Plan
In November 2014, the Group established the Rightmove Share Incentive Plan Trust (SIP). Employees were offered 50 shares (2014: 100) as a
gift, subject to a three year service period (the Vesting Period), with effect from 4 January 2016 (2014: 1 January 2015). The SIP awards have
been valued using the Black Scholes model and the resulting share-based payments charge spread evenly over the Vesting Period of three
years. The SIP shareholders are entitled to dividends paid in cash over the Vesting Period. No performance criteria are applied to the exercise
of SIP options. The assumptions used in the measurement of the fair value at Grant Date of the SIP awards are as follows:
Grant date
1 January 2015
Share price
Exercise
at grant date
(pence)
2245.00
price
(pence)
nil
Expected
volatility
(%)
24.7
Option
life
(years)
3
Risk free
Dividend
non-vesting
Fair value
rate
(%)
0.8
yield
(%)
nil
condition
per option
(%)
(pence)
45.0
2245.00
Employee turnover
before vesting/
Expected volatility is estimated by considering historic average share price volatility at the Grant Date.
Group
Outstanding at 1 January
Granted
Forfeited
Released
Outstanding at 31 December
Exercisable at 31 December
2015
Number
–
38,300
(7,600)
(500)
30,200
–
2014
Number
–
–
–
–
–
–
The weighted average market value per ordinary share for SIP awards released in 2015 was £34.45. The weighted average exercise price in
2015 was nil.
The SIP shares released relate to good leavers and retirements from the SIP, in accordance with the terms of the Trust.
The SIP options outstanding at 31 December 2015 have a weighted average contractual life of 2.0 years.
The share-based payments charge for SIP options for the year ended 31 December 2015 is £138,000.
The Company charge for the year was £1,000.
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Rightmove plc annual report 2015 103
Notes continued
25 Operating lease commitments
Non-cancellable operating lease rentals are payable as follows:
Group
Less than one year
Between one and fi ve years
More than fi ve years
31 December 2015
31 December 2014
Plant &
Land &
machinery
buildings
£000
359
165
–
£000
949
1,370
296
Total
£000
1,308
1,535
296
Plant &
machinery
£000
339
308
–
Land &
buildings
£000
949
2,026
589
Total
£000
1,288
2,334
589
524
2,615
3,139
647
3,564
4,211
The Company had no operating lease commitments in either year.
26 Capital commitments
The Group and the 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 £547,000 (2014: £536,000) by Rightmove Group Limited in respect of balances owing
under the inter-group loan agreement dated 30 January 2008.
As at 31 December 2015, the balance owing under this agreement was £31,908,000 (2014: £46,983,000) including capitalised interest
(refer Note 19).
On 31 May 2015, Rightmove Group Limited declared an interim dividend of 55p per ordinary share to the Company. Additionally, on
18 December 2015, Rightmove Group Limited declared a further interim dividend of 45p per ordinary share to the Company. The dividends
of £129,400,000 (2014: £80,228,000) were settled via a reduction in the inter-group loan balance owed by Rightmove plc to Rightmove
Group Limited. Rightmove Group Limited also declared a dividend in specie of £863,000, representing the cost of the SIP shares transferred
from the EBT to the SIP.
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 benefi cial interest of the directors in the
ordinary shares of the Company is included in the Directors’ Remuneration Report on pages 42 to 66.
During the year, the directors in offi ce in total had gains of £9,263,000 (2014: £858,000) arising on the exercise of share-based incentive awards.
Key management personnel
No other Rightmove employees are considered to meet the defi nition of key management personnel other than those disclosed in the Directors’
Remuneration Report on pages 42 to 66.
104 rightmove.co.uk
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28 Financial instruments
Credit risk
The carrying amount of fi nancial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Group
Net trade receivables
Accrued interest receivable
Other debtors
Cash and cash equivalents
Money market deposits
Note
17
17
17
18
18
31 December 2015 31 December 2014
£000
24,609
25
59
8,418
4,000
£000
21,801
30
65
11,205
–
37,111
33,101
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
17
31 December 2015 31 December 2014
£000
24,220
389
£000
21,594
207
24,609
21,801
The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was:
Group
Property advertisers
Other
Note
17
31 December 2015 31 December 2014
£000
23,055
1,554
£000
20,827
974
24,609
21,801
The Group’s most signifi cant customer accounts for £1,305,000 (2014: £1,154,000) of the trade receivables carrying amount.
Rightmove plc annual report 2015 105
Notes continued
28 Financial instruments continued
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
31 December 2015
31 December 2014
Gross
£000
21,227
2,654
593
104
477
Impairment
£000
(5)
(55)
(19)
(7)
(360)
Gross
£000
14,362
4,776
2,371
425
357
25,055
(446)
22,291
Impairment
£000
(49)
(61)
(28)
(76)
(276)
(490)
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 2015 31 December 2014
£000
490
365
(409)
446
£000
436
341
(287)
490
The Group has identifi ed specifi c 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 satisfi ed that no recovery of
the amount owing is possible; at that point the amounts considered irrecoverable are written off against the fi nancial asset directly.
106 rightmove.co.uk
Liquidity risk
The following are the contractual maturities of undiscounted fi nancial liabilities, including undiscounted estimated interest payments:
Group
At 31 December 2015
Trade payables being non-derivative fi nancial liabilities
At 31 December 2014
Trade payables being non-derivative fi nancial liabilities
The Company had no non-derivative fi nancial liabilities in either year.
Carrying
amount
£000
Contractual
cash fl ows
£000
6 months
or less
£000
592
(592)
(592)
461
(461)
(461)
It is not expected that the cash fl ows included in the maturity analysis could occur earlier or at signifi cantly different amounts and all payables
are due within six months of the balance sheet date.
Currency risk
During 2015, all the Group’s sales and more than 95.0% (2014: 95.0%) of the Group’s purchases were Sterling denominated and, accordingly
it has no signifi cant currency risk.
Interest rate risk
The Group has exposure to interest rate risk on its cash and money market deposit balances. As at 31 December 2015, the Group had total
cash of £8,418,000 (2014: £11,205,000) and money market deposits of £4,000,000 (2014: £nil).
Fair values
The fair values of all fi nancial 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 fi nancial statements between 31 December 2015 and the
reporting date.
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Rightmove plc annual report 2015 107
Advisers and shareholder information
Contacts
Chief Executive Offi cer:
Chief Operating Offi cer:
Finance Director:
Company Secretary:
Website:
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Jenny Warburton
www.rightmove.co.uk
Financial calendar 2016
2015 full year results
Annual General Meeting
Final dividend record date
Final dividend payment
Half year results
Interim dividend
26 February 2016
5 May 2016
6 May 2016
3 June 2016
27 July 2016
6 November 2016
Registered offi ce
Corporate advisers
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in
England no. 6426485
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
Rightmove is
the UK’s largest
property portal
Our aim is to
empower the
UK’s decisions
around property
Contents
Strategic report
Governance
Financial statements
1 Highlights
2 Our strategy
3
At a glance
4 Chairman’s statement
6
13
17 Risk management
18 Principal risks and uncertainties
19
Corporate responsibility
Chief Executive’s review
Financial review
Corporate governance report
24 Directors and offi cers
26
38 Directors’ report
41
42
67
Statement of directors’ responsibilities
Directors’ remuneration report
Auditor’s report
70
71
72
73
74
75
76
77
Consolidated statement of comprehensive
income
Consolidated statement of fi nancial position
Company statement of fi nancial position
Consolidated statement of cash fl ows
Company statement of cash fl ows
Consolidated statement of changes in
shareholders’ equity
Company statement of changes in
shareholders’ equity
Notes forming part of the fi nancial
statements
108 Advisers and shareholder information
Designed and produced by The Team www.theteam.co.uk
Rightmove plc Annual report 2015
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How Britain has moved
in the last 15 years
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Caldecotte, Milton Keynes
MK7 8LE
Registered in England no 6426485