Rightmove plc | annual report 2016
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Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Caldecotte, Milton Keynes
MK7 8LE
Registered in England no 6426485
the UK’s number one
property website
Rightmove is
the UK’s largest
property portal
Our aim is to create a more
transparent and efficient
property marketplace and
to make home moving easier
in the UK
Advisers and shareholder information
Contacts
Chief Executive Officer:
Chief Operating Officer:
Finance Director:
Company Secretary:
Website:
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Sandra Odell
www.rightmove.co.uk
Financial calendar 2017
2016 full year results
Final dividend record date
Annual General Meeting
Final dividend payment
Half year results
Interim dividend
24 February 2017
5 May 2017
9 May 2017
2 June 2017
28 July 2017
3 November 2017
Registered office
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in
England no. 6426485
Corporate advisers
Financial adviser
UBS Investment Bank
Joint brokers
UBS Limited
Numis Securities Limited
Auditor
KPMG LLP
Bankers
Barclays Bank Plc
HSBC Bank plc
Santander UK Plc
Solicitors
Slaughter and May
Pinsent Masons
Registrar
Capita Asset Services*
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Strategic report
Highlights
1
Our strategy
2
3
Business model
Chairman’s statement
4
6 What makes us excited
10
14
17
21 Risk management
21 Principal risks and uncertainties
23 The EU referendum
23 Viability statement
24
Chief Executive’s review
Key performance indicators
Financial review
Corporate responsibility
Corporate governance report
Governance
28 Directors and officers
30
43 Directors’ report
46
47
75
Statement of directors’ responsibilities
Directors’ remuneration report
Auditors’ report
Financial statements
78
Consolidated statement of
comprehensive income
Consolidated statement of financial
position
Company statement of financial position
Consolidated statement of cash flows
Company statement of cash flows
Consolidated statement of changes in
shareholders’ equity
Company statement of changes in
shareholders’ equity
Notes forming part of the financial
statements
Advisers and shareholder information
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*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: 0371 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.
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Designed and produced by The Team www.theteam.co.uk
Rightmove plc annual report 2016
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Strategic report | Highlights
Financial highlights
“Rightmove continues to be the place that home movers turn to first, with nearly 1.5 billion visits in 2016, up 10% on
last year. Home movers spent nearly a billion minutes every month searching and researching homes on Rightmove,
the only place you can see almost the entire UK property market.” Nick McKittrick Chief Executive Officer
Revenue
+15%
Revenue up 15% year on year to
£220.0m (2015: £192.1m) with
growth across all business areas
Basic earnings per share
+21%
Basic earnings per share up 21%
to 137.9p (2015: 114.0p)
Underlying operating profit(1)
+15%
Operating profit
+18%
Underlying operating profit(1)
up 15% to £166.2m (2015: £144.3m)
Operating profit up 18%
to £161.6m (2015: £137.2m)
Underlying basic
earnings per share(2)
+18%
Underlying basic earnings per
share(2) up 18% to 142.8p
(2015: 121.4p)
Final dividend
+19%
Final dividend of 32.0p
(2015: 27.0p) per ordinary share
making a total dividend of 51.0p
(2015: 43.0p), up 19%
(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.
Operational highlights
“Our continued innovation and audience growth is delivering even greater exposure for our customers’ brands and
properties. We are adding further value through our data, advertising products and productivity tools and by building
closer relationships with customers to support their ambitions. Our customer numbers grew by 2% to reach an
all-time high of over 20,100 and with customers spending more on our products, our revenue increased by 15%.
With consumers and customers becoming increasingly digital our clear market leadership coupled with the value
of our products and data positions us well for the future.” Nick McKittrick Chief Executive Officer
Customer numbers
20,121
Record customer numbers
with Agency and New Homes
customers up 2% to 20,121
(2015: 19,752)
Properties advertised
Traffic: visits
1 million
1 million UK residential properties
advertised on Rightmove which is a
third(1) more than on any other portal
+10%
Visits up 10% averaging over
120 million visits per month(2)
Traffic: time on site
Average revenue per advertiser(3)
Employee engagement
1 billion
Time on site up 5% to nearly
1 billion minutes per month(2)
£842
Average revenue per advertiser
up a record £88 to £842 per month
(2015: £754)
95%
95% of employee respondents
think Rightmove is a great place
to work
(1) Source: AlphaWise, Morgan Stanley Research January 2017.
(2) Source: Google Analytics.
(3) For Agency and New Homes customers.
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernance
Strategic report | Our strategy
Developing our brand
Our marketing connects with the strong
positive emotions that moving home
often generates and reflects our position
at the heart of it.
Page 12
Continuing to innovate
We continue to innovate our products, develop
our platforms, help drive operational efficiencies
and inform customer decisions through
software, data and insight.
Page 16
Supporting our customers
We provide the most significant 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 18
Building great teams
We focus on building great teams and
making Rightmove a great place to work.
Page 20
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Strategic report | Business model
Our customers
Rightmove’s customers are primarily estate agents, lettings
agents and new homes developers advertising properties for
sale and to rent in the UK.
Our business model
Rightmove is the UK’s number one property portal and the UK’s
largest property marketplace. 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 benefit 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 first as they can see almost the entire UK
property market in one place. It is equally compelling to home
sellers and landlords to ensure their properties are advertised on
Rightmove, 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 help to drive their businesses by offering the most
significant and effective exposure for their brand and properties
resulting in the largest source of high quality leads. We also provide
best in class software, delivering data, market insight and tools
that inform their decisions and help drive business efficiencies.
Our principal sources of revenue are the monthly subscription
fees paid by customers to advertise all of their properties and
the fees paid for our additional advertising products and
packages. Our additional advertising products increase a
customer’s share of voice and competitiveness. These are
critical factors for our customers and particularly for an agent to
help to win the instruction opportunity to sell or rent a home,
which remains the lifeblood of their business.
As the property industry becomes more digital, Rightmove’s
market leading audience and best in class software is becoming
even more valuable to customers. We expect that the majority
of our growth will continue to come through product
penetration, pricing and innovation. We also continue to
develop a number of smaller adjacent businesses such as
advertising overseas and commercial properties and providing
property related data and valuation services.
The Rightmove network effect
We benefit from strong network effects as our property audience
and the properties our customers advertise creates a ‘virtuous
circle’ enhancing the Rightmove value proposition.
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernanceChoiceEfficiencyTransparencyBETTER MARKETPLACETURN TO FIRSTThe place consumers search and research propertyMOST EXPOSURELargest source of high quality leads,high value productsand packagesBuyers/Sellers/Renters/ LandlordsAgents/Developers
Strategic report | Chairman’s statement
Scott Forbes
Chairman
I am pleased to present Rightmove plc’s results for the year
ended 31 December 2016.
Amid the attention devoted to economic and political events
on both a local and world stage this past year, we are proud to
say that Rightmove has once again delivered a set of
outstanding results.
We are not insensitive to the macro-environment, however
we continue to be confident in the strength of our business.
Our confidence is derived from an in-depth knowledge of the
market in which we operate together with the power of our
subscription-based business model, which benefits from
strong network effects, and a relentless focus on continual
improvement for both our customers and consumers.
Our approach has further cemented our position as the
UK’s number one property portal with customer numbers
reaching a record high of over 20,100 and our unrivalled
audience reaching new highs too. We are in an enviable
position to fulfil our aim of creating a more transparent and
efficient property marketplace and ultimately making home
moving easier in the UK.
Our audience, best in class platforms and significant property
inventory advantage coupled with our focus on innovation at
the core of our business drives our value proposition for the
benefit of both our trade customers and consumers. Property
data has always been at the core of what we do and we are
excited about continuing to harness the power of our data to
drive further transparency and efficiency in the property
market, predict market opportunities and drive success for
our customers and consumers.
We are still a relatively young organisation, but during our
progression over the last 16 years we have remained
steadfast in our commitment to serving the housing market
and this has consistently delivered strong results. We are
committed to continue that focused path in a manner that
is appropriate for all of our stakeholders.
Financial results
The strength of our business model and core value
proposition underpin record financial results in 2016.
Underlying operating profit(1) was up 15% to £166.2m
(2015: £144.3m) driven by strong organic revenue growth
of 15% to £220.0m (2015: £192.1m) and continued focus
on cost control. Underlying basic earnings per share(2) was
up 18% to 142.8p (2015: 121.4p), even greater than the
percentage increase in profits and in part attributable to 2.2m
shares bought back during the year at a cost of £88.1m 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 profit.
In 2016, we returned a further £131.3m (2015: £112.5m) to
shareholders through dividends and share buybacks bringing
our total cash returned to shareholders since our flotation in
March 2006 to over £725.0m. We have now bought back
39.7m shares since we commenced our share buyback
programme in 2007 reducing our share capital by 30%.
(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.
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We are proud to say that Rightmove has once
again delivered a set of outstanding results.
Dividend
The Board previously announced that it would increase the
interim dividend to 19p (H1 2015: 16.0p) per ordinary share,
which was paid on 6 November 2016. Consistent with our
policy of increasing the total dividend for the year broadly in
line with earnings, the Board proposes to pay a final dividend of
32.0p (2015: 27.0p) per ordinary share for a total dividend for
the year of 51.0p (2015: 43.0p), an increase of 19%. The final
dividend, subject to shareholder approval, will be paid on 2
June 2017 to all shareholders on the register on 5 May 2017.
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 30 to 42.
Board changes and Chief Executive Officer succession
After 16 years of leadership, as remarkable for his success as
with the modest way he has achieved it, Nick McKittrick has
decided to retire as Chief Executive Officer and as a Board
director at the forthcoming AGM on 9 May 2017. Nick will
remain in the Company until 30 June 2017 to ensure a
smooth transition process.
I speak on behalf of the Board and Rightmove employees
when I say that we will miss Nick on both a personal and
professional level. We have greatly appreciated his
contribution to Rightmove’s success and we wish him
the very best for the future.
Nick will pass the baton to Peter Brooks-Johnson, our
Chief Operating Officer and Board director since 2011.
The Board always has a focus on long-term succession
plans and in Peter we have a strong, experienced and
ready successor who has held positions of responsibility
for nearly every functional area within Rightmove.
Having completed three full terms, Colin Kemp will retire
from the Board in May 2017. I am grateful for his valuable
contribution and insights over the past nine years, in
particular his championing of the voice of the customer
and we wish him well in his next venture.
On 30 December 2016 Jacqueline de Rojas joined us as a
non-executive director. Jacqueline is currently Managing
Director UKI-Northern Europe for The Sage Group plc and is
a recognised technology leader in the UK and a passionate
advocate for increased opportunities for women and
diversity in both the boardroom and technology workplace.
We look forward to Jacqueline’s support in our continuous
quest to deliver innovation to our customers as they seek to
reach the UK’s largest home moving audience.
Outlook
The Board and I are grateful for the confidence and support
of all our customers and for the talent and dedication of our
employees. We are clear that our goal is to continue to work
together to position Rightmove as the essential marketplace
for home hunters and for property advertisers to reach by far
the widest possible audience. The Board is confident of
continued success in 2017.
Scott Forbes
Chairman
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernance
Strategic report | What makes us excited
The power of data
Rightmove has been described as a restless innovator and during the course of this year
we made over 4,000 changes to our platforms both large and small. During 2016 we were
delighted to be ranked as the world’s most innovative growth company by Forbes. Our
innovation is focused on the core business and as we successfully innovate we find even
more reasons to believe in the wealth of opportunities ahead.
The power of data
Data driving market
efficiencies and transparency
Rightmove’s research shows that
when selling their homes most
vendors want to be updated on
the progress of the sale at least
once a week. The Marketing
Report Tool delivers this update
to vendors by showing not only
the interest their property has
received on the UK’s largest
property marketplace, but also by
comparing that interest to similar
properties nearby.
The tool also enables agents
to clearly demonstrate their
marketing efforts and expertise
to a vendor.
It is especially powerful for
highlighting when a property
is over-priced or would benefit
from a higher profile by
purchasing an advertising
product on Rightmove.
“ This tool is already
being used on 100,000
properties each month.”
A
B
B
C
A Property first listed
B Featured Property
product applied
C Average interest of
similar properties
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Rightmove’s Data Services business provides insight, analysis and risk assessment
tools to businesses which are making decisions around property, particularly in relation
to valuation and investment. Our property comparison and background check toolset is
now the de facto standard for valuers in the surveying industry. All our tools and
services are based on the bedrock of our uniquely powerful property dataset, providing
our customers with constantly updated property insight and information across the UK.
Our Best Price Guide Report
helps an agent justify their
valuation to a potential vendor.
Using our software agents can
access our unrivalled database
of current property listings
advertised on Rightmove
together with our archive of
over 35 million properties and
build a co-branded report to
support their valuation.
In 2016 agents generated an
average of 620,000 Best Price
Guide Reports per month.
By providing customers with an
increasingly powerful online
marketplace at the same time
as building closer relationships
with them, we can help
customers to innovate and
empower their business models
to ultimately make home
moving easier. We are enabling
our agents to be more efficient
and lower their overheads and
adapt in a digital marketplace.
“ A property is 40% more likely to be
sold by the agent who first marketed it
if it is priced in line with our Automated
Valuation Model.”
Rightmove plc annual report 2016
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernance
Strategic report | What makes us excited
The power of data
The power of data to predict
The data generated from our whole of market view allied to artificial intelligence
techniques enables us to identify patterns and trends in consumer behaviour.
Winning the right to sell a
property is the lifeblood of an
estate agent’s business. Less
than 2% of saleable properties
are on the market at any time
making it very difficult for agents
to target their marketing at
those homeowners who might
be thinking of selling.
This challenge leads to big
inefficiencies in an agent’s
marketing spend.
In May 2016 we acquired the
Outside View, a predictive
analytics business which had
developed an algorithm that
identifies the properties most
likely to come to market in a local
area. Using our combined
knowhow together with
Rightmove’s whole of market
view we have developed the
algorithm into a product to help
agents market more efficiently
by targeting their efforts at
those potential vendors.
In a typical outcode (the first
portion of a postcode) there
are around 10,000 properties,
and in a six-month period,
approximately 150 of those
properties may come to market.
The Outside View machine
learning algorithm assesses
nearly 400 features of each of
the properties in the outcode to
determine which are the most
likely to come to market in the
next six-month period.
Targeting those addresses that
are most likely to
come to the
market, the
platform then
generates and
sends a series of
co-branded
personalised
emails on behalf
of an agent,
inviting the
owner to contact
the agent for a
property
valuation. Using
this method we
enable our
customers to
market to
potential
vendors as
efficiently as
possible.
“ Our data enables us to see
recurring patterns in house buying
and selling habits to help make the
marketplace more efficient.”
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rightmove.co.uk
Trials of the product have
produced encouraging results
and we expect to launch a full
version in the second half of
2017. In the medium term
we believe this will be as
successful as our popular
Local Valuation Alert Product.
10,000
Properties in
an outcode
400 Features on
each property
Machine
Learning
Algorithm
Potential
vendors
emailed
~150
Properties
go on to sell
We’ve only just begun
We’ve helped the UK’s property marketplace become more efficient and transparent
by aggregating nearly every property for sale and to rent in the UK, engaging nearly
every UK home mover and by providing our customers with innovative advertising
products and productivity tools. Our relentless focus is to build on our market leading
position, help our customers compete and succeed and keep innovating to make
home moving easier for consumers and customers alike.
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A We have doubled the number of independent Agent
customers spending £1,500 a month over the last two
years from 5% to 10%
B Impact of adoption of highest value Optimiser package
Average revenue per advertiser
(ARPA) growth will continue to
be driven by increased product
penetration, pricing and
innovation and is underpinned
by the value of our unrivalled
audience and data, our
substantial product inventory
and our culture and track record
of innovation.
To put the immediate
advertising opportunity
into context, the ARPA for
newspapers in 2007 was circa
£2,500(1) per month compared
to our 2016 ARPA of £842 per
month and this is before we
consider further growth in
marketing spend and the
business efficiencies that
customers gain from using
Rightmove.
(1) Source: Advertising Association Warc Report December 2015.
Rightmove plc annual report 2016
Rightmove plc annual report 2016
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Strategic report | Chief Executive’s review
Nick McKittrick
Chief Executive Officer
Rightmove, the UK’s number one property portal, has
delivered another year of record results. Visits from home
movers increased by 10% and they spent nearly a billion
minutes on Rightmove every month in 2016. Our number
of advertisers grew by 2% to reach an all-time high of over
20,100 and with advertisers spending more on our products,
data and services, our revenue increased by 15% to
£220.0m with underlying operating profit(1) up 15% to
£166.2m and operating profit up 18% to £161.6m.
Our progress is testament to our disciplined focus on the UK
property advertising market and the huge effort ‘Rightmovers’
have made to build this business together with our industry
customers. We look forward to delivering further growth as
we continue to shape the UK property market.
Our Strategy
The place consumers ‘turn to first’ and engage with most
At the core of our strategy is a relentless focus on continual
improvement and innovation to create the most compelling
experience for consumers so that they turn to us first. We
will continue to achieve this by providing consumers with the
most up to date, engaging and comprehensive property
content together with the best search, research and home
moving tools to support their home moving journey.
To that end we launched new search technology in the first
half of the year, leading the way and setting the standard for
the fastest, simplest and richest search experience with
more images, larger images, simplified filtering options
and a fully responsive design ensuring the best possible
presentation of content across all devices. The future is
also exciting with our next search innovation, ‘Where can
I live’, launching in early 2017. This search identifies the
commutable areas home hunters can afford, and then
shows them the properties available in those areas.
We continued to invest in our brand in 2016 with an updated
look and feel and through our ‘find your happy’ advertising
campaign. This campaign connects with the strong positive
emotions that moving home often generates and reflects
our position at the heart of it. Our brand building focused on
(1) Before share-based payments and NI on share-based incentives.
(2) Source: Comscore, December 2016.
national TV through our partnership with Channel 4 and broke
new ground as we delivered contextual adverts which gave live
information on available properties in locations referred to
in Channel 4’s property content. We also continued to add
further weight to our presence in London with TV advertising,
additional outdoor media and our exclusive partnerships with
the Evening Standard and Time Out.
More consumers than ever turned to Rightmove in 2016 with
nearly 1.5 billion visits across all our platforms, a 10% increase
on the previous year. The growth was driven by mobile and
of the nearly 12 billion minutes that consumers spent on
Rightmove, two thirds of time spent was on mobile devices.
Our market share of traffic across both desktop and mobile
was 77%(2) with the mobile component even higher at 81%(2).
Traffic to our research tools also grew significantly in 2016 as
sellers and landlords turned to Rightmove first 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
benefit of access to our catalogue of 1 million current
properties and 40 million historic property records.
Consumers spent over 350 million minutes using our research
tools in 2016 which is up by over 20% on the previous year.
Traffic to our Overseas property site increased in 2016
suggesting the dream of owning a property abroad for
many of the British public continues to be a popular one.
Our overseas site attracted 1.6 million more unique visitors
compared to 2015 and surpassed 100 million searches for
the first time. We now have a record number of both overseas
estate agent and developer customers advertising more than
a quarter of a million properties across the world with over half
of the properties located in the two most popular countries
for British buyers, namely Spain and France.
Our Commercial property advertising business continues to
gain momentum with over 40 million visits in 2016, and an
86% market share of visits among the top three commercial
property portals in the UK. As a result, more and more
commercial agents and landlords are choosing to advertise
with us.
10 rightmove.co.uk
More consumers than ever turned to
Rightmove in 2016 with nearly 1.5 billion
visits across all our platforms.
Unrivalled exposure, leads and products for our customers
With traffic to our platforms growing for the 16th consecutive
year we continued to increase the exposure for our customers’
brands and properties. This record exposure generated nearly
47 million leads for our customers, six percent down on 2015
as the result of less activity in the housing market post the
result of the EU referendum, although still nine percent higher
than 2014.
Our long-established focus on the quality of our leads
continues to stand us in good stead as they convert far more
often to outcomes for our customers. In fact, we generate
six(3) times as many sales and lets for our Agency customers
as our nearest competitor. No wonder, when home sellers and
landlords are so much more likely to find their buyer or tenant
on Rightmove compared to any other portal, that 85%(4) of
people selling their home rank Rightmove as the most
important site for marketing their property.
Winning the right to an instruction to sell or let a property is
critical to an agent’s success. Over a million of the email
leads sent by home movers to agents highlighted that they
had a property to sell, each one creating an instruction
opportunity for a customer. These were in addition to the
instruction opportunities that came via our phone leads,
which accounted for two-thirds of all leads. 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.
We have continued to innovate our products alongside
the development of our new search technology to further
increase the value we deliver to customers. Our property
products, Featured Property and Premium Listings are
attracting more attention following their redesign which
focused on making them larger and more premium. The
Featured Agent branding product now gains more visibility
as a larger creative space in the search results that gives
our customers more flexibility to better communicate their
message to the largest home hunting audience in the UK.
(3) Source: Independent software provider to the estate agency industry.
(4) Source: The Property Academy 2015 Home Moving Trends Survey.
There is significant headroom to grow product revenue as we
leverage data to increase the penetration of existing products,
evolve their value and pricing, and continue to innovate and
introduce new products as customers look to invest more to
drive their brand exposure and gain market share. This year
ARPA increased by 12% to £842 driven by customers spending
more on products and packages.
Innovation to create a better marketplace
Combining our software and whole of market dataset whilst
supported by our dedicated account management teams,
we help customers drive operational efficiencies and inform
their business decisions. Our focus is on the areas our
customers value most, which in the case of our agents is
winning and retaining business.
For example, whereas previously our customers would 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 with our software – all included as part of their
membership of Rightmove.
We introduced the next wave of market share analysis tools
within our popular market intelligence software ‘Rightmove
Intel’ along with the capability for multi-branch agents to
easily see metrics at branch and area levels. We also
changed the way that we report on the performance of
properties by moving to the more complete measure of
‘detailed views’. This takes into account all consumer
interactions with properties on all Rightmove platforms
and allows us to better highlight the performance of our
additional products to both customers and consumers.
Our new Marketing Report is based on this new measure and
is proving extremely popular as our customers are already
using the report on over 100,000 properties each month.
The overall engagement and value of our ‘Rightmove Intel’
software keeps growing with usage up over 30% year on year.
The digitalisation of the property industry and the efficiencies
our software and tools bring help to reduce the cost per
office and have also enabled the growth in the number of
Rightmove plc annual report 2016
11
Strategic reportFinancial statementsGovernance
a new identity that’s
clean and fresh
our brand refresh
When it comes to property first impressions count.
That’s why we’ve refreshed our brand with a new
logo that looks great on all devices and is cleaner and
bolder. Our ‘house and arrow ’ design is familiar to
home hunters everywhere and will ensure Rightmove
continues to be the place people visit first.
12 rightmove.co.uk
12 rightmove.co.uk
12 rightmove.co.uk
Strategic report | Chief Executive’s review continued
There is significant headroom to grow product
revenue as we leverage data to increase the
penetration of existing products, evolve their
value and pricing, and continue to innovate.
customers. Over the last 12 months our membership base
has grown by 2% to over 20,100 customers.
We care about our customers’ business success and building
strong relationships is vital to support their ambitions,
especially in light of the significant digital changes taking place.
To that end we are spending more time with customers than
ever before and making sure that more of our conversations
lead to recommendations that our customers truly value.
In 2017 we plan to evolve our event programme with the
introduction of ‘Rightmove Live’. These events will include
speakers from a range of industries covering content
applicable to all small and medium-sized businesses, with an
objective of inspiring and motivating the industry. In keeping
with an online culture these events will be filmed and hosted
on an ‘on demand’ platform, meaning our customers can
benefit from this content irrespective of whether they are
able to attend on the day.
Build great teams and continue to make Rightmove
a great place to work
We strive to create one team of Rightmovers with as
few barriers as possible to rapid growth and innovation.
We believe that this comes from a process-light, highly
connected organisation with little constraining hierarchy
and bureaucracy. It is about selecting the right people,
giving them the freedom and authority to innovate and
lead with very simple measures, and then guiding them to
succeed. We need every Rightmover to be both individually
empowered and accountable.
We believe in sharing often and early and reinforce this
through events such as ‘townhalls’, stand-ups, team away
days and company days which all share progress, successes
and challenges. The culture is not solely built on events like
these, but also from the everyday small gestures and the
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.
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
Rightmovers to recognise their peers who embody the
behaviours we aspire to.
The biggest influence in our restless and inquisitive culture,
of course, comes from our people. Their actions and
behaviours create the sense of belonging and connection
and allow the business to continue to thrive and attract
great people. In our 2016 ‘Have Your Say’ people survey,
95% of Rightmovers think ‘Rightmove 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 50 gnomes have pride of place in our office.
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 watching
Rightmove’s continued success in the future.
Current trading and outlook
We believe the outlook for the UK online property advertising
market remains positive, despite the uncertainties stemming
from the result of the EU referendum. Consumers and
customers are becoming increasingly digital and therefore spend
continues to transition from traditional advertising channels.
Our clear market leadership coupled with the value of our
products and data positions us well for the future. With average
revenue per advertiser continuing to grow the Board remains
confident of making further progress in 2017 and beyond.
Nick McKittrick
Chief Executive Officer
24 February 2017
Rightmove plc annual report 2016
13
Strategic reportFinancial statementsGovernance
Strategic report | Operational key performance indicators
We use the metrics set out below to track our operational performance.
Number of advertisers
Definition
The total number of paid for
UK estate and lettings Agency
branches and New Home
developments advertising
properties on Rightmove
Strategic link
The place consumers ‘turn to
first’ and engage with most; and
innovation to create a better
marketplace
Risks
2016 performance
1
2
3
Number of advertisers
21,000
20,000
19,000
18,000
17,680
17,000
20,121
19,752
19,304
18,425
21000
:
20000
S
o
u
r
c
19000
e
R
g
18000
h
t
m
o
v
17000
e
i
16,000
Number of advertisers
Source: Rightmove
2012
2013
2014
2015
2016
16000
Average revenue per advertiser (ARPA in £ per month)
1,000
800
600
400
200
0
684
754
842
607
529
S
o
u
r
c
e
:
i
R
g
h
t
m
o
v
e
2013
Traffic - time on site (billions of minutes)
Source: Rightmove
2014
2015
2012
2016
Traffic (time on site measured in billions of minutes)
11.1
11.7
10.2
8.1
6.2
14
12
10
8
6
4
2
0
i
:
S
o
)
u
s
r
e
c
t
e
u
n
G
m
o
f
o
o
g
s
e
n
o
A
n
b
a
l
(
y
t
i
c
s
i
l
l
i
l
Employee engagement
Source: Google analytics
2012
2013
2014
2015
2016
+2%
Definition
Revenue from Agency and New
Home advertisers in a given
month divided by the total
number of advertisers during
the month, measured as a
monthly average over the year
2016 performance
+12%
Definition
Total time measured in billions
of minutes spent on Rightmove
platforms during the year
2016 performance
+5%
Strategic link
Unrivalled exposure, leads and
products for our customers
Risks
1
2
3
Strategic link
The place consumers ‘turn to
first’ and engage with most
Risks
2
3
4
Strategic link
Build great teams and continue
to make Rightmove a great
place to work
Risks
5
Employee engagement(1) – ‘Rightmove is a great place to work’
100%
95%
90%
85%
80%
75%
96%
94%
95%
91%
S
o
u
r
c
e
:
i
R
g
h
t
m
o
v
e
2013
2014
2015
2016
Definition
Based on number of respondents
selecting ‘agree’ or ‘strongly
agree’ in answer to this question
in the annual employee survey
2016 performance
+4
percentage
points
Risks relevant to our KPIs (read more on pages 21 to 22)
1 Macroeconomic risk – UK housing market downturn
2 Competitive environment
hence only four years of data is presented in the chart.
3 New or disruptive technologies and changing
5 Securing and retaining the right talent
consumer behaviours
4 Cyber security and IT systems
14 rightmove.co.uk
(1) The employee engagement survey was first conducted in 2013,
Strategic report | Financial key performance indicators
We use the metrics set out below to track our financial performance.
Revenue £m
Revenue £m
220.0
192.1
167.0
139.9
119.4
250
200
150
100
50
0
2015
2016
166.2
144.3
Underlying operating profit £m
2013
2014
2012
Underlying operating profit(1) £m
200
150
100
87.5
50
0
124.6
104.0
2014
Underlying basic EPS (pence)
2013
2012
Underlying basic EPS(2) (pence per ordinary share)
2016 performance
+15%
Revenue grew strongly in 2016 up 15% to £220.0m
(2015: £192.1m) with all business areas experiencing
year on year growth
Risks
1
2
3 4 5
2016 performance
+15%
Underlying operating profit(1) increased by 15% to £166.2m
(2015: £144.3m) with operating margin increasing to 75.5%
(2015: 75.1%)
Risks
)
m
£
(
)
m
£
(
2015
2016
1
2
3 4 5
121.4
142.8
100.3
81.0
65.7
2016 performance
+18%
Underlying basic EPS(2) increased by 18% to 142.8p
(2015: 121.4p). Basic EPS grew by 21% to 137.9p
(2015:114.0p)
Risks
150.0
100.0
50.0
0
Cash returned to shareholders £m
2012
2013
2014
2015
2016
1
2
3 4 5
Cash returned to shareholders £m
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0
131.3
112.5
103.4
86.8
85.6
)
m
£
(
2016 performance
+17%
During the year all free cash flow was returned
to shareholders in the form of share buybacks and dividends
with cash returns totalling £131.3m (2015: £112.5m)
Risks
2012
2013
2014
2015
2016
1
2
3 4 5
(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 2016
15
Strategic reportFinancial statementsGovernance
property searches that
can take you even further
searching faster than ever before
We launched our new search technology in 2016,
leading the way and setting the standard for the
fastest, simplest and richest search experience
with more images, larger images, simplified filters
and a fully responsive design across all platforms.
16 rightmove.co.uk
Strategic report | Financial review
Robyn Perriss
Finance Director
Revenue
We have experienced another strong year of revenue growth
delivering record revenues of £220.0m.
Underlying operating profit
Agency
New Homes
Other
Total revenue
2016
£m
168.3
33.9
17.8
220.0
2015
£m
147.1
30.5
14.5
192.1
Change
14%
11%
23%
15%
Revenue
Underlying operating costs
Underlying operating profit
Share-based payments
NI on share-based incentives
Operating profit
2016
£m
220.0
(53.8)
166.2
(4.1)
(0.5)
161.6
2015
£m
192.1
(47.8)
144.3
(3.8)
(3.3)
137.2
Change
15%
13%
15%
8%
(85%)
18%
Our Agency business was the main contributor to the
overall revenue growth increasing by14% to £168.3m (2015:
£147.1m). Agency continues to be our largest business
contributing 77% (2015: 77%) of our total revenue.
The majority of the revenue increase came from ARPA growth
as a result of the further adoption of additional advertising
products together with increases to core membership prices.
Spending by agents increased across our range of additional
advertising products with healthy adoption of our Optimiser
package which provides the highest value to our customers.
Revenue from our New Homes business grew by 11% to
£33.9m (2015: £30.5m) driven by the sale of additional
advertising products, including email campaigns, and by
increases to core membership prices, together with healthy
growth in development numbers, up 10% year on year to 2,659
developments (2015: 2,416).
During 2016 we continued to leverage our brand strength
beyond the main UK residential property business generating
strong growth in our Data Services, Overseas, Commercial and
non-property advertising businesses with year on year revenue
up 23% to £17.8m (2015: £14.5m).
Underlying operating profit(1) increased by 15% to £166.2m
(2015: £144.3m) and underlying operating margin(1) increased
to 75.5% (2015: 75.1%). 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 13% or £6m to
£53.8m (2015: £47.8m). Of the increase £4m related to salary
and associated costs attributable to general wage inflation
and an increased average headcount of 469 (2015: 412),
reflecting investment in sales, customer support and
technical heads during the year and the full year impact of
staff recruited during 2015. Technology costs increased by
£0.7m in the year due to our investment in new site search
functionality and increased licensing costs associated with
better customer sales and support platforms.
Underlying operating profit is reported before share-based
payments, which are a significant non-cash charge driven by a
valuation model, and NI on share-based incentives, which is
driven by reference to the Rightmove plc share price and so
subject to volatility, rather than operational activity. The directors
therefore consider underlying operating profit to be the most
appropriate indicator of the performance of the business and
year on year trends.
(1) Before share-based payments charge of £4.1m (2015: £3.8m) and NI charge of
£0.5m (2015: £3.3m) on share-based incentives.
(2) Before share-based payments charge of £4.1m (2015: £3.8m) and NI charge of
£0.5m (2015: £3.3m) on share-based incentives and no related adjustment for tax.
Rightmove plc annual report 2016
17
Strategic reportFinancial statementsGovernance
lightbulb moments that give
our customers the edge
inspiring our customers with information
We help our customers drive operational efficiencies
and inform their business decisions by combining our
software and whole of market dataset with dedicated
account management teams.
18 rightmove.co.uk
18 rightmove.co.uk
Strategic report | Financial review continued
Share-based payments and National Insurance (NI)
In accordance with IFRS 2, a non-cash charge of £4.1m (2015:
£3.8m) is reflected in the income statement representing the
amortisation of the fair value of share-based incentives granted.
NI is being accrued, where applicable, at a rate of 13.8% on the
potential employee gain on share-based incentives granted.
Based on a year on year decrease in the closing share price from
£41.25 at 31 December 2015 to £39.03 at 31 December 2016 in
respect of the outstanding share-based incentives granted,
together with the realised NI cost on share-based incentives
exercised in the year, there was a charge of £0.5m (2015: £3.3m).
Taxation
The consolidated tax rate for the year ended 31 December 2016
was 19.8% (2015: 20.2%). The effective tax rate was slightly
lower than the UK enacted rate of 20.0% 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 2016 was £78.5m (2015: £75.3m). £31.6m
(2015: £29.8m) related to corporation tax and Employer’s NI
borne by the Group while the remaining £46.9m (2015: £45.5m)
was collected in respect of payroll taxes and VAT. The Company
currently has no open tax authority enquiries in respect of any
tax and there are no known material tax risks based on the
positions adopted. The Company has therefore not recognised
any uncertain liabilities in relation to estimates of additional tax
which may be due in relation to enquiries.
Earnings per share (EPS)
Underlying basic EPS(2) increased by 18% to 142.8p
(2015: 121.4p). Basic EPS increased by 21% to 137.9p
(2015: 114.0p). The growth in EPS was mainly driven by the
increase in profitability in the year together with the benefit from
our continued share buyback programme which reduced the
weighted average number of ordinary shares in issue to 94.0m
(2015: 96.0m).
Balance sheet
Rightmove’s balance sheet at 31 December 2016 showed
total equity of £8.0m (2015: £6.6m) reflecting growth in profits
and retained earnings less the continued return of capital to
shareholders in the form of share buybacks and dividends during
the year.
Reflecting both revenue growth and strong cash collections,
trade receivables increased by 8% to £26.6m (2015: £24.6m).
Trade and other payables increased by £4.2m to £35.8m
(2015: £31.6m) due to an increase in deferred revenue in line
with trading. Our deferred tax asset, representing the future tax
benefits from share-based incentives, is marginally higher at
£6.9m (2015: £6.8m).
Cash flow
Rightmove continues to see strong cash generation and to
return all free cash generated to shareholders. Predictable
cash flows reflect the subscription nature of the business
coupled with low working capital requirements. Cash
generated from operating activities was up 18% to £169.2m
(2015: £143.2m) and operating cash conversion was once
again in excess of 100%.
Tax payments increased to £27.8m (2015: £26.9m) and £0.2m
(2015: £0.2m) was paid in relation to bank charges and bank
facility fees resulting in net cash from operating activities of
£141.2m (2015: £116.1m).
Capital expenditure of £1.8m (2015: £1.8m) includes investment
in new load balancers to optimise the performance of our
platforms and an upgrade to customer facing software tools
used by our Data Services business. On 31 May 2016 we
acquired 100% of The Outside View Analytics Ltd, a predictive
analytics company, for net cash consideration of £2.0m.
Proceeds of £0.4m (2015: £0.4m) were received on the exercise
of share-based incentives and £0.8m (2015: £0.5m) was applied
to purchase shares to fund the Rightmove Share Incentive Plan.
During 2016, £88.1m was invested in the repurchase of our own
shares (2015: £76.1m) whilst a further £43.2m (2015: £36.5m)
was paid in dividends reflecting the increased final dividend for
2015 and the 3p increase in the interim dividend this year. This
brings the total cash returned to shareholders in the year to
£131.3m (2015: £112.5m).
The closing Group cash and money market deposit balance at
the end of the year was £17.8m (2015: £12.4m).
Dividends
Consistent with our policy of growing the dividend broadly
in line with the increase in underlying earnings per share,
the directors are recommending a final dividend of 32.0p
(2015: 27.0p) per ordinary share, which together with the
interim dividend makes a total dividend for the year of 51.0p
(2015: 43.0p), an increase of 19%. We are proud to have
delivered 10 years of successive dividend growth since
Rightmove listed in 2006 and the final dividend, subject to
shareholder approval, will be paid on 2 June 2017 to all
shareholders on the register on 5 May 2017.
Robyn Perriss
Finance Director
24 February 2017
Rightmove plc annual report 2016
19
Strategic reportFinancial statementsGovernance
a place
where
everyone
has the
space to
grow
personal growth
We continue to build empowered teams and make
Rightmove a great place to work. We attract and retain
top talent to provide the best service for consumers
and customers. Our restless and inquisitive culture
allows both our business and our people to thrive.
20 rightmove.co.uk
20 rightmove.co.uk
Strategic report | Risk management
Approach to risk management
The Board has overall responsibility for ensuring that risk is
effectively managed across the Group. The primary method by
which risks are monitored and managed is through the monthly
Executive Committee meetings. The subject of risk is included
on each monthly agenda and any significant new risks or
change in status to existing significant risks is discussed
and actions taken as appropriate.
On a bi-annual basis, risk is reviewed by operational
management across each business area. This review includes
a detailed assessment of identified risks, the likelihood of each
risk occurring and the potential impact, together with controls
and mitigating procedures in place. This information is
combined to form a consolidated risk register which is reported
to the Executive Committee for review and challenge, ahead of
final review and approval by the Board. A nominated director
has responsibility for each risk. The Board reviewed the risk
register at both the February 2016 and September 2016
Board meetings.
Risk management is reinforced by the Group’s continuous
process to design and embed strong internal controls across
the business as we grow, particularly in relation to smaller
breadth business areas. The Audit Committee also receives and
analyses regular reports from management and the outsourced
internal audit function on matters related to risk and control and
reviews the timeliness and effectiveness of corrective action
taken by management. The Audit Committee on behalf of the
Board also considers the findings and recommendations of its
external auditor throughout the year to design and implement
effective financial controls.
Risk management framework
Board/Audit Committee
Executive Committee
Risk register and risk review
Operational management
Strategic report | Principal risks and uncertainties
Internal controls/
compliance and
outsourced internal
audit activities
External audit
A description of the principal risks and uncertainties faced by
the Group in 2016, together with the potential impact and
monitoring and mitigating activities is set out in the table below.
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.
We recognise that the Group is exposed to risks wider than
those listed, however we have disclosed those that we believe
Key risk and description
1 Macroeconomic environment
The macroeconomic environment significantly
impacts confidence in the UK housing market,
impacting transaction levels.
• Substantially fewer housing transactions than
the norm may lead to a reduction in the
number of Agent branches or New Home
developments
• In addition, a contraction in the volume of
transactions in the UK housing market could
lead to a reduction in advertisers’ marketing
budgets which could reduce the demand for the
Group’s property advertising products
The potential impact of the result of the EU
referendum is further discussed on page 23
Impact
Monitoring and mitigation
Change from
prior year
Underperformance as
the number of Agents
and New Home
developments are a
major determinant of
Rightmove’s revenue
• Monitoring of housing market leading
indicators and trends in Rightmove
membership
• Continuing to provide the most significant
and effective exposure for customers’ brands
and properties, be the largest source of high
quality leads and offer value-adding products
and packages and help drive operational
efficiencies for our customers, thereby
embedding the value of our membership
• Communicating the effectiveness of digital
media versus alternative mediums such
as print
• Maintaining a flexible cost base that can
respond to changing conditions
Rightmove plc annual report 2016
21
Strategic reportFinancial statementsGovernance
Strategic report | Principal risks and uncertainties continued
Key risk and description
2 Competitive environment
Increased competition from existing
competitors or new entrants targeting
the Group’s primary revenue markets
3 New or disruptive technologies and changing
consumer behaviours
Rightmove operates in a fast-moving online
marketplace. Failure to innovate or adopt new
technologies or failure to adapt to changing
customer business models and evolving
consumer behaviour may impact the Group’s
ability to offer the best products and services
to its advertisers and the best consumer
experience
4 Cyber security and IT systems
• Unavailability of the website and other
platforms
• Corruption or loss of key data as a result
of a security breach
5 Securing and retaining the right talent
Our continued success is dependent on our
ability to attract, recruit, retain and motivate
our highly skilled workforce
Impact
Monitoring and mitigation
Change from
prior year
This may impact on
Rightmove’s ability to
grow revenue due to
the potential loss of:
• Audience
• Advertisers
• Demand for
additional
advertising products
• Communication of the value of Rightmove
membership to advertisers
• 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
efficiently
• Sustained marketing investment in the
Rightmove brand
• 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:
• Audience
• Continual improvements to our platforms
• Developing our product proposition to
meet our customers’ needs and evolving
business models
• Significant and ongoing investment in mobile
and tablet platforms
engagement
• Large in-house technology team with culture
• Advertisers
• Demand for
additional
advertising products
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
financial implications
for the Group
The inability to recruit
and retain talented
people could impact
our ability to maintain
our financial
performance and
deliver growth
When key staff leave
or retire, there is a risk
that knowledge or
competitive
advantage is lost
of innovation
• Innovation lab to develop emerging models
and technologies
• 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
• Disaster Recovery and Business Continuity
Plans in place, subject to regular review
and testing
• Use of three data centres to load balance and
ensure optimal performance and business
continuity capability
• Regular backups of key data
• Regular testing of the security of the
IT systems and platforms including
penetration testing and distributed denial
of service attack procedures
• Ongoing monitoring of external threats
through updates from external specialists and
collaboration with other online organisations
• Ongoing succession planning and
development of future leaders
• 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
• Regular staff communication
and engagement
• Maintaining the culture of the Group, which
generates significant staff loyalty
Increased risk
Decreased risk
Risk unchanged
22 rightmove.co.uk
Strategic report | The EU referendum
The result of the UK’s EU referendum has increased the level
of macroeconomic uncertainty and could increase the
likelihood of the housing market macroeconomic risks set
out on page 21.
• A reduction in housing market activity increases the
propensity for advertisers to evaluate their marketing spend
both offline and on other portals and we remain confident in
the strength of the Rightmove value proposition.
In considering the potential implications of the referendum
result on the business the directors considered the following:
• The Rightmove business is largely subscription based and
is therefore less susceptible to short-term shocks or
variations in the property market or wider economy;
• around two-thirds of our estate agency customers also
provide lettings services which may mitigate the impact of
any downturn in the property market on their business; and
The directors believe that our strong market position and
relationships with our customers, and the value embedded
in our membership continue to position us well providing
that housing transaction volumes do not take a sharp
downward turn.
Strategic report | Viability statement
In accordance with provision C.2.2. of the Code, the directors
have assessed the viability of the Group over a three-year
period, taking into account the Group’s current position and
the potential impact of the principal risks and uncertainties
set out on pages 21 to 22. 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 2019.
The directors have determined that a three-year period to
31 December 2019 constitutes an appropriate period over
which to provide its viability statement, as the Group
operates within the online digital marketplace, and
projections looking out further than three years become
significantly less meaningful in the context of the fast
moving nature of the market. Three years is also the period
considered under the Group’s current three-year strategic
plan. The three-year plan is reviewed by the directors 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
numbers, ARPA growth and other ancillary revenue streams
and considers the Group’s profitability, cash flows and
dividend cover over the period.
The plan is subject to robust downside sensitivity analysis
which involves flexing a number of the main assumptions
underlying the plan. Where appropriate, analysis is carried
out to evaluate the potential financial impact over the period
of the Group’s principal risks actually occurring. Furthermore
our business model is structured so that the Group is not
overly reliant on a small customer base with no single
customer constituting more than 3% of Group sales.
Also given our significant free cash flow, our ability to
adjust our discretionary share buyback programme provides
long-term comfort around viability in the face of adverse
economic or competitive conditions.
Whilst this review does not consider all the risks that the
Group may face, the directors consider that this stress-
testing based assessment of the Group’s prospects
is reasonable in the circumstances of the inherent
uncertainty involved.
Rightmove plc annual report 2016
23
Strategic reportFinancial statementsGovernance
Strategic report | Corporate responsibility
Our people
Our people are our most valued asset, they are vital to
Rightmove’s 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 benefits 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 fit. All new vacancies are communicated
internally to give our colleagues an opportunity to apply or
recommend someone. In 2016 10% of new employees were
introduced to Rightmove by an existing employee.
We continued our successful partnership with MK College
and the University of Bedford which offers paid internships to
design students for up to six months and provides graduates
with valuable work experience in marketing or design. Five
out of six interns who joined us in 2015 became permanent
employees during the year and a further four interns joined
Rightmove in 2016, of whom two are now permanent. Our
intern programme will continue to run in 2017 and so far we
have eight new interns including three from our involvement
with the Prince’s Trust, details of which can be found in the
charitable activities section on page 25.
The high quality of our recruiting, supported by long-term
commitment from Rightmove employees is key to the
success of our culture. We are proud to have 51 people who
have celebrated ten or more years’ service, which represents
over 10% of our employees and which we believe backs up
our impressive people survey results.
People development and training
To support our culture of highly connected and empowered
employees every new employee attends two office based
‘How Rightmove fits together’ days to introduce them to the
business and our customers. They also attend ‘Nexton’ an
off-site residential experience to introduce employees 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 benefit in providing continual professional
and personal development for Rightmovers. In 2016, a new
set of customer-focused training was rolled out, including
how to communicate effectively by email and telephone.
Employee benefits
Whilst we believe that being a great place to work helps us
attract the best talent we also reward our employees with a
range of additional benefits.
Rightmove contributes towards a group stakeholder pension
plan. Opt out rates continue to be low and currently 90% of
employees are members of the pension plan. We also offer
private healthcare complemented by a cash plan scheme for
all employees.
We want our people to directly benefit from their contribution
to the success of 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 2016, the Group’s eighth Sharesave contract
matured allowing employees to benefit from the continued
success of the Group over the last three years. 66% of our
employees currently participate in Sharesave.
Following the launch of the Rightmove Share Incentive Plan
(SIP) and initial award of shares in 2015, in January 2016 we
made a further free share award of 50 shares to all qualifying
employees. We have also made a free share award of 50
shares to all qualifying employees in January 2017.
We also offer flexible 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
through ‘townhalls’ and business performance updates with
senior management and quarterly sales conferences.
24 rightmove.co.uk
Our employee recognition scheme is based around the
‘Rightmove behaviours’, which reflect our unique blend of
values and ways of working. It is an opportunity to nominate
colleagues who have demonstrated these behaviours in action
and during 2016 it continued to prove popular with up to eight
awards presented every two months at our ’townhalls’.
As it is important to know what our employees think, and
having received much valuable feedback in the past, we
conduct an annual ‘Have your Say’ people survey. We are
proud of another set of outstanding results from the survey
with highlights including:
• 90% of respondents think that Rightmove is run on
strong values and principles;
• 95% of respondents think this is a great place to work
and are proud to work for Rightmove; and
• 97% of respondents are committed to making a real
contribution to the success of Rightmove.
Despite the outstanding results, the management team is
never complacent and works hard to improve the employee
experience at Rightmove. An employee engagement score
will again form part of the senior management bonus criteria
in 2017, demonstrating the importance of employees to the
continuing success of Rightmove.
Equality and diversity
Rightmove has a firm 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
range 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 and
what the home hunters want from the Rightmove platforms.
As at 31 December 2016, our female representation on the
Board was 33% with three out of nine Board directors being
female. Following the retirement of Colin Kemp and Nick
McKittrick in May 2017, this will rise to 43% with 50:50
representation at executive director level.
The Board continues to focus on the next level of senior
management in order to develop potential within this team
to step up to Board level at the appropriate time. It is also
important to identify and develop potential within the wider
organisation with a view to strengthening the female
representation within the senior management team.
In 2016, 18% (2015: 24%) of our senior management team
were female. Rightmove has a small senior management
team and therefore the loss of just one female manager
can have a big impact on female representation in this group.
We are proud that the rest of our workforce now equally
represents men and women.
A breakdown by gender of the number of persons who
were directors of Rightmove, senior managers and all other
employees as at 31 December 2016, is set out below.
Human rights
Whilst Rightmove does not have a specific human rights
policy, it does have policies covering Equal Opportunities,
Anti-slavery and Anti-bribery 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. This register
is reviewed by the Audit Committee annually.
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 2016
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.
Directors
Senior management
All Rightmove employees
3
6
3
14
229
229
Male
Female
Male
Female
Male
Female
Rightmove plc annual report 2016
25
Strategic reportFinancial statementsGovernance
Strategic report | Corporate responsibility continued
In 2016 we contributed £18,000 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 efficient means of giving.
In 2016, we contributed £49,000 to support customer
initiatives via Agents Giving, where we contribute to the costs
of setting up a charitable activity carried out by our customers,
for example paying for the kit to be used by participants in a
charity run or cycling event. 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 with Agents Giving in
2014. We were delighted that during 2016, Agents Giving
achieved the milestone of raising over £1 million for a number
of charitable initiatives supported by our customers.
The Rightmove platforms include functionality for our
customers to display Energy Performance Certificates which
allow prospective buyers to evaluate the energy efficiency
of a property they are considering buying and to identify
opportunities to improve the energy efficiency once they
have purchased the property.
As an internet-based Group with most staff employed in two
office locations, we believe our own environmental footprint
is small. We encourage our staff to take steps to address our
environmental responsibilities. For instance, we continue
to operate recycling schemes which were established in
consultation with local authorities and recycling partners.
All waste bins were removed from the desks in our London
and Milton Keynes offices which encourages and increases
the amount of recycling we do.
In November 2016, we invited ten young people from the
Prince’s Trust to attend four weeks’ work experience at
Rightmove to learn about the business and the career
opportunities on offer. The experience was very rewarding
for the young people who enjoyed the lively family
atmosphere and for the many Rightmovers who were
involved in organising and delivering the work experience.
The collaboration has resulted in three young individuals
being offered a three-month internship within Rightmove.
During the year Rightmove contributed £25,000 to the
Prince’s Trust.
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 benefit. Rightmove has
worked hard to increase the number and size of photographs
of each property, improved the size and added functionality
to property floor plans and has introduced more
comprehensive map searches and aerial photographs
which help home hunters to identify the specific location
of a property. Rightmove has added information on which
schools are closest to the properties listed and the
broadband speed for the area, all of which combined,
provides high quality information about properties, to
reduce the carbon footprint generated by prospective
buyers making wasted journeys.
As an operator of an online property portal, the main
environmental impact is the power usage of our data
centres. Our procurement policy is to purchase hardware
with the best computational performance which uses the
least electrical power.
We encourage our employees to use alternatives to car
travel, by promoting the use of public transport in particular
when travelling between our two office locations and by
encouraging participation in our Cycle to Work scheme.
In 2016, we also introduced the option for staff entitled to a
company car to select hybrid electric cars as an alternative
to petrol or diesel engines.
In 2016, our fuel card provider, Allstar, again partnered with
Forest Carbon to capture the CO2 emissions from our fleet
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 the CO2 from each vehicle and with that
Forest Carbon plant woodlands that are quality assured by
the Government’s Woodland Carbon Code to offset
the emissions from each vehicle. We are provided with an
e-certificate 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.
26 rightmove.co.uk
Greenhouse gas reporting
The Companies Act 2006 (Strategic Report and Directors’
Report) Regulations 2013 requires all UK quoted companies
to report on their greenhouse gas (GHG) emissions, which
are classified as either direct or indirect and which are divided
further into Scope 1, Scope 2 and Scope 3 emissions.
Direct GHG emissions are emissions from sources that are
owned or controlled by Rightmove. Indirect GHG emissions
are emissions that are a consequence of the activities of the
Group but that occur at sources owned or controlled by
other entities.
Scope 1 emissions: Direct emissions controlled by the
Group arising from Company cars. Whilst the cars are leased,
we are responsible for the emissions and therefore we report
these under Scope 1.
Scope 2 emissions: Indirect emissions attributable to the
Group due to its consumption of purchased electricity.
Scope 3 emissions: Other indirect emissions associated
with activities that support or supply the Group’s operations,
we include emissions arising from our third party run
data centres.
The Group is required to report Scope 1 and 2 emissions for
its reporting year to 31 December 2016. 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
Tonnes CO2e(1) Tonnes CO2e(1)
2015
2016
486
323
298
492
342
221
Emissions per Employee
Scope
Source
Scope 1
Company cars
Scope 2
Electricity
Tonnes CO2e
Tonnes CO2e
per employee(1) per employee(1)
2015
2016
1.0
0.7
0.7
2.4
1.2
0.8
0.6
2.6
Scope 3 Outsourced – data centres
Total
(1) Based on 469 (2015: 412) employees taken as the average number of
employees in the Group throughout the year.
Emissions per employee have declined year on year due
to an increase in headcount in areas which have not had
a proportionate impact on emissions, such as the use
of company cars or running the outsourced data centres.
We will continue to monitor and look for ways to improve
energy efficiency.
Methodology
We have reported on all of the emission sources required
under the Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013. We have used the
GHG’s Protocol’s Operational Control consolidation
method. We do not have responsibility for any emission
sources that are not included in the above information.
Health and safety
The Group considers the effective management of health
and safety to be an integral part of managing its business.
During 2016, we continued our fire safety, first aid and work
place safety training. The Group’s ongoing policy on health
and safety is to provide adequate control of the health and
safety risks arising from work activities. This is delivered
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.
Total
1,107
1,055
(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.
The increase in emissions from our outsourced data centres
was due to a new, larger facility coming online during the year.
Emissions have also been calculated using an ‘intensity
metric’, which will enable the Group to monitor how well we
are controlling emissions on an annual basis, independent of
fluctuations in the levels of their activity. As Rightmove is a
‘people’ business, the most suitable metric is ‘Emissions per
Employee’, based on the average number of employees
during the year. The Group’s emissions per employee are
shown in the next table.
Rightmove plc annual report 2016
27
Strategic reportFinancial statementsGovernance
Governance | Directors and officers
Nick McKittrick
Chief Executive Officer
Appointment to the Board
5 March 2004
Current external commitments
None
Previous roles and relevant experience
Nick is one of the co-founding executives of
Rightmove and became Chief Executive Officer
in April 2013 having been Chief Operating
Officer since 2005 and additionally Finance
Director since 2009. His prior experience is in
technology consulting with Accenture.
Peter Brooks-Johnson
Chief Operating Officer
Appointment to the Board
10 January 2011
Current external commitments
None
Previous roles and relevant experience
Peter joined Rightmove in 2006 and became
Chief Operating Officer in April 2013 having
been Managing Director of rightmove.co.uk
since 2011 and head of the 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 Ascential plc
Non-executive director of Travelport Worldwide Ltd
Chairman of Innasol Group Ltd
Previous roles and relevant experience
Chairman of Orbitz Worldwide until September
2015 and a director of NetJets Management Ltd,
a subsidiary of Berkshire Hathaway until October
2009. Scott has over 35 years’ experience in
operations, finance and mergers and acquisitions
including 15 years at Cendant Corporation which
was formerly the largest worldwide provider of
residential property services. Scott established
Cendant’s international headquarters in London in
1999 and led this division as Group Managing
Director until he joined Rightmove.
Colin Kemp
Non-Executive Director
Appointment to the Board
3 July 2007
Committee membership
Remuneration, Nomination
Current external commitments
Non-executive director of Ellis Whittam
(Holdings) Limited
Previous roles and relevant experience
With over 30 years’ experience in high street
retail banking, Colin worked for Lloyds Banking
Group companies since 1979 including two
and a half years on the bank’s Retail Executive
Committee, before retiring in July 2016. Between
January 2005 and December 2007, he was
Managing Director of Halifax Estate Agencies
Limited. Colin is a Cranfield MBA, an Associate
of the Chartered Institute of Marketing and a
Visiting Fellow at Cranfield University.
Rakhi Goss-Custard
Non-Executive Director
Appointment to the Board
28 July 2014
Committee membership
Audit, Remuneration
Current external commitments
Non-executive director of Kingfisher plc
Non-executive director of Schroders plc
Non-executive director of Intu Properties plc
Non-executive director of Be Heard Group plc
Previous roles and relevant experience
Rakhi was previously Director of UK Media at
Amazon to June 2014. She held various other
senior positions during her 11-year tenure at
Amazon including Media, Entertainment,
General Merchandise and Book divisions as well
as Product Development. Prior to Amazon,
Rakhi previously advised Zappos and held
strategy roles at TomTom and Oliver Wyman.
Jacqueline de Rojas
Non-Executive Director
Appointment to the Board
30 December 2016
Current external commitments
Managing Director UKI – Northern Europe
of The Sage Group plc
President of techUK
Previous roles and relevant experience
Jacqueline has been employed throughout
her career by global blue-chip software
companies. Before joining Sage in 2016, she
held senior positions at Citrix, CA Technologies,
McAfee and Ascential Software. She was a
non-executive director of Home Retail Group
plc from 2012 to 2016. Jacqueline is an advisor
to the Digital Leaders Technology Group and
a passionate advocate for diversity in the
workplace.
28 rightmove.co.uk
Robyn Perriss
Finance Director
Appointment to the Board
30 April 2013
Current external commitments
None
Previous roles and relevant experience
Robyn joined Rightmove in 2007 as Financial
Controller with responsibility for day to day
financial operations and was promoted to the
Board as Finance Director in April 2013. She was
also Company Secretary from April 2012 to July
2014 and from June to October 2016. Robyn
qualified as a chartered accountant in South
Africa with KPMG and worked in both audit and
transaction services. Prior to joining Rightmove,
Robyn was Group Financial Controller at the
online media business, Auto Trader.
Peter Williams
Senior Independent
Non-Executive Director
Appointment to the Board
3 February 2014
Committee membership
Remuneration (Chairman), Audit, Nomination
Current external commitments
Chairman of boohoo.com plc
Chairman of Mister Spex GmbH
Non-executive director of U and I plc
Previous roles and relevant experience
Peter was previously senior independent
director of ASOS plc and Sportech plc,
Chairman of Jaeger, held non-executive
director roles in Cineworld Group plc, the EMI
group, Blacks Leisure Group plc, JJB Sports plc,
GCap Media plc and Capital Radio Group plc. In
his executive career, Peter was Chief Executive
at Alpha Group plc and prior to that, Chief
Executive of Selfridges plc where he also acted
as Chief Financial Officer for over ten years.
Ashley Martin
Non-Executive Director
Appointment to the Board
11 June 2009
Committee membership
Audit (Chairman), Nomination
Current external commitments
Non-executive director of Zegona
Communications plc
Previous roles and relevant experience
Ashley qualified as a chartered accountant
in 1981 and has a career in finance spanning
35 years. He was previously Global Chief
Financial Officer of Engine Holding LLC and
Group Finance Director of Rok plc, the building
services group, and Group Finance Director of
the media services company, Tempus plc.
Sandra Odell
Company Secretary
Appointment as officer to the Board
1 November 2016
Current external commitments
None
Previous roles and relevant experience
Sandra is a Fellow of the Institute of Chartered
Secretaries and Administrators. Prior to joining
Rightmove, Sandra was Company Secretary
of Quintain, the London property developer,
and before that held various senior company
secretarial positions in listed financial
services companies.
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernance
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.
The statement of corporate governance covers:
• the structure and role of the Board and its committees;
• relations with the Company’s shareholders and the Annual
General Meeting (AGM); and
• the reports of the Audit Committee and Nomination
Committee including Board effectiveness and evaluation.
The report of the Remuneration Committee is set out
separately in the Directors’ Remuneration Report on
pages 47 to 48.
The Group’s risk management and internal control
framework and the principal risks and uncertainties are
described on pages 21 to 22. The Directors’ Report on pages
43 to 45 also contains information required to be included in
this statement of corporate governance.
Statement of compliance
The Code sets out the principles and provisions relating to
good governance of UK listed companies and can be found
on the FRC’s website at https://frc.org.uk.
We are pleased to confirm that, for the year under review, the
Company has complied fully with the principles and provisions
of the Code.
The Board’s role
The Board is collectively responsible to shareholders for the
overall direction and control of the Group and has the powers
and duties set out in the Companies Act and the Company’s
Articles of Association. The Board delegates certain matters
to the Board committees and delegates the day to day
operational aspects of the business to the executive directors.
During the year, the Board has adopted an updated schedule of
matters requiring Board approval. These include approval of:
• Rightmove’s business strategy;
• the annual business plan;
• changes to the Group’s capital structure;
• the capital management and dividend policies;
• the annual and half year results and shareholder
communications;
• major acquisitions and disposals;
• appointment and removal of officers of the Company; and
• the system of internal control and risk management.
The key responsibilities and actions carried out by the Board during the year are set out below:
Responsibility
Specific actions and information received during the year
Approved the Group’s
budget for 2017 and its
three-year business plan
to 2019
Presentation from a
media analyst on the
online classifieds
marketplace and global
peer benchmarking
Strategy and
direction
The June Board meeting
was devoted to
Rightmove’s strategy
and included a discussion
of the potential influences,
threats and opportunities
to Rightmove’s business
model arising from
economic, regulatory and
other market changes.
Priority strategic initiatives
are featured for monitoring,
analysis and discussion at
every Board meeting
throughout the year
Performance
monitoring
Regular market updates
and reports about
competitive landscape
including new business
models and innovation
Regular updates on
business performance
relative to analyst
consensus forecasts
and business plan
Housing market updates
Presentations from senior
management providing
an update on Agency and
New Homes business
performance and
progress against the
Rightmove customer
value equation
30 rightmove.co.uk
Responsibility
Specific actions and information received during the year
Shareholder
engagement
Governance
and risk
People and
values
Investor feedback
received via the executive
directors throughout the
year, particularly post
results and investor
roadshows
Reviewed key risks
appearing on the risk
register. Discussed
changes in significant
risks affecting the
business and considered
emerging risks
Received reports from the
Audit Committee on the
findings of Rightmove
Assurance
Presentations by senior
managers throughout the
year to ensure the Board’s
exposure to the breadth
and depth of talent
supporting business
growth
Received monthly
reports on shareholder
composition and analysis
of significant changes to
the shareholder register
Presentation from UBS,
Rightmove’s corporate
broker explaining the key
drivers of the Group’s
valuation
Investor Consultation
eliciting feedback on the
proposed Remuneration
Policy received via the
Remuneration
Committee
Reviewed and approved
the Group’s regulatory
results announcements
and Annual Report
Briefings and
presentations from senior
management covering a
wide range of topics
including cyber and
information security risks,
corporate governance
and 2017 insurance
renewal programme
Consideration of Board
Strategy Review externally
facilitated by Korn Ferry
including analysis of
relevant experience and
skills on the Board to best
support the Group’s
achievement of its
strategic objectives
The Audit Committee
reported on Rightmove
Assurance’s review of
employee incentivisation
arrangements
The Remuneration
Committee reported on
the proposed executive
Remuneration Policy
Monitoring of Group
employee satisfaction
scores across a range
of criteria
There are usually seven or eight scheduled Board meetings
each year including one meeting or away day devoted to
consideration of the Group’s strategy. Additional meetings
can be arranged at short notice at the request of any
director, if required. In addition to scheduled Board meetings,
there is regular informal dialogue between all directors.
Directors receive Board papers well in advance of meetings
to allow sufficient time for review and consideration. If any
director raises a concern or challenges any aspect of the
business conducted at a Board meeting, the Company
Secretary will ensure their comments are appropriately
recorded in the Board minutes. In addition to formal Board
papers, directors receive monthly management and financial
reports on the operational and financial performance of the
business setting out actual and forecast financial
performance against approved budgets and other key
performance indicators. The Board also receives copies of
broker reports and press releases relating to the Group.
Board committees
The Board has established three principal committees,
the Audit Committee, the Remuneration Committee and
the Nomination Committee, to assist it in the execution
of its duties. The Chairman of each Committee reports on
the respective Committee’s activities at the subsequent
Board meeting.
The Committees’ terms of reference are available on the
Company’s corporate website, plc.rightmove.co.uk or by
request from the Company Secretary.
Each of the Committees is authorised, at the Company’s
expense, to obtain legal or other professional advice to
assist in carrying out its duties. No person other than a
Committee member is entitled to attend the meetings of
these Committees, except by invitation of the Chairman of
that Committee. Current membership of the Committees
is shown on page 34. The composition of these Committees
is reviewed regularly, taking into consideration the
recommendations of the Nomination Committee.
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernance
Governance | Corporate governance report continued
Committee
Role and terms of reference
Audit
Remuneration
Nomination
Reviews and reports to the Board on:
• Group financial reporting;
• the system of internal control and risk
management;
• independence and effectiveness of the
external audit process; and
• the internal audit plan, results and
effectiveness of Rightmove Assurance,
the outsourced internal audit function.
Recommends the appointment of the external
auditors to the Board for approval by shareholders
Makes recommendations to the Board on:
• the Remuneration Policy and strategy for
executive directors and senior managers;
• long-term incentive arrangements;
• the design and determination of targets
under any performance-related pay scheme;
and
• any major changes in employee benefit
structures
with the objective of ensuring that directors
and employees are incentivised and fairly
rewarded for their individual contributions to
the Group’s overall performance. Careful
consideration is given to the interests of
the shareholders and to the financial and
commercial health of the Group
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
Membership
required under the
terms of reference
At least three members
who should be
independent non-
executive directors
Minimum number of
meetings per year
Committee
report on pages
Three
36 to 40
Two
At least three members
who should be
independent non-
executive directors
47 to 48;
60 to 74
Two
At least three members,
the majority of whom
should be independent
non-executive directors
41 to 42
Board composition
The Board at the date of this report comprises three
executive directors and six non-executive directors,
including the Chairman. The three executive directors are
Nick McKittrick (Chief Executive Officer), Peter Brooks-
Johnson (Chief Operating Officer) and Robyn Perriss
(Finance Director). The non-executive directors are Scott
Forbes (Chairman), Peter Williams (Senior Independent
Director), Ashley Martin, Colin Kemp, Rakhi Goss-Custard
and Jacqueline de Rojas.
Biographical details of all directors at the date of this report
appear on pages 28 to 29 and details of Committee
membership appear on page 34.
Consideration of the Board size and composition is kept
under regular review by the Nomination Committee.
Board changes
As part of the organisational changes announced on
24 February 2017, Nick McKittrick, Chief Executive Officer,
will retire from the Board at the next AGM being 9 May 2017,
and Peter Brooks-Johnson (currently Chief Operating
Officer) will become the Chief Executive Officer from that
date. Nick McKittrick will remain with the Company through
to 30 June 2017 to ensure a smooth transition process.
Colin Kemp will also retire from the Board and relevant
Committees with effect from the AGM date, having served
nine years as a non-executive director.
Jacqueline de Rojas joined the Board on 30 December 2016.
All other directors served throughout the year.
32 rightmove.co.uk
Division of responsibilities
The posts of Chairman and Chief Executive Officer are separate and there are clear written guidelines to support their
division of responsibilities. The key responsibilities of the Board members are summarised below:
Chairman
Chief Executive Officer
Non-executive directors
Senior Independent Director
Company Secretary
Responsible for the leadership and governance of the Board, including:
• ensuring its effectiveness by creating and managing constructive relationships between
the executive and non-executive directors;
• ensuring there is ongoing and effective communication between the Board and its key
shareholders; and
• with the assistance of the Company Secretary, setting the Board’s agenda and ensuring that
adequate time is available for discussion and effective decision making, and that directors receive
sufficient, pertinent, timely and clear information.
Responsible for the day to day management of the Group, including:
• the operational and financial performance of the Group;
• developing the Group’s objectives and strategy and following Board approval, the successful
execution of strategy;
• effective and ongoing communication with shareholders; and
• chairing the Executive Committee.
The role of the non-executive directors is to:
• constructively challenge the executive directors; and
• monitor the delivery of the strategy within the risk and control framework set by the Board.
The non-executive directors bring wide and varied commercial experience and independent
judgement to the Board and the Committees’ deliberations.
The breadth of management, financial and listed company experience of the non-executive directors
is described in the biographical details on pages 28 to 29 and demonstrates a range of business
expertise that provides the right mix of skills and experience given the size of the Group.
The role of the Senior Independent Director is to:
• act in an advisory capacity to the Chairman;
• deputise for the Chairman if required;
• serve as an intermediary for other directors when necessary;
• be available to shareholders if they have concerns which they have not been able to resolve
through the normal channels of the Chairman and Chief Executive Officer or other executive
directors for which such contact is inappropriate; and
• conduct an annual review of the performance of the Chairman and, in the event it should be
necessary, convening a meeting of the non-executive directors.
The Company Secretary:
• monitors compliance with appropriate Board procedures;
• advises the Board on corporate governance matters;
• assists the Chairman in ensuring that all the directors have full and timely access
to relevant information; and
• assists the Chairman by organising directors’ induction and training programmes.
The Company Secretary also acts as Secretary to the Audit, Remuneration and
Nomination Committees.
The appointment and removal of the Company Secretary is a matter for Board approval.
Board diversity
We are committed to a Board comprised of directors from
different backgrounds with diverse and relevant experience,
perspectives, skills and knowledge. We believe that diversity,
including gender diversity, amongst directors contributes
towards a high performing and effective Board and business, so
we strive to maintain the optimal balance. We endorse both a
meritocratic Board appointment process and balanced gender
representation on the Board. As at 31 December 2016, 33%
of Board members were female and following the retirement
of Nick McKittrick and Colin Kemp in May 2017, this will rise to
43% with 50:50 representation at an executive director level.
We remain committed to recruiting the best people and
appropriate talent for the business and will seek to recruit
qualified directors with an ideal of achieving as near equivalent
gender balance on the Board as possible.
Rightmove plc annual report 2016
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Board independence
The Code provides that the Board should identify in
the Annual Report each non-executive director that
it considers to be independent. That is, to determine
whether the director is independent in character and
judgement and whether there are relationships or
circumstances which are likely to affect, or could
appear to affect, the director’s judgement.
The Board reviews non-executive director independence
on an annual basis taking into account such factors as their
contribution to unbiased and independent debate during
meetings. The Board considers that there is an appropriate
balance between the executive and non-executive directors
and that all non-executive directors are fully independent of
management and independent in character and judgement.
Colin Kemp completed nine years’ service as a non-
executive director in July 2016 and will retire following the
2017 AGM. The Board does not believe that the period from
his nine-year anniversary to his retirement date will impair
Colin Kemp’s independence in character or judgement.
To safeguard their independence, a director is not entitled to
vote on any matter in which they may be conflicted or have a
personal interest. Where necessary, directors are required
to absent themselves from a meeting of the Board while
such matters are being discussed. In cases of doubt, the
Chairman of the Board is responsible for determining
whether a conflict of interest exists.
The Chairman is also the Chairman of another publically
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 2016
Balance of directors
as at 31 December 2016
3
1
3
2
5
3
1
0-3
years
3-6
years
6-9
years
9+
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. All directors are subject to
election at the first AGM following their appointment and in
accordance with the Code, all directors will seek re-election
at the 2017 AGM with the exception of Nick McKittrick and
Colin Kemp, who have notified the Company of their
retirement from the Board as at this date.
Board and Committee membership and attendance
The membership of the Committees of the Board and
attendance at Board and Committee meetings for the year
under review are set out in the table below:
Remuneration
Committee
Audit
Committee
Nomination
Committee
Board
Total meetings
Scott Forbes
Nick McKittrick
Peter Brooks-
Johnson
Robyn Perriss
Colin Kemp
Ashley Martin
Peter Williams
Rakhi Goss-Custard
7
7
7
7
7
7
7
7
7
6
4(1)
–
–
–
6
1(2)
6
6
5
–
–
–
–
–
5
5
5
2
2
–
–
–
2
2
2
2(3)
(1) The Remuneration Committee Chairman invited the Chairman of the Board
to attend all Remuneration Committee meetings.
(2) The Remuneration Committee Chairman invited Ashley Martin to attend one
Remuneration Committee meeting as a guest for consideration of bonus and
long-term incentive plan performance targets.
(3) Rakhi Goss-Custard was invited to attend two Nomination Committee
meetings on a guest basis.
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 non-executive directors at which the performance of
the Chairman was also reviewed, without the presence of
the Chairman.
34 rightmove.co.uk
Annual General Meeting
The AGM provides an opportunity for shareholders to vote on
aspects of the Company’s business, meet the directors and
ask them questions. The AGM will be held on 9 May 2017 at
the offices of UBS Limited at 5 Broadgate, London EC2M 2QS.
The Company will arrange for the Annual Report and related
papers to be available on the Company’s corporate website
at plc.rightmove.co.uk or posted to shareholders (where
requested) at least 20 working days before the AGM.
The Company continues to comply with the Code with
the separation of all resolutions put to shareholders.
The Company proactively encourages shareholders to
vote at general meetings by providing electronic voting for
shareholders who wish to vote online and personalised proxy
cards to all shareholders, ensuring that all votes are clearly
identifiable. The Company presently takes votes at general
meetings on a show of hands on the grounds of practicality,
owing to the limited number of shareholders in attendance.
All proxy votes are counted and the level of proxy votes,
including abstentions, lodged for each resolution are
reported after each resolution and published on the
Company’s website.
Indemnification of directors
The Articles of Association of the Company allow for a
qualifying third party indemnity provision between the
Company and its directors and officers, which remains in
force at the date of this report. The Group has also arranged
directors’ and officers’ insurance cover in respect of legal
action against the directors. Neither our indemnity nor the
insurance provides cover in the event that a director is
proven to have acted dishonestly or fraudulently.
The Group has a Dealing Code setting out the process and
timing for dealing in shares, which is compliant with the
Market Abuse Regulation. The Dealing Code applies to all
directors, who are persons discharging managerial
responsibility, and other insiders.
Shareholder relations
The Board is accountable to shareholders for the performance
and activities of the Group and welcomes opportunities to
engage with shareholders.
Within the terms of the regulatory framework, the directors
have conducted regular dialogue with shareholders through
ongoing meetings with institutional investors and research
firms to discuss strategy and operational and financial
performance. Contact in the UK is principally with the Chief
Executive Officer and the Finance Director. The Chairman
attends selected investor meetings in the UK and the USA.
The Senior Independent Director is also available to
shareholders if they wish to supplement their communication,
or if contact through the normal channels is inappropriate.
The Board is kept informed of the views and opinions of
those with an interest in the Company’s investors through
reports from the Chief Executive Officer and the Finance
Director, as well as reports from the Company’s joint brokers,
UBS and Numis.
Shareholders are also kept up to date with the Group’s
activities through the half year results statement and Annual
Report and the investor relations section of its website, at
plc.rightmove.co.uk, which provides details of all the
directors, the financial calendar, latest news including
financial results, investor presentations and Stock Exchange
announcements.
Rightmove plc annual report 2016
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Audit Committee report
Ashley Martin
Chairman of the Audit Committee
Dear shareholder
I am pleased to present the 2016 report of the Audit
Committee (the Committee).
This report provides an overview of the principal activities
of the Committee and details how it has discharged its
responsibilities during the year.
The Committee is an essential part of Rightmove’s
governance framework to which the Board has delegated
oversight of the accounting, financial reporting and internal
control processes, the outsourced internal audit function
and the relationship with the external auditors. The key
responsibilities are set out on page 32 of the Corporate
Governance Report.
The Committee has completed a detailed programme
of work in 2016 in relation to its remit, including challenge
and debate in relation to the outsourced risk and assurance
programme delivered by PricewaterhouseCoopers LLP
(PwC), known as Rightmove Assurance, and ensuring it is
embedded throughout the business.
The Committee has also considered a number of new and
emerging business risks and regulatory requirements.
These included a review of the potential impact on
Rightmove of changes in the housing market environment
following the UK’s decision to leave the EU, and a review of
the requirements of the Finance Bill 2016 in relation to the
Group’s tax strategy together with compliance with the
Senior Accounting Officer Regime, and the reporting
requirements under the Modern Slavery Act 2015.
This report also outlines the significant accounting matters
which received our particular focus during the year. It seeks
to explain why the issues are considered significant and
together with the external auditors’ report provides
additional context for understanding the Group’s accounting
policies and financial statements for the year.
We were delighted to receive communication from the
Financial Reporting Council (FRC) that following a review
of our 2015 Annual Report and financial statements, there
were no queries or issues arising.
Looking forward to the next 12 months, the Committee will
continue to focus on the audit, assurance and risk processes
within the Group, including specific reviews in relation to
cyber security risk, quality of member data and data privacy.
I will be available at the AGM to answer any questions about
the work of the Committee.
A copy of the terms of reference of the Committee can be
found on the Company’s website at: plc.rightmove.co.uk.
Ashley Martin
Chairman of the Audit Committee
36 rightmove.co.uk
Composition and attendance at meetings
Committee members
Number of meetings attended
Ashley Martin
(Chairman of the Committee)
Peter Williams
Rakhi Goss-Custard
5
5
5
The Committee consists entirely of independent non-
executive directors, the biographical details of whom can be
found on pages 28 to 29. There has been no change to the
composition of the Committee during the year. The Board is
satisfied that both Ashley Martin and Peter Williams have
recent and relevant financial skills and experience. Both have
professional qualifications with the Institute of Chartered
Accountants of England and Wales. We consider that every
member of the Committee has competence relevant to
Rightmove’s business and the sector in which we operate.
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 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 Committee Chairman briefs the Board on the matters
discussed at each meeting and minutes of the Committee
meetings are circulated to the Board once approved. The
effectiveness of the operation of the Committee was
reviewed as part of the effectiveness review of the Board
and its committees in December 2016, details of which can
be found in the Nomination Committee report on page 42.
Each Board member responded to key questions on Board
performance and commented generally on the performance
of Board Committees. The Board received positive feedback
on the Committee’s performance, in particular, noting the
improved engagement between Rightmove Assurance and
the business during the year.
Financial reporting
The primary role of the Committee in relation to financial
reporting is to review with the assistance of both
management and the external auditor the half year results
statement and the Annual Report and financial statements
relating to the Group’s financial performance.
The key significant area of judgement considered by the
Committee in relation to the 2016 Annual Report is revenue
recognition; details of how this was addressed by the
Committee are provided below.
Revenue recognition
The key area of judgement is 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, including 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. KPMG investigated anomalies and outliers
identified and provided 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. A separate review of billing
and controls within the non-core revenue streams was also
undertaken by Rightmove Assurance. In addition, the
Committee received regular updates from management
discussing current customer offers and their impact on
revenue recognition.
The Committee was satisfied with the explanations provided
and conclusions reached.
Fair balanced and understandable
At the request of the Board, the Committee was asked to
consider whether the 2016 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.
The Committee was provided with an early draft of the
Annual Report in order to assess the strategic direction and
key messages being communicated. Feedback was provided
by the Committee in advance of the February Board
meeting, highlighting any areas where the Committee
believed further clarity was required. The draft report was
then amended to incorporate this feedback prior to being
tabled at the Board meeting for final comment and approval.
Rightmove plc annual report 2016
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When forming its opinion, the Committee reflected on the information it had received and its discussions throughout the year.
In particular, the Committee considered:
Is the report fair?
• Is the whole story presented and has any sensitive material been omitted which should have been
included?
• Are key messages in the narrative aligned with the KPIs and are they reflected in the financial
reporting?
• Is the reporting on the business areas in the narrative reporting consistent with the financial
reporting in the financial statements?
Is the report balanced?
• Do you get the same messages when reading the front end and back end of the Annual Report
independently?
• Are the alternative performance measures explained clearly with appropriate prominence?
• Are the key judgements referred to in the narrative reporting and significant issues reported in this
Committee Report consistent with disclosures of key estimation uncertainties and critical
judgements set out in the financial statements?
• How do these compare with the risks that KPMG are planning to include in their Auditors’ Report?
Is the report understandable?
• Is there a clear and cohesive framework for the Annual Report?
• Are the important messages highlighted appropriately throughout the Annual Report?
• Is the Annual Report written in easy to understand language and are the key messages clearly
drawn out?
• Is the Annual Report free of unnecessary clutter?
Following its review, the Committee is of the opinion that the
2016 Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position, performance,
business model and strategy.
Financial Reporting Council
During the year, Rightmove received a letter from the
FRC to confirm that the Annual Report for the year ended
31 December 2015 had been subject to review by its
Conduct Committee, which is responsible for reviewing and
investigating the annual accounts, directors’ and strategic
reports of UK public companies. The letter from the FRC
communicated that following this review, no questions or
queries have been raised. The FRC noted that its role was
not to verify information, but to consider compliance with
reporting requirements, and it did not take responsibility
for reliance on its letter by any party.
Internal audit
The Group established an internal audit function during 2015
known as Rightmove Assurance which is outsourced to PwC.
The aim of Rightmove Assurance is to provide independent
and objective assurance on the effectiveness of internal
control, risk management and governance processes.
This includes assurance that underlying controls and
processes are working effectively, as well as specialist
reviews that focus on emerging risks in new and evolving
areas of the business.
During the year and in accordance with the approved internal
audit plan, Rightmove Assurance carried out work in the
following areas:
• financial controls: review of the risks and controls in relation
to the revenue and billing processes within our other
revenue streams, being all business units other than
Agency and New Homes;
• business continuity planning and Crisis Response: a
comprehensive review and update of plans for the Milton
Keynes and London offices, and testing of business
continuity readiness;
• review of non-financial reporting KPIs: including
comparisons with public reporting by other quoted peers;
• reward and incentivisation: an assessment of the structure
and philosophy of reward within the Group for employees
excluding directors; and
• Senior Accounting Officer (SAO) regime: review of
Rightmove’s tax risk framework in advance of Rightmove
entering the SAO regime in 2017.
Reports setting out the principal findings of the Rightmove
Assurance reviews and agreed management actions were
discussed by the Committee.
Effectiveness of the internal audit process
The work of Rightmove Assurance has provided a key
additional source of assurance and support to management
and the Audit Committee on the effectiveness of internal
controls as well as providing guidance and recommendations
to further enhance the internal control environment, and
provide specialist insight into areas of change in the business.
38 rightmove.co.uk
The first review by the Committee of the effectiveness of
the Rightmove Assurance function took place in early 2016.
The evaluation was led by the Committee Chairman and
included consideration of stakeholder feedback on the
quality of Rightmove Assurance activity, including from PwC
themselves. The evaluation concluded that Rightmove
Assurance had added value to the business in its first year
in providing further assurance on financial controls and
increasing the robustness of the risk review process. It was
also seen as helpful in setting priorities for management
and allowing access to specialist input that Rightmove
does not have in-house. The evaluation had a number
of recommendations for PwC and Rightmove that were
incorporated into the 2016 Rightmove Assurance plan.
External audit
The Committee has primary responsibility for overseeing the
relationship with, and performance of, the external auditor.
KPMG LLP was re-appointed as the Group’s auditor in 2013
following an audit tender and, in accordance with the EU Audit
Directive implemented in 2016, the Group will be required
to put the external audit contract out to tender by 2023.
The external auditor is required to rotate the audit partner
responsible for the Group audit every five years. The current
lead partner, Karen Wightman, has been in place for four
years, and therefore the Committee and management will
work with KPMG to ensure a smooth transition to a new audit
partner, commencing during the 2017 audit process.
The Committee approved the fees of KPMG for the year
as set out in Note 6 of the financial statements.
Effectiveness of the external audit process
The effectiveness of the external audit process is dependent
on a number of factors. These include the quality, continuity,
experience and training of audit personnel, business
understanding, technical knowledge and the degree of
rigour applied in the review processes of the work
undertaken, together with appropriate audit risk
identification 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 2016 financial year, the Committee was satisfied that
there had been appropriate focus and challenge on the
primary areas of audit risk and concluded that the
performance of KPMG remained efficient and effective.
Non-audit services
The Committee discussed its responsibilities to safeguard
audit objectivity and independence as well as the needs of
the business and agreed that it was practical in certain
limited cases for the auditor to be assigned to other non-
audit project work due to their knowledge and expertise of
the business.
The Committee approved an updated non-audit fee policy
in November 2015 in advance of the EU Audit Directive
implemented in June 2016, and adopted by the FRC in its
Revised Ethical Standard 2016. Following the introduction of
updated FRC guidelines, the non-audit fee policy has been
updated to give management the authority to incur permitted
non-audit fees of up to £15,000 in any financial year without
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 of 70% of the average audit fees
over the three preceding financial years. Permitted non-audit
services are any services which are not identified as prohibited
services in the FRC Revised Ethical Standard 2016.
The level of non-audit fees as a proportion of the audit fee
has typically been very low at Rightmove. The non-audit
services provided by KPMG have historically related to tax
advisory services which are now prohibited, and as a result,
PwC were appointed as Rightmove’s tax advisors in 2016.
Details of the non-audit fee services provided by KPMG can
be found in Note 6 of the financial statements.
Additional areas of focus of the Committee during 2016
The Committee considers new and emerging risks as the
business and regulatory environment evolves. This resulted
in the following items being discussed by the Committee
during 2016:
• housing market: consideration of the potential impact on
Rightmove of the greater level of uncertainty in the housing
market following the vote to leave the EU;
• data protection, and use of consumer personal data;
• Modern Slavery Act 2015: review of the proposed steps to
be taken prior to the publication of a Modern Slavery Act
statement and approval of the draft statement; and
• consideration of the adoption of IFRS 15 Revenue from
Contracts with Customers on the Group’s financial
statements.
Internal controls
The Board has overall responsibility for the Group’s system
of internal controls and has established a framework of
financial and other controls which is periodically reviewed
in accordance with the FRC Internal Control: Guidance to
Directors publication for its effectiveness.
Rightmove plc annual report 2016
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The Board has taken, and will continue to take, appropriate
measures to ensure that the chances of financial
irregularities occurring are reduced as far as reasonably
possible by improving the quality of information at all levels in
the Group, fostering an open environment and ensuring that
financial analysis is rigorously undertaken. 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 has established the procedures
necessary to ensure that there is an ongoing process for
identifying, evaluating and managing the significant risks to
the Group. These procedures have been in place for the
whole of the financial year ended 31 December 2016 and up
to the date of the approval of these financial statements and
they are reviewed regularly.
The key elements of the system of internal control are:
• major commercial, strategic, competitive and financial risks
are formally identified, quantified and assessed and
discussed with the executive directors, after which they are
considered by the Board;
• a comprehensive system of planning, budgeting and
monitoring Group results. This includes monthly
management reporting and monitoring of performance
against both budgets and forecasts with explanations for
all significant variances;
• an organisational structure with clearly defined lines of
responsibility and delegation of authority;
• clearly defined policies for capital expenditure and
investment, including appropriate authorisation levels, with
larger capital projects, acquisitions and disposals requiring
Board approval;
• a comprehensive disaster recovery and business continuity
plan based upon:
• co-hosting of the rightmove.co.uk platforms across three
separate locations which is regularly tested and reviewed;
and
• the capability for employees to remote work from home
or a third party location in the event of a loss of one of our
premises which has been tested for the Milton Keynes
office during the year;
• 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;
• a treasury function which manages cash flow forecasts
and cash on deposit and counterparty risk; and
• whistleblowing and bribery policies of which all employees
are made aware, to enable concerns to be raised either with
line management or, if appropriate, confidentially outside
their line management.
Through the procedures outlined above, the Board, with
advice from the Committee, has considered all significant
aspects of internal control for the year and up to the date of
this Annual Report. No significant failings or weaknesses
were identified during this review. However, had there been
any such failings or weaknesses, the Board confirms that
necessary actions would have been taken to remedy them.
40 rightmove.co.uk
Nomination Committee report
Scott Forbes
Chairman of the Nomination Committee
Dear shareholder
I am pleased to present the 2016 report of the Nomination
Committee (the Committee).
The Committee’s role is to regularly review the structure,
size and composition of the Board with the objective of
matching the evolving skills, knowledge and experience
required by the business. The Committee seeks to optimise
the Board’s performance and ensure the continued ability
of the Group to compete effectively in the marketplace,
and make recommendations to the Board with regard to
any changes.
A copy of the terms of reference of the Committee can be
found on the Company’s website at: plc.rightmove.co.uk.
These were updated during the year with the key
responsibilities as follows:
Board
composition
and
appointments
• Review the structure, size and composition of
the Board and make recommendations on any
changes
• Identify and nominate suitable candidates
Organisation
and succession
planning
Board
evaluation
to fill Board vacancies
• Recommend the membership of the Audit and
Remuneration Committees
• Review the organisation and succession plan in
order to identify skills and expertise for the
Group to meet its strategic objectives
• Make recommendations to the Board
concerning plans for succession for both
executive and non-executive directors and, in
particular, for the key roles of Chairman and
Chief Executive Officer
• Evaluate the performance of the Board both
collectively and individually against agreed
performance criteria
• Determine the level of Board effectiveness
based on the assessment and recommend any
actions to improve performance
In 2016 the Committee reviewed the organisation and
succession plans, recommended the appointment of a new
non-executive director and conducted an internal Board
and Committee evaluation. Further details of the Board
evaluation can be found on page 42 of this report.
Jacqueline de Rojas was appointed as a non-executive
director on 30 December 2016, following an external search
by Korn Ferry International (Korn Ferry). The Board currently
consists of nine directors including six non-executive
directors, five of which are considered to be independent.
Following the retirement of Nick McKittrick (Chief Executive
Officer) and Colin Kemp (non-executive director) at the
2017 AGM, the Board will comprise seven directors (two
executive directors and five non-executive directors).
I will be available at the AGM to answer any questions about
the work of the Committee.
Scott Forbes
Chairman of the Nomination Committee
Composition and attendance at meetings
The following non-executive directors are members of the
Committee. The Committee met twice during the year and
attendance at the meetings is shown below:
Committee members
Number of meetings attended
Scott Forbes
(Chairman of the Committee)
Peter Williams
Ashley Martin
Colin Kemp
2
2
2
2
Rakhi Goss-Custard and Nick McKittrick attended both
meetings by invitation.
Membership
The Committee is comprised entirely of non-executive directors,
whose biographical details can be found on pages 28 to 29.
As at 31 December 2016 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
Officer is normally invited to attend the meeting to discuss the
annual organisation and succession plan.
Rightmove plc annual report 2016
41
Strategic reportFinancial statementsGovernance
Governance | Corporate governance report continued
The Chairman of the Company may not chair the
Committee in connection with any discussion about the
appointment of his successor. In these circumstances,
the Senior Independent Director will take the chair.
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.
Appointments are for a period of up to three years,
extendable by no more than two additional three-year
periods, so long as Committee members continue to
be independent.
Principal activities of the Committee during 2016
During the year the Committee has:
• reviewed the Board composition;
• reviewed the Board committees’ composition;
• approved the plans for the organisation and succession
of the executive directors and senior management;
• agreed the process for and considered actions based
upon the findings of the Board evaluation;
• recommended the appointment of a non-executive
director;
• considered the diversity of the Board and updated the
policy regarding gender diversity on the Board; and
• conducted an annual review of its terms of reference.
Board induction and training
All new non-executive directors joining the Board undertake
a tailored induction programme to meet their individual
needs. This covers for example: the strategic challenges
and opportunities facing the Group, financial performance,
operational activities (including meeting with members of
the senior management team and spending a day on the
road with a sales director meeting our customers), the
role of the Board including the matters reserved to it for
approval, and the responsibilities of the Board Committees.
New directors receive a comprehensive induction pack of
corporate information and a briefing from the Company
Secretary covering corporate governance, Group policies
and relevant regulations.
Individual Board members have access to training and can
seek the advice from independent professional advisers, at
the Group’s expense, where specific expertise or training is
required in furtherance of their duties.
The Committee considered the conclusions of the Board
Strategy Review externally facilitated by Korn Ferry in 2015,
and agreed a candidate profile for a new non-executive
director to join the Board in advance of Colin Kemp’s
retirement following the 2017 AGM. The Committee
recommended the appointment of Jacqueline de Rojas
as a recognised technology leader with relevant customer
engagement experience and an advocate for increased
opportunities for women and diversity in both the
boardroom and technology workplace. The Committee
has also agreed a candidate profile and initiated a search by
Korn Ferry for a non-executive director with suitable skills
and experience to replace Ashley Martin, when he retires
from the Board and as Audit Committee Chairman in
May 2018.
The Board has undertaken an internal self-assessment
during 2016. Directors were invited to provide feedback
via the Company Secretary on Board and Committee
performance and answer key questions relating to the
Board’s strengths, improvements during the year and which
business risks and development opportunities should
receive more focus. The Committee and Board discussed
the feedback at the Committee meeting in December 2016
and recommended a number of actions and areas of focus
for the Board during 2017. It was agreed that the Board has
benefited from access to members of senior management
and such interaction should continue at future board
meetings. Additionally, the Board seeks more opportunities
to enhance its understanding of the customer perspective.
The evaluation concluded that the Board and its
Committees continue to operate effectively with strong
individual contributions from executive directors, open,
constructive debate and a good balance of support and
challenge from the non-executive directors.
An internally facilitated review of the performance of the Board
and its Committees will again be conducted during 2017.
42 rightmove.co.uk
Governance | Directors’ report
The directors submit their report together with the audited
financial statements for the Company and its subsidiary
companies (the Group) for the year ended 31 December 2016.
Rightmove plc (the Company) is incorporated as a public
limited company registered in England number 6426485
with a registered office at Turnberry House, 30 Caldecotte
Lake Drive, Caldecotte, Milton Keynes MK7 8LE.
Pages 43 to 45, 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 1 to 27.
This report sets out the development and performance of
the Group’s business during the financial year, the position
of the Group at the end of the year and a description of the
principal risks and uncertainties facing the Group.
Dividend
An interim dividend of 19.0p (2015: 16.0p) per ordinary share
was paid in respect of the half year period on 4 November
2016, to shareholders on the register of members at the
close of business on 7 October 2016. The directors are
recommending a final dividend for the year of 32.0p
(2015: 27.0p) per ordinary share, which together with
the interim dividend, makes a total for the year of
51.0p (2015: 43.0p), amounting to £29,696,000
(2015: £25,547,000). Subject to shareholders’ approval at
the Annual General Meeting (AGM) on 9 May 2017, the final
dividend will be paid on 2 June 2017 to shareholders on the
register of members at the close of business on 5 May 2017.
Share capital
The shares in issue, including 2,271,725 shares held in
treasury (2015: 2,322,314) at the year-end amounted to
95,490,266 (2015: 97,741,977) ordinary shares of £0.01,
with a nominal value of £954,902 (2015: £977,419). The
holders of ordinary shares are entitled to receive dividends
as declared from time to time, and are entitled to one vote
per share at general meetings of the Company. Movements
in the Company’s share capital and reserves in the year are
shown in Note 22 and Note 23 to the financial statements.
Information on the Group’s share-based incentive schemes
is set out in Note 24 to the financial statements. Details of
the share-based incentive schemes for directors are set out
in the Directors’ Remuneration Report on pages 47 to 74.
Share buyback
The Company’s share buyback programme continued during
2016. Of the 15% authority given by shareholders at the 2016
AGM, a total of 2,251,711 (2015: 2,251,340) ordinary shares of
£0.01 each were purchased in the year to 31 December 2016,
being 2.4% (2015: 2.3%) of the shares in issue (excluding
shares held in treasury) at the time the authority was granted.
The average price paid per share was £39.12 (2015: £33.79)
with a total consideration paid (excluding all costs) of
£88,083,000 (2015: £76,071,000). Since the introduction
of the new parent company in January 2008, a total of
36,415,142 shares have been purchased of which 2,271,725
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 9 May 2017.
Shares held in trust
As at 31 December 2016, 343,275 (2015: 386,057)
ordinary shares of £0.01 each in the Company were held by
The Rightmove Employees’ Share Trust (EBT) for the benefit
of Group employees. These shares had a nominal value at
31 December 2016 of £3,433 (2015: £3,861) and a market
value of £13,398,000 (2015: £15,925,000). The shares held
by the EBT may be used to satisfy share-based incentives
for the Group’s employee share plans. During the year,
50,082 (2015: 184,842) shares were transferred to Group
employees following the exercise of share-based incentives.
Additionally, 20,250 shares were purchased by the EBT for
transfer to the Rightmove Share Incentive Plan Trust (SIP).
The terms of the EBT provide that dividends payable on the
shares held by the EBT are waived.
As at 31 December 2016, 50,150 (2015: 37,800) ordinary
shares of £0.01 each in the Company were held by the SIP
for the benefit of Group employees. These shares had a
nominal value at 31 December 2016 of £502 (2015: £378)
and a market value of £1,957,000 (2015: £1,559,000).
The shares held by the SIP are awarded as free shares to
eligible employees in January of each year and are held in
trust for a period of three years before an employee is
entitled to take ownership of the shares. During the year,
600 (2015: 500) shares were released early from the SIP in
relation to good leavers and retirees under the SIP rules.
Substantial shareholdings
As at the date of this report, the following beneficial interests
in 3% or more of the Company’s issued ordinary share
capital (excluding shares held in treasury) on behalf of the
organisations shown in the table below, had been notified
to the Company pursuant to Rule 5.1 of the Disclosure
Guidance and Transparency Rules. The information provided
below was correct as at the date of notification, where
indicated this was not in the current financial year. It should
be noted that these holdings are likely to have changed since
notified to the Company. However, notification of any change
is not required until the next applicable threshold is crossed.
Rightmove plc annual report 2016
43
Strategic reportFinancial statementsGovernance
Governance | Directors’ report continued
Shareholder
BlackRock Inc(2)
Marathon Asset
Management LLP(3)
Baillie Gifford & Co(3)
Axa Investment
Managers SA(3)
Standard Life
Investments(3)
Caledonia (Private)
Investments Pty
Limited(3)
Nature of holding
rights % (1)
Total voting
Indirect
Contracts for difference (CFD)
Stock lending
7,761,241
1,844,685
702,740
8.3%
2.0%
0.8%
Indirect 5,930,755 6.4%
Indirect 5,873,614 6.3%
Indirect 5,510,468 5.9%
Direct
Indirect
831,055
4,000,946
0.9%
4.3%
Direct 2,905,192 3.1%
(1) The above percentages are based upon the total voting rights share capital
(being the shares in issue less shares held in treasury) of 93,119,831 as at
24 February 2017.
(2) Date of notification was 13 February 2017.
(3) Date of notification preceded the 2016 financial year.
Directors
The directors of the Company as at the date of this report
are named on pages 28 to 29 together with their profiles.
The Articles of Association of the Company require directors
to submit themselves for re-appointment where they have
been a director at each of the preceding two AGMs and were
not appointed or re-appointed by the Company at, or since,
either such meeting. Following the provisions of the UK
Corporate Governance Code, all directors who have served
during the year and remain a director as at 31 December 2016
will retire and offer themselves for re-election at the
forthcoming AGM with the exception of Nick McKittrick and
Colin Kemp, who have notified the Company of their
retirement from the Board as at this date.
Jacqueline de Rojas will offer herself for election, this being
her first AGM following her appointment to the Board as
non-executive director on 30 December 2016.
The Board is satisfied that the directors retiring and standing
for re-election are qualified for re-appointment by virtue
of their skills, experience and contribution to the Board.
The executive directors have service contracts with the
Company which can be terminated on 12 months’ notice.
The appointments for the non-executive directors can be
terminated on three months’ notice.
The interests of the directors in the share capital of the
Company as at the date of this report, the directors’ total
remuneration for the year and details of their service
contracts and Letters of Appointment are set out in the
Directors’ Remuneration Report on pages 47 to 74. At the
date of this report all of the executive directors were deemed
to have a non-beneficial interest in 343,275 ordinary shares of
£0.01 each held by the EBT.
Research and development
The Group undertakes research and development activity in
order to develop new products and to continually improve
the existing property platforms. Further details are disclosed
in Note 2 to the financial statements on page 87.
Political donations
During the year the Group did not make any donations to any
political party or other political organisation and did not incur
any political expenditure within the meanings of sections
362 to 379 of the Companies Act 2006.
Annual General Meeting
The AGM of the Company will be held at the offices of UBS
Limited at 5 Broadgate, London, EC2M 2QS on 9 May 2017
at 10am. The Notice of Annual General Meeting will be
published in March 2017.
The resolutions being proposed at the 2017 AGM are
general in nature, including the renewal for a further year of
the limited authority of the directors to allot the unissued
share capital of the Company and to issue shares for cash
other than to existing shareholders (in line with the
Pre-Emption Group’s Statement of Principles). A resolution
will also be proposed to renew the directors’ authority to
purchase a proportion of the Company’s own shares.
The Company will again seek shareholder approval to hold
general meetings (other than AGMs) at 14 days’ notice.
Resolutions will be proposed to renew these authorities,
which would otherwise expire at the 2017 AGM.
Additional items of special business for the 2017 AGM are
resolutions seeking shareholder approval for the Rightmove
2017 Deferred Share Bonus Plan (DSP), and amendment and
renewal of the Rightmove 2008 Sharesave Plan (Sharesave).
The DSP has operated since 2009 as an incentive for
executive directors and certain senior employees, using
shares purchased by the EBT in the market. Shareholder
approval is required to allow the use of Treasury or new issue
shares. The Sharesave has operated since 2008 and enables
all Rightmove employees to save for three years and
purchase shares in the Company at a discounted price under
HMRC approved rules. Shareholder approval is required to
amend and renew the Sharesave for a further ten years.
44 rightmove.co.uk
Auditor
KPMG LLP has confirmed its willingness to continue in
office as auditor of the Group. In accordance with section
489 of the Companies Act 2006, separate resolutions for
the re-appointment of KPMG LLP as auditor of the Group
and for the Audit Committee to determine the auditor’s
remuneration will be proposed at the 2017 AGM.
Audit information
So far as the directors in office at the date of signing of the
report are aware, there is no relevant audit information of
which the auditor is unaware and each such director has
taken all reasonable steps to make themselves aware of any
relevant audit information and to establish that the auditor
is aware of that information.
Greenhouse gas emissions
Our report of greenhouse gas emissions in line with UK
mandatory reporting regulation is provided in the Corporate
Responsibility section of the Strategic Report on page 27.
Fair, balanced and understandable
The Board has concluded that the 2016 Annual Report is fair,
balanced and understandable and provides the necessary
information for shareholders and other readers of the
accounts to assess the Group’s position and performance,
business model and strategy.
Responsibility statement of the directors in respect
of the annual financial report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in
the consolidation taken as a whole; and
• the management report required by DTR 4.1.8R
(contained in the Strategic Report and the Directors’
Report) includes a fair review of the development and
performance of the business and the position of the
Company and the undertakings included in the Group
taken as a whole, together with a description of the
principal risks and uncertainties they face.
Signed on behalf of the Board:
Nick McKittrick
Chief Executive Officer
Robyn Perriss
Finance Director
24 February 2017
Rightmove plc annual report 2016
45
Strategic reportFinancial statementsGovernance
Governance | Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report
and the Group and parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and
parent Company financial statements for each financial year.
Under that law they are required to prepare the Group
financial statements in accordance with IFRSs as adopted by
the EU and applicable law and have elected to prepare the
parent Company financial statements on the same basis.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
parent company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They have
general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
Under company law the directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
parent Company and of their profit or loss for that period.
In preparing each of the Group and parent Company
financial statements, the directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance
with IFRSs as adopted by the EU; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and the parent Company will continue in business.
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate
Governance Statement that complies with that law and
those regulations.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
46 rightmove.co.uk
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 (the Company) together with
its subsidiary companies (the Group) for the year ended
31 December 2016.
The report is divided into two sections, the Remuneration
Policy Report and the Annual Report on Remuneration.
As required by the remuneration regulations, you will be
asked to vote separately on these two reports at our AGM
on 9 May 2017. The Remuneration Policy, which has been
subject to review this year by the Remuneration Committee
(the Committee) and consultation with our shareholders, is
set out on pages 50 to 59 . This year we have introduced a
section called ‘Remuneration at a glance’, to provide our
shareholders with a summary of the Company’s
performance for 2016 and proposed remuneration
arrangements for 2017.
Performance and reward
The Committee considers that the remuneration of the
executive directors appropriately and fairly reflects the
performance of the Group. As described in the Strategic
Report, our 2016 results show another year of strong
growth in organic revenue and underlying operating profit(1).
The increase in underlying operating profit(1) achieved
this year is particularly strong in light of uncertainties
influencing the general market place and once again
demonstrates the strength of the Rightmove business
model and brand and the effectiveness of our
management team.
In accordance with the Remuneration Policy, the Committee
has reviewed achievement against the bonus plan objectives
for 2016 and recommended an annual bonus payment of
92%. This echoes the strong growth in revenue and
underlying operating profit(1) of 15%, our continued market
leadership in audience and encouraging growth in Other
revenue, albeit not at the maximum opportunity. We were
also delighted that the employee engagement target was
met in full. Overall, performance for the year significantly
outperformed the business plan and the Committee was
therefore satisfied that it was appropriate to pay 92% of
the maximum bonus.
Turning to the Group’s longer term performance, which
continues to reflect the successful implementation of its
growth strategy over the last three financial years, the 2014
Performance Share Plan awards (measuring performance
from 1 January 2014 to 31 December 2016) will vest in full
in March 2017 as a result of delivering underlying basic
EPS(2) growth of 76% and TSR growth of 53% over the
performance period, which exceeded the respective
growth targets set of 70% and FTSE 250 Index +25%
over the three-year period. The Committee tested the
performance conditions, which were set at the beginning
of the performance period, and determined that the Group
had outperformed the maximum targets. It was therefore
satisfied that the awards should vest in full
Remuneration policy
In 2016, the Committee conducted a full review of the
executive Remuneration Policy, which was last approved
by shareholders in 2014.
The review indicated that the overall policy, which
provides below market fixed pay (base salary, pension
and benefits) and above market variable pay opportunity
(short and long-term incentives) for outstanding
performance, remains fit for purpose in this dynamic,
growth-orientated business. However, this policy has
resulted in levels of fixed pay falling further below market
(1) Before share-based payments and NI on share-based incentives.
(2) Before share-based payments and NI on share-based incentives with no related adjustment for tax.
Rightmove plc annual report 2016
47
Strategic reportFinancial statementsGovernance
Governance | Directors’ remuneration report continued
levels than the Committee felt was appropriate and, as a
consequence, longer-term incentives which are broadly in
line with the market as a percentage of salary, have also
fallen below market norms. The Committee therefore
considers that an adjustment to levels of fixed pay is
appropriate to ensure that the current policy continues to
effectively reward and incentivise our executive directors
and senior management team to deliver sustainable
performance in a growth-orientated business.
The Committee consulted the Company’s major
shareholders, together holding over 50% of Rightmove
shares, for their views on the new policy, including salary
proposals for 2017. Our shareholders were overwhelmingly
supportive of the proposed changes, subject to some useful
constructive feedback, which has been incorporated into the
proposed policy. The key elements of the Remuneration
Policy are summarised in ‘Remuneration at a glance’ on page
49 and detailed in the Remuneration Policy Report on pages
50 to 59.
Details of the changes to the salaries of the executive
directors are set out on page 61. In summary, increases of
3% in excess of the average of Rightmove’s employees were
awarded to the CEO and COO and an increase of 11.8%
above that of the workforce was awarded to the Finance
Director. These increases were introduced in January 2017
and reflect the increase in size and complexity of each role
and, in the case of the Finance Director, that on appointment
her salary was set significantly below the Committee’s
assessment of an appropriate rate for the role and the
performance and capability that she has demonstrated as
she has gained experience in the role.
The proposed Remuneration Policy will also incorporate
some minor modifications to bring it in line with current
market and best practice and is expected to operate for
three-years from shareholder approval in May 2017.
The Committee’s objective is to retain a remuneration
framework that rewards and incentivises our management
team to deliver Rightmove’s longer term strategy with a
clear emphasis on performance-related pay to reflect the
culture of the Group. Following the proposed changes,
the Remuneration Policy will continue to provide below market
levels of fixed pay with above market levels of variable pay
opportunity, subject to the achievement of challenging
performance measures linked to the Group KPIs. Variable pay is
geared toward long-term sustainable performance, with a high
level of annual bonus deferral into shares, long-term incentive
awards and higher share ownership guidelines.
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.
Chief Executive Officer retirement
On 23 February 2017, Nick McKittrick notified the Board
of his intention to retire as a director and Chief Executive
Officer following the AGM on 9 May 2017. A summary of the
remuneration arrangements in relation to his retirement are
set out on page 74.
Peter Williams
Chairman of the Remuneration Committee
48 rightmove.co.uk
Underlying basic EPS(2)
Underlying basic EPS(2)
Total Shareholder Return
Total Shareholder Return
81.0
81.0
100.3
100.3
121.4
121.4
142.8
142.8
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75% of 2014 Performance Share Plan (PSP) awards vest on
75% of 2014 Performance Share Plan (PSP) awards vest on
achievement of outstanding EPS growth. Annual EPS growth of +18%
achievement of outstanding EPS growth. Annual EPS growth of +18%
Year
Year
Governance | Remuneration at a glance
Underlying basic EPS(2)
Underlying basic EPS(2)
150
150
120
120
90
90
81.0
81.0
100.3
100.3
121.4
121.4
142.8
142.8
2016 Financial Performance
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Rightmove
Rightmove
FTSE 250
FTSE 250
FTSE 350
FTSE 350
25% of 2014 Performance Share Plan awards vest
25% of 2014 Performance Share Plan awards vest
in line with upper quartile relative TSR performance.
in line with upper quartile relative TSR performance.
Total Shareholder Return
Total Shareholder Return
200
200
160
160
120
120
80
80
40
40
+48%
+48%
+23%
+23%
+19%
+19%
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e
p
p
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r
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e
t
t
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n
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o
o
h
h
T
T
:
:
e
e
c
c
r
r
u
u
o
o
S
S
2014
2014
2013
2013
+15%
Year
Year
75% of 2014 Performance Share Plan (PSP) awards vest on
75% of 2014 Performance Share Plan (PSP) awards vest on
achievement of outstanding three-year EPS growth of +76%
achievement of outstanding three-year EPS growth of +76%
+15%
2016
2016
2015
2015
Dec 13
Dec 13
Rightmove
Rightmove
FTSE 250
FTSE 250
FTSE 350
FTSE 350
Underlying operating profit before tax(1)
0
0
Returns to shareholders
Dec 14
Dec 14
Dec 15
Dec 15
£131.3m
25% of 2014 Performance Share Plan awards vest
25% of 2014 Performance Share Plan awards vest
in line with upper quartile relative TSR performance.
in line with upper quartile relative TSR performance.
Dec 16
Dec 16
Long-term incentive plan – outcome against maximum targets: 100%
Underlying basic EPS(2)
Underlying basic EPS(2)
Total Shareholder Return
Total Shareholder Return
150
150
120
120
90
90
60
60
30
30
0
0
i
i
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p
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81.0
81.0
100.3
100.3
121.4
121.4
142.8
142.8
2013
2013
2014
2014
2015
2015
Year
Year
75% of 2014 Performance Share Plan (PSP) awards vest on
75% of 2014 Performance Share Plan (PSP) awards vest on
achievement of outstanding three-year EPS growth of 76%.
achievement of outstanding three-year EPS growth of 76%.
2016
2016
e
e
v
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m
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200
200
160
160
120
120
80
80
40
40
0
0
£
£
e
e
u
u
a
a
V
V
l
l
Rightmove
Rightmove
FTSE 250
FTSE 250
FTSE 350
FTSE 350
+53%
+53%
+24%
+24%
+20%
+20%
Dec 13
Dec 13
Dec 14
Dec 14
Dec 15
Dec 15
Dec 16
Dec 16
s
s
r
r
e
e
t
t
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S
S
This graph shows the value, by 31 December 2016 of £100 invested in
This graph shows the value, by 31 December 2016 of £100 invested in
Rightmove on 31 December 2013 compared with the value of £100
Rightmove on 31 December 2013 compared with the value of £100
invested in the FTSE 250 Index and the FTSE 350 Index.
invested in the FTSE 250 Index and the FTSE 350 Index.
25% of 2014 Performance Share Plan awards vest in line with upper quartile
25% of 2014 Performance Share Plan awards vest in line with upper quartile
relative TSR performance.
relative TSR performance.
Annual bonus plan – outcome against maximum targets: 92%
Underlying operating
profit before tax(1)
Growth in absolute website
visits relative to our nearest
competitor
Growth in Other revenue(3)
Employee survey respondents
who think ‘Rightmove is a great
place to work’
Target:
Actual:
£163.8m
£166.2m
Target:
50%
higher growth in absolute visits
than our nearest competitor
Actual:
Growth in absolute visits
17.75 times higher than
our nearest competitor
Target:
30%
23%
Actual:
growth
growth
Target:
95%
95%
Actual:
Pay and performance for 2016
Salary
Benefits & Pension
Cash Bonus
Deferred Shares
Nick
Peter
McKittrick Brooks-Johnson
£424,320
£1,973
£195,187
£292,781
£355,368
£17,822
£163,469
£245,204
Performance Shares
£1,212,662
£1,015,601
Robyn
Perriss
£281,112
£14,473
£129,312
£193,967
£803,392
Shareholder alignment
Shareholding Guidelines:
200% of salary for all executive directors from 2017
Proportion of variable awards received in shares:
85% of performance-related pay is awarded in Rightmove shares
Shares required to be retained on vesting until guidelines met:
Total remuneration
£2,126,923
£1,797,465
£1,422,256
50% of vested Deferred and Performance shares
Remuneration Policy 2017– 2020
Policy element
Fixed pay below comparative market median and variable incentive opportunity above median No change
Proposed change from 2014 policy
Base salaries executive directors receive inflationary adjustments to salaries in line with
all employees
Pension contributions up to 6% of base salary
Increases in base salary capped at 3% above wider
workforce increases(4)
No change
Annual bonus maximum 125% of salary, with 40% cash and 60% deferred into Company
shares for two years
Performance Share Plan awards granted at 200% of salary. No post-vesting holding period
Clawback applies to deferred annual bonus awards and Performance Share Plan awards
No change
No change. The Committee will have discretion to
introduce post-vesting holding periods for new
executive directors
No change
(1) Before share-based payments and NI on share-based incentives.
(2) Before share-based payments and NI on share-based incentives with no
related adjustment for tax.
(3) Other revenue is all revenue excluding Agency and New Homes.
(4) A one-off increase in the Finance Director’s salary of 13.8% is proposed in 2017 to
address her historically low starting salary level and recognise the capability she has
demonstrated as she has gained experience in that role.
Rightmove plc annual report 2016
49
Strategic reportFinancial statementsGovernance
Governance | Directors’ remuneration report continued
• Executive directors should have below market levels of
base salary, minimal benefits (which are made available
on the same basis to all Rightmove employees), but
with above market levels of variable pay potential.
This arrangement is designed to align the interests of the
executive directors with the interests of shareholders and
to reflect the dynamic, performance driven culture of the
Group. The Company will generally review market levels of
remuneration for executive directors with the assistance
of external, independent remuneration consultants and
consult shareholders on remuneration policy at least every
three years.
• Executive director remuneration should normally be
reviewed against the market every three years, further
changes to remuneration for the current executives should
be made infrequently. Annual pay reviews for executive
directors in intervening years should, in most instances,
be directly linked to the policies applied to all employees,
specifically with regard to cost of living rises in base salary
and changes in benefits.
• Executive directors should be principally rewarded for
the overall success of the business for which they have
collective responsibility. The Group has key short-term and
medium to long-term goals and executive directors should
be incentivised against these goals.
• Executive directors should not be able to gain significantly
from short-term successes, which subsequently prove
not to be consistent with growing the overall value of the
business. Hence a majority of any bonus payable in relation
to short-term strategic goals is required to be taken in the
form of shares in the Company which are deferred for a
further two years after the bonus target has been achieved.
The following table provides an overview of the Committee’s
Remuneration Policy, which has been designed to reflect the
principles described above:
Remuneration Policy Report (unaudited)
Introduction
This report sets out the Company’s policy on directors’
remuneration for the forthcoming year and, for subsequent
years, as well as information on remuneration paid to
directors for the financial year ended 31 December 2016.
The report has been prepared in accordance with the
Companies Act 2006, the Large and Medium-sized
Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (together the Act) and
the 2014 UK Corporate Governance Code (the Code).
In accordance with the Act this report comprises a Policy
Report and an Annual Report on Remuneration. The
Remuneration Policy was approved by shareholders in 2014
and, in compliance with the Act, a revised Policy Report will
be put to a binding shareholder vote at the 2017 AGM.
In practice, however, the Remuneration Committee
(the Committee) has applied some elements of the policy
detailed below from the beginning of 2017 and expects
to apply the new policy throughout the three-year period
from and subject to shareholder approval on 9 May 2017.
The Annual Report on Remuneration will be subject to an
advisory vote at the 2017 AGM. The parts of the report
which have been audited have been highlighted.
Remuneration Policy Report (the Policy Report)
This part of the Directors’ Remuneration Report sets out
the Remuneration Policy for the Company and has been
prepared in accordance with the Act.
The policy has been developed after taking into account
Rightmove’s pay philosophy that our executives should
be rewarded with demonstrably lower than market base
salaries and benefits and higher than market equity
rewards contingent upon the achievement of challenging
performance targets in accordance with the ‘best practice’
principles set out in the Code and the views of our major
shareholders.
The key principles of the Committee’s policy are unchanged
and are as follows:
• Remuneration arrangements should be simple to explain,
understand and administer.
• Remuneration arrangements should be designed to
provide executive directors with the opportunity to receive
a share in the future growth and development of the Group
which is regarded as fair by both other employees and
shareholders. This approach should allow the Company to
attract and retain the dynamic, self-motivated individuals
who are critical to the success of the business.
50 rightmove.co.uk
Remuneration Policy
Element of
remuneration
Purpose and
link to strategy
Operation
Maximum
opportunity
Performance
criteria
Directors’ current salaries are
set out on page 61.
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 and will be capped at
the average workforce
increase plus 3%, subject to
the Committee’s consideration
of the overall salary budget,
individual and Group
performance and factors in
the wider economy including
inflation.
Increases beyond those linked
to the workforce (in percentage
of salary terms) will only be
awarded where there is a
change of incumbent, in
responsibility, experience or
a significant increase in the
scale of the role and/or size,
value and/or complexity of
the Group.
The value of benefits may vary
from year to year depending on
the cost to the Company from
third party providers.
Salary
To provide a
base salary
which will attract
and retain high
calibre
executives to
execute the
Group’s
business
strategy.
Base salaries are normally reviewed
annually. The timing of any change
is at the Committee’s discretion
and will usually be effective from
1 January.
When considering the executive’s
eligibility for a salary increase, the
Committee considers the following
points:
• size and responsibilities of the
role;
• individual and Group performance;
• increases awarded to the wider
workforce; and
• broader economic and inflationary
conditions.
Executive directors’ remuneration
is 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.
Benefits
To provide
simple, cost-
effective,
employee
benefits which
are the same as
those offered
to the wider
workforce.
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.
Executive directors will be entitled
to receive new benefits on the
same terms as those introduced
for the whole workforce.
The Committee considers both
individual and Group performance
in a broad context when
determining base salary increases.
Not applicable
Rightmove plc annual report 2016
51
Strategic reportFinancial statementsGovernance
Governance | Directors’ remuneration report continued
Element of
remuneration
Purpose and
link to strategy
Operation
Pension
To provide
a basic,
cost-effective,
long-term
retirement
benefit.
Annual bonus
including
Deferred
Share Bonus
Plan (DSP)
To incentivise
and recognise
execution of the
business
strategy on an
annual basis.
Rewards the
achievement of
annual financial
and operational
objectives.
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.
The Company may introduce a
cash alternative to a pension
contribution where this would be
more tax efficient for the individual.
Whilst executives are not obliged
to join, the Company operates
a pension salary exchange
arrangement whereby executives
can exchange part of their salary
for Company paid pension
contributions. Where executives
exchange salary and this reduces
the Company’s National Insurance
Contributions the Company
credits the full saving to the
executive’s pension.
The annual bonus comprises a
cash award (40% of any bonus
earned) and a DSP award (60%
of any bonus earned). A greater
proportion of the annual bonus
may be deferred in future years
at the Committee’s discretion.
Deferred shares will vest after two
years and be potentially forfeitable
during that period.
Payments under the annual bonus
plan may be subject to clawback
in the event of a material
misstatement of the Group’s
financial results or misconduct.
Maximum
opportunity
6% of base salary
Performance
criteria
Not applicable
Maximum (% salary):
125% of base salary
The bonus is determined by and
based on performance against
a range of key performance
indicators which will be selected
and weighted to support delivery
of the business strategy.
The primary bonus metric will be
profit-based (e.g. underlying
operating profit before tax) with
targets set in relation to a carefully
considered business plan and
requiring significant out-
performance of that plan to
trigger maximum payments.
A minority of bonus will also be
earned based on pre-set targets
drawn from the Group’s other key
performance indicators relating to
underlying drivers of long-term
revenue growth.
Details of the performance
measures used for the current
year and the targets set for
the year under review and
performance against them is
provided on pages 61 to 62 and
67 to 68.
25% of the awards vest for
achieving the threshold
performance target. Bonus is
earned on a linear basis from
threshold to maximum
performance levels.
52 rightmove.co.uk
Element of
remuneration
Purpose and
link to strategy
Operation
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.
All-employee
Sharesave
Plan
Share
Incentive Plan
(SIP)
Provides all
employees with
the opportunity
to become
owners in the
Company on
similar terms.
To provide all
employees the
opportunity to
own shares in
the Company on
equal terms.
Share
ownership
guidelines
To provide
alignment
between the
executives and
shareholders.
The PSP was established in 2011
and 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.
The Committee has discretion to
introduce a two-year post-vesting
holding period for future executive
appointments to the Board.
A dividend equivalent provision
operates enabling dividends to be
paid (in cash or shares) on shares
at the time of vesting.
PSP awards may be subject to
clawback in the event of a material
misstatement of the Group’s
financial results or misconduct.
Executive directors are entitled to
participate on the same terms as
all other employees in the Group’s
Sharesave Plan, which has standard
terms.
Executive directors are entitled to
participate in the SIP on the same
terms as all other employees.
The SIP has standard terms
and currently only free shares
are offered. However, executive
directors routinely forfeit their
entitlement to any free share
awards.
The Committee may award free
shares to employees, subject to
the continued strong Group
performance. Share awards will
typically be made annually in
January and will be modest in value,
historically 50 shares per employee,
although this will differ with the
market value of the shares.
Executive directors are required
to retain at least half of any share
awards vesting or exercised (after
selling sufficient shares to meet
the exercise price and to pay any
tax liabilities due) until they have
met the shareholding guideline.
The Committee will regularly
monitor progress towards
the guideline.
Maximum
opportunity
Maximum (% salary):
200% of base salary
Performance
criteria
Awards vest based on three-year
performance against challenging
financial targets for EPS and
relative TSR performance.
Financial targets will determine
vesting in relation to at least half
of an award.
25% of the awards vest for
achieving the threshold
performance target. Awards vest
on a linear basis from threshold to
maximum performance levels.
The performance period for
financial targets and relative
TSR targets is three financial years,
starting with the year in which the
award is granted.
Participation limits are set by
HMRC from time to time.
None
Participation in the SIP is based
on HMRC rules. Share awards
are discretionary and made
within the SIP rules.
None
Shareholding guideline:
200% of base salary for
all executive directors.
Not applicable
Rightmove plc annual report 2016
53
Strategic reportFinancial statementsGovernance
Governance | Directors’ remuneration report continued
Element of
remuneration
Purpose and
link to strategy
Operation
Maximum
opportunity
Non-
executive
directors
To provide a
competitive fee
which will attract
and retain high
calibre
individuals and
reflects their
relevant skills
and experience.
Business
expenses
To reimburse
directors for
reasonable
business
expenses.
Performance
criteria
None
The fees for non-executive
directors (including the Company
Chairman) are reviewed periodically
(generally every three years).
Fees for the Chairman and
non-executive directors were
last reviewed in 2015 and are
set out on page 66.
Fee increases 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
increase the above fee levels
in the event that it is necessary
to recruit a new Chairman
or non-executive director of
an appropriate calibre in
future years.
Expenses vary from year to
year according to each
director’s responsibilities,
business activity and location.
Not applicable.
The Committee will consider
the Chairman’s fee, whilst the
non-executive directors’ fee is
considered by the wider Board,
excluding the non-executives.
Fee levels for each role are
determined after considering the
responsibility of the role, the skills
and knowledge required and the
expected time commitments.
Periodic benchmarking against
relevant market comparators,
reflecting the size and complexity
of the role, is used to provide
context when setting fee levels.
In exceptional circumstances,
where the normal time
commitment has been
substantially exceeded, an
additional fee may be paid at
the Board’s discretion.
Directors may claim reasonable
business expenses within the
terms of the Group’s expenses
policy and be reimbursed on the
same basis as all employees.
The Group may reimburse
business expenses which are
in future classified as taxable
benefits by HMRC.
Discretions maintained by the Committee in
operating the incentive plans
The Committee will operate the annual bonus plan, PSP,
Sharesave Plan and SIP according to their respective rules
and in accordance with the Listing Rules and HMRC rules
where relevant.
The Committee retains discretion, consistent with market
practice, in a number of regards to the operation and
administration of these plans. These discretions include, but
are not limited to, the following:
• the selection of participants in the respective plan;
• the timing of grant of an award (if any) and payments;
• the size of an award and/or a payment (with limits as
described in the table above);
• the extent of vesting based on the achievement of
performance targets and applicable exercise periods
where relevant;
• how to deal with a change of control (e.g. the timing of
testing performance targets) or restructuring of the Group;
• determination of a ‘good’/’bad’ leaver for incentive plan
purposes based on the rules of each plan and the
appropriate treatment chosen including the timing of the
delivery of shares;
• adjustments (if any) required in certain circumstances
(e.g. rights issues, corporate restructuring events and
special dividends); and
• the annual review of performance measures, targets and
weightings for the annual bonus plan and PSP from year
to year.
The Committee also retains the ability to adjust the targets
and/or set different measures for the annual bonus plan
and PSP if events occur (e.g. a material divestment or
acquisition) which cause it to determine that the conditions
are no longer appropriate and an amendment is required so
54 rightmove.co.uk
that the conditions achieve their original purpose and are
not materially less difficult to satisfy.
Any use of the above discretions would, where relevant,
be detailed in the Annual Report on Remuneration and if
appropriate, the subject of prior communication with the
Company’s major shareholders.
For the avoidance of doubt, all previous commitments or
entitlements agreed prior to the approval of this Policy or
appointment to the Board will be permitted to pay out on
their original terms or in line with the Policy in force at the
time they were agreed.
Selection of performance measures and how
targets are set
The performance metrics that are used for annual bonus
and long-term incentive plans are a subset of the Group’s
key performance indicators.
For the annual bonus, underlying operating profit before
tax(1) is the primary performance metric used as it is aligned
to the Group’s strategy of delivering profitable growth and
is a key financial performance indicator used within the
business. Consistent with previous years, operating profit is
measured on an underlying basis, to exclude any volatility in
relation to the Company’s share price in connection with the
IFRS 2 valuation and National Insurance charge on share-
based incentives granted. The underlying operating profit
before tax(1) target is set on a sliding scale based around
the business plan for the year, with 25% payable for
threshold performance.
The annual bonus also considers performance against other
operational metrics, including a traffic market share target,
growth in Other revenue and an employee engagement
target, for a minority of the bonus, with a sliding scale used
to determine performance against each measure.
Market share is a measure of the size and engagement of
our audience and the value which Rightmove brings to our
customers and therefore a challenging target to increase
Rightmove’s share of this audience is considered
appropriate by the Committee.
The Other revenue target measures growth in revenue
from businesses other than Agency and New Homes.
Since some of these businesses will be at an early stage of
development, we consider growth in revenue rather than
in operating profit to be the appropriate measure and note
that this element of the bonus is only a small proportion of
the total bonus opportunity.
(1) Before share-based payments and NI on share-based incentives
(2) Underlying basic EPS is reported before share-based payments and NI on
share-based incentives with no related adjustment for tax
For the PSP, awards are subject to a combination of
underlying basic EPS(2) (EPS) and relative TSR performance
conditions. EPS is considered the most appropriate financial
metric for Rightmove at this stage in its development (since
it is the measure of profitability that is most closely aligned
with shareholders’ interests and monitored on an ongoing
basis within the business). The Policy also recognises that
relative TSR should also be a performance measure in
order for there to be a clear alignment of executive and
shareholder interests. EPS targets are set based on sliding
scales that take account of internal financial planning and
external analyst forecasts. Only 25% of the EPS element
will pay out for threshold performance levels, with the
maximum award requiring substantial out-performance.
For TSR, the range of targets measure how successful the
Company is in out-performing the FTSE 350 Index with
25% of this part of the award vesting at the threshold
performance level, through to full vesting for 25% out-
performance of the Index over the three-year performance
period. For historic PSP awards, performance against the
FTSE 250 Index was the selected measure, however, the
Company has resided in the top quartile of the FTSE 250
for some time and the wider index is now considered more
appropriate for comparison purposes.
Performance targets do not apply to Sharesave or SIP
awards since these awards are structured to encourage
employees to become share-owners and to maintain tax-
favoured status the awards must operate on a consistent
basis for all employees.
The Company does not at the present time take account
of the ratio of CEO to employee pay but will keep this under
review as market and best practice develops and as
regulations evolve.
How the views of employees are taken into account
The Company has not to date felt it necessary to consult
directly with employees on executive remuneration matters.
However, the Committee is kept aware of pay and
employment conditions within the wider workforce when
setting executive directors’ remuneration policy.
Remuneration policy for executive directors
compared to other employees
The Committee will consider the proposed salary budget
for the whole Group when it is deciding on salary increases
for executive directors specifically.
In line with the Company’s strategy to keep remuneration
simple and consistent, benefits and pension arrangements
provided to executive directors are the same as those
offered to all Group employees.
Rightmove plc annual report 2016
55
Strategic reportFinancial statementsGovernance
Governance | Directors’ remuneration report continued
The extent to which annual bonuses are offered varies by
level of employee within the Group, with the quantum and
performance metrics used determined by the nature of the
role and responsibilities and market rates at that level.
Long-term incentive awards such as the DSP, are only
offered to senior management as those awards are more
heavily weighted towards performance-related pay and have
a stronger visibility on the value created for shareholders and
the reward for participants.
Shareholders’ views
The Committee considers it vitally important to maintain
open and transparent communication with the Company’s
shareholders. The Committee consulted major shareholders
representing over 50% of the Company’s share ownership
on proposed changes and continued suitability of the
Remuneration Policy. The shareholders who were consulted
were overwhelmingly supportive of the Policy proposals and
commented constructively in relation to several areas,
including future rises in basic salary and post-vesting holding
periods for long-term incentives. Shareholder feedback was
considered by the Committee and contributed to the
development of the overall Remuneration Policy.
Reward scenarios
The Company’s reward policy (as previously outlined) is illustrated below using three different performance scenarios:
minimum, on-target and maximum:
Scenario chart
0
0
0
£
2000
1800
1600
1400
1200
1000
800
600
400
200
0
£1,896
47%
29%
£977
23%
31%
£448
100%
46%
24%
£1,588
47%
29%
£818
23%
31%
46%
24%
£375
100%
Minimum
Target
Nick McKittrick
Chief Executive Officer
Maximum
Minimum
Target
Peter Brooks-Johnson
Chief Operating Officer
Maximum
£1,361
47%
29%
24%
£701
23%
31%
46%
Maximum
Target
Robyn Perriss
Finance Director
£321
100%
Minimum
Fixed pay
Bonus
LTIP
Assumptions:
1. Minimum = fixed pay only (salary + benefits + pension).
2. On-target = 55% payable of the 2017 annual bonus and 62.5% vesting of the 2017 PSP awards being the midpoint
between threshold vesting of 25% and maximum vesting of 100%.
3. Maximum = 100% payable of the 2017 annual bonus and 100% vesting of the 2017 PSP awards.
Base salary is as set at 1 January 2017. The value of taxable benefits is based on the cost of supplying those benefits
(using the cost as disclosed on page 65) for the year ended 31 December 2016. The executive directors have elected not
to partcipate in the Company’s pension arrangements.
The executive directors can participate in the Sharesave Plan and SIP on the same basis as other employees. The value that
may be received under these schemes is subject to tax approved limits. For simplicity, the value that may be received from
participating in these schemes has been excluded from the above charts.
As required by the regulations no assumption is made as to future share price growth for reward elements (deferred bonus
and long-term incentives) that are delivered in shares.
Amounts have been rounded to the nearest £1,000.
56 rightmove.co.uk
Recruitment and promotion policy
The Committee proposes an executive director’s remuneration package for new appointments in line with the principles
outlined in the table below:
Element of remuneration
Policy
Base salary
Benefits
Pension
Annual bonus
Base salary levels will be set based on the roles and responsibilities of the individual together with their
relevant skills and experience, taking into account the market rates for companies of comparable size
and complexity and internal Company relativities. In some circumstances (e.g. to reflect an individual’s
limited experience at a Plc board level) it may be considered appropriate to set initial salary levels below
the perceived market competitive rate. Phased increases, potentially above inflation, may then be
offered to achieve the desired market positioning over time, subject to an individual’s continued
performance and development in the role.
Benefits as provided to current executive directors. Where necessary the Committee may approve
the payment of relocation expenses to facilitate recruitment, and flexibility is retained for the
Company to pay legal fees and other costs incurred by the individual in relation to their appointment.
Defined contributions or a cash alternative at the level provided to current executive directors.
An annual bonus would operate in the same manner as outlined for the current executives (as
described above and in the Annual Report on Remuneration), although it would be pro-rated to reflect
the employment period during the bonus year. Flexibility will be retained to set equivalent objectives
for any new executive joining part way through a year.
The maximum bonus potential would not exceed 125% of base salary.
It would be expected that the bonus for a new appointment would be assessed on the same
performance metrics as that for the current executives on an ongoing basis. However, depending on
the timing and nature of appointment it may be necessary to set tailored performance criteria for their
first bonus plan.
Long-term incentives
A new appointment will be eligible to receive PSP awards as outlined in the policy table.
Buy-out awards
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. However, any award granted outside the normal award and performance cycle may be
pro-rated at the Committee’s discretion. The Committee may introduce post-vesting holding periods
under the PSP for new executives if it considers this an appropriate commitment in conjunction with
the shareholding guidelines.
The ongoing maximum award would not exceed 200% of base salary.
For an internal hire, existing awards would continue over their original vesting period and remain
subject to their terms as at the date of grant.
The new appointment would be eligible to participate in the Sharesave Plan and the SIP under the
same terms as all other employees.
To facilitate an external recruitment, it may be necessary to buy-out remuneration which would
be forfeited on leaving their previous employer. When determining the quantum and structure
of any buy-out awards the Committee will, as a minimum, take into account the following factors:
• the form of remuneration (cash or shares);
• timing of expected payment/vesting; and
• expected value (i.e. taking into account the likelihood of achieving the existing performance criteria).
Buy-out awards, if used, will be granted using the Company’s existing share plans to the extent
possible, although awards may also be granted outside of these schemes if necessary and as
permitted under the Listing Rules.
Rightmove plc annual report 2016
57
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Governance | Directors’ remuneration report continued
Directors’ service contracts and non-executive
directors’ terms of appointment
The Committee’s policy on service agreements for
executive directors is that they should provide for
12 months’ notice of termination by the Company and
by the executive. Any proposals for the early termination
by the Company of the service agreements of directors,
are considered by the Committee.
The service agreements for the executive directors allow
for lawful termination of employment by making a payment
in lieu of notice or by making phased payments over any
remaining unexpired period of notice. The phased payments
may be reduced if, and to the extent that, the executive finds
an alternative remunerated position.
In addition, any statutory entitlements or sums to settle or
compromise claims in connection with the termination
would be paid as necessary. The Company may also
provide a contribution toward reasonable legal fees or
outplacement services.
For Nick McKittrick a payment in lieu of notice will be related
to base salary, benefits and projected annual bonus pursuant
to the Group’s targets being achieved for the year (pro-rated
for any unexpired period of notice where appropriate). The
Committee is aware that the provision of annual bonus with
a payment in lieu of notice is no longer considered in line with
best practice. The provision within Nick McKittrick’s contract
is considered a legacy issue which would not be repeated in
any future director’s service contract.
For Peter Brooks-Johnson and Robyn Perriss a payment in
lieu of notice will be restricted to base salary and benefits.
In good leaver circumstances a bonus may be paid at the
normal time subject to achievement of the performance
conditions and pro-rating for the period worked in the year.
For awards granted under the PSP ‘good leaver’ status may
be determined, in certain prescribed circumstances, such
as death, ill health, disability, redundancy, transfer or sale of
the employing company, or other circumstances at the
discretion of the Committee. If defined as a ‘good leaver’,
awards will remain subject to performance conditions, which
will be measured over the performance period from grant to
the original vesting date, unless the Committee determine
to assess performance from grant to the date of cessation,
and which will be reduced pro-rata to reflect the proportion
of the performance period actually served. The Committee
retains the discretion to disapply time pro-rating in
exceptional circumstances and to accelerate the vesting
of awards for ‘good leavers’ in the event of death.
For awards granted under the DSP, ‘good leaver’ status
may be determined for reasons of death, injury, disability,
redundancy, transfer or sale of the employing company or
other circumstances at the discretion of the Committee.
If defined as a ‘good leaver’, awards will be retained and vest
on the original vesting date, save as above in the event of
death, when the Committee has the discretion to
accelerate vesting.
Scott Forbes’ appointment may be terminated by either
party giving to the other not less than three months’ notice
in writing. The Company may also terminate by making a
payment in lieu of notice. Scott Forbes is not contractually
entitled to any other benefits on termination of his contract.
The Letters of Appointment for the non-executive directors
provide for a term of up to two three-year periods and a
possible further three-year term (subject to re-election
by shareholders and subject to the director remaining
independent). The appointments may be terminated with
a notice period of three months on either side and the
Letters of Appointment set out the time commitments
required to meet the expectations of their roles.
Copies are available for inspection on request to the
Company Secretary.
Further details of all directors’ contracts and Letters of
Appointment are summarised overleaf:
58 rightmove.co.uk
Executive directors
Nick McKittrick (Chief Executive Officer)(2)
5 March 2004
7 February 2006
12 12 years 11 months
Date of appointment
Letter of Appointment(1)
Date of contract/
Notice
(months)
Length of service at
24 February 2017
Peter Brooks-Johnson(3)
Robyn Perriss(4)
Non-executive directors
Scott Forbes (Chairman)
Colin Kemp
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
10 January 2011
22 February 2011
30 April 2013
1 May 2013
12
12
6 years 1 month
3 years 10 months
13 July 2005
21 February 2006
3 July 2007
4 December 2007
11 June 2009
9 June 2009
3 February 2014
3 February 2014
28 July 2014
28 July 2014
30 December 2016
10 October 2016
3
3
3
3
3
3
11 years 7 months
9 years 7 months
7 years 8 months
3 years 1 month
2 years 7 months
2 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 16 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 11 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 9 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. None of the executive directors currently hold any
outside directorships.
Rightmove plc annual report 2016
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Governance | Directors’ remuneration report continued
Annual Report on Remuneration
Remuneration Committee role and membership
Terms of reference
The primary role of the Committee is to make
recommendations to the Board as to the Company’s overall
policy and framework for the remuneration of the executive
directors and the Chairman of the Board. The remuneration
and terms of appointment of the non-executive directors
are determined by the Board as a whole.
In accordance with the Code, the Committee also
recommends the structure and monitors the level of
remuneration for the first layer of management below Board
level. The Committee is also aware of, and advises on, the
employee benefit structures throughout the Group and
ensures that it is kept aware of any potential business risks
arising from those remuneration arrangements.
The Committee has formal terms of reference which are
reviewed annually and updated as required. These are
available on the Company’s website at plc.rightmove.co.uk
or on request from the Company Secretary.
Membership
The following independent non-executive directors were
members of the Committee during 2016. During the year
the Committee met six times and attendance at the
meetings is shown below:
Committee Members
Number of meetings attended
Peter Williams (Chairman of the Committee)
Colin Kemp
Rakhi Goss-Custard
6
6
6
The quorum for meetings of the Committee is two
members. The Committee will meet at such times as may be
necessary but will normally meet at least five times a year.
The Company Secretary acts as Secretary to the Committee.
Only members of the Committee have the right to attend
Committee meetings. The Chairman of the Committee
has requested that the Chairman of the Board attend the
meetings except during discussions relating to his own
remuneration. The Chief Executive Officer may also be
invited to meetings and the Committee takes into
consideration his recommendations regarding the
remuneration of executive colleagues and the first 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 Hewitt
(part of Aon plc), which is a member of the Remuneration
Consultants Group and has signed up to its Code of Conduct,
has been retained as the Committee’s remuneration
advisor since 2011. The terms of engagement between
the Company and NBS are available from the Company
Secretary on request.
The total fees paid to NBS in respect of services to the
Committee during the year were £42,000.
During 2016 NBS also provided services to the Company
in connection with the valuation of share-based incentives
(as required by IFRS 2) and confirmed that, in its view, these
services did not present a conflict of interest with the other
services provided to the Committee. The Committee
reviews its relationship with external advisors on a regular
basis and continues to believe that there are no conflicts
of interest.
What has the Committee done during the year?
The Committee met six times during the year to consider
and, where appropriate, approve key remuneration items
including the following:
Pay and incentive plan reviews
• annual review and approval of executive directors’ base
salaries and benefits;
• review of year-end business performance against relevant
performance targets to determine annual bonus payouts
and vesting of long-term incentives;
• review and approval of appropriate benchmarks and
performance measures for the annual performance
related bonus and 2017 PSP awards to ensure measures
are aligned with strategy and that targets are appropriately
stretching;
• ongoing monitoring of senior management remuneration
structures; and
• approval of share awards granted under the Deferred Share
Bonus Plan (DSP) and the Rightmove Performance Share
Plan (PSP).
Governance and strategy
• review of the Remuneration Policy for executive directors
and consultation with major shareholders on the proposed
policy before submitting it for shareholder approval at the
2017 AGM;
• review and approval of the 2016 Directors’ Remuneration
Report;
• review of the 2016 AGM voting and feedback from
institutional investors;
• evaluation of the Committee’s performance during the
year; and
• review of the Committee’s terms of reference.
60 rightmove.co.uk
Application of policy for year ending
31 December 2017
Salaries
The executive directors’ salaries for the 2017 financial year
are set out in the table below:
Salary
1 January 31 December
2016
2017
Salary Workforce
increase
Executive directors
Nick McKittrick
£445,536 £424,320
Peter Brooks-Johnson £373,136 £355,368
plus Change
3%
3%
5%
5%
Robyn Perriss
£320,000 £281,112
11.8% 13.8%
The 5% increase in Nick McKittrick’s and Peter Brooks-
Johnson’s salaries represents an increase of 3% above the
average workforce increase of 2% for 2017, primarily to
recognise the scale and complexity of their roles and also to
address the relatively low pay of these executives compared
with market norms. Robyn Perriss has been awarded an
additional increase of 11.8% above the average all employee
pay rise to reflect the lower starting salary awarded on her
appointment to the Board in her first role as a Finance
Director and in recognition of the performance and capability
she has demonstrated as she has gained experience in that
role. The salaries remain well below the market median for
executives in comparable companies.
On 24 February 2017 the Company announced the
retirement of Nick McKittrick as Chief Executive Officer and
the appointment of Peter Brooks-Johnson as his successor,
with effect from 9 May 2017. Further details are disclosed
on page 74.
Pension and other benefits
The Group operates a stakeholder pension plan for
employees under which the employer contributes 6% of
base salary, subject to the employee contributing a minimum
of 3% of base salary. Peter Brooks-Johnson and Robyn
Perriss participated in the pension plan during the year.
However, the executive directors have chosen not to
participate in this arrangement in future years. 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 2017 financial year will be consistent
with the policy detailed on page 52 of the Remuneration
Policy section of this report in terms of maximum bonus
opportunity, deferral and clawback provisions. The
mechanism through which the clawback can be implemented
(enabling both the recovery and withholding of incentive pay)
enables the Committee to (i) reduce the cash bonus earned
in a subsequent year and/or reduce outstanding DSP/PSP
share awards (i.e. withholding provisions may be used to
effect a recovery) or (ii) for the Committee to require that a
net of tax balancing cash payment be made to the Company.
The performance measures have been selected to reflect a
range of financial and strategic targets that continue to
support the key objectives of the Group.
The performance measures and weightings will be as
follows:
Measure
As a % of maximum bonus opportunity
Financial targets
Underlying operating profit before tax(1)
Strategic targets
Traffic market share(2)
Other revenue(3)
Employee engagement(4)
(1) Operating profit before share-based payments and NI on
share-based incentives.
(2) Measured on a time on site basis.
(3) Revenue excluding Agency and New Homes.
(4) Based on the results of the annual employee survey.
65%
15%
15%
5%
In relation to the financial target a challenging sliding scale
will operate with 25% of the maximum bonus opportunity
payable at the threshold underlying operating profit target
relative to the 2017 business plan through to 100%
becoming payable for significant outperformance relative
to the plan. A greater proportion of the award will be paid
for exceeding on-target performance.
The weighting of all performance measures are unchanged
from 2016.
The targets themselves, as they relate to the 2017 financial
year, are deemed to be commercially sensitive. However,
retrospective disclosure of the targets and performance
against them will be provided in next year’s Annual Report
on Remuneration to the extent that they do not remain
commercially sensitive at that time.
Long-term incentives
The award levels under the PSP, originally approved in 2014,
remain at 200% of base salary for all executive directors.
Consistent with current market practice and previous years,
awards to the executive directors under the PSP in 2017 will
be subject to a mixture of EPS (75% of awards) and relative
TSR (25% of the awards) performance conditions. The 2017
targets are as follows:
Rightmove plc annual report 2016
61
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Governance | Directors’ remuneration report continued
EPS performance condition
The Group’s EPS growth will be measured over the period of
three financial years (2017 to 2019). The EPS figure used will
be equivalent to the Group’s basic underlying EPS (before
share-based payments, National Insurance on share-based
incentives and no related adjustment for tax). With a view to
ensuring appropriately stretching but achievable targets are
set in light of market expectations for the Group, the
following range of targets will apply to the 2017 awards:
Underlying basic EPS growth
from 2017 to 2019(1)
% of award vesting
(maximum 75%)
Chairman and non-executive directors’ fees
The Chairman and non-executive fees were last reviewed in
a market context in 2015 and increased to current levels. In
line with our policy they will be reviewed periodically, usually
every three years, with the next increase anticipated in 2018.
The basic non-executive fee is £50,000 with an additional
£10,000 fee per annum paid for the chairing of the Audit
and Remuneration Committees and a further £5,000 fee
paid to the Senior Independent Director as detailed in the
table below:
Less than 20%
20%
50%
0%
18.75%
75%
Between 20% and 50%
Straight-line vesting
(1) The benchmark underlying basic EPS for the financial year 2016 from which
these targets will be measured is 142.8p.
As in prior years, the targets that are intended to operate
for the 2017 PSP awards were set to be appropriately
demanding in light of the Group’s internal planning, external
market expectations for future growth and the current
trading environment, the targets are considered to provide a
realistic incentive at the lower end of the performance range
but require exceptional performance to achieve full vesting.
On this basis, the Committee is satisfied that the range of
targets are appropriately demanding, and no less challenging
than the range of targets set for 2016 awards.
Relative TSR performance condition
The vesting schedule for the relative TSR element of
executive directors’ 2017 PSP awards is set out below.
Relative TSR will be assessed against the FTSE 350 Index,
reflecting the Company’s size in terms of market
capitalisation. Performance will be measured over three
financial years.
TSR performance of the Company
relative to the FTSE 350 Index(1)
% of award vesting
(maximum 25%)
Less than the Index
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.
Scott Forbes (Chairman)
£170,000
£170,000
Annual fee
1 January 2017
Annual fee
31 December 2016
Colin Kemp
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
£50,000
£60,000
£65,000
£50,000
£50,000
£50,000
£60,000
£65,000
£50,000
£274(1)
(1) Fee for 2016 is for two days from her appointment on 30 December 2016.
Statement of shareholder voting at AGM
At the AGM on 5 May 2016, 94.91% 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
for
against
% Votes Votes
against withheld(1)
Directors’
Remuneration 77,382,308 94.91 4,146,773 5.09
Report
879,511
(1) A vote withheld is not a vote in law and is not counted in the calculation of the
proportion of votes cast ‘For’ and ‘Against’ a resolution.
In line with the Company’s commitment to ongoing dialogue
with its shareholders, meetings are offered, where
appropriate, to understand the reasons for any potential or
actual opposition to the Company’s Remuneration Policy.
Changes are made to our Policy where it is considered
appropriate to do so.
62 rightmove.co.uk
Review of past performance
Share price performance
In 2016, the Company’s share price ended the year at £39.03,
down 5.4% year on year (the FTSE 250 Index was up 3.7%
and the FTSE 350 Index was up 12.5%). On a three-year basis
the share price has increased by 42.4% and has continued to
outperform both the FTSE 250 and FTSE 350 Indices over
that period as shown in the graphs below.
Total shareholder return (TSR)
The first graph below compares the TSR of Rightmove’s
shares against the FTSE 250 Index and the FTSE 350
Index for the three-year period from 1 January 2014 to
31 December 2016. TSR is the product of movements in
the share price plus dividends reinvested on the ex-dividend
date. TSR provides a useful, widely used benchmark to
illustrate the Company’s performance over the last three
years. Specifically, it illustrates the value of £100 invested
in Rightmove’s shares and in the 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 historically for the purposes of measuring relative
performance for PSP awards. From 2016 as Rightmove
continues to be ranked towards the top of that Index in
terms of market capitalisation, it was felt to be more
appropriate to use the FTSE 350 Index for the purpose of
comparing TSR performance and therefore this will be used
as the criteria applied to 25% of the PSP awards to be
granted in March 2017.
The graphs below illustrate, for statutory purposes, the
TSR of Rightmove’s shares against the FTSE 250 Index
and the FTSE 350 Index for the three and eight years to
31 December 2016.
TSR Graph – three years
Total Shareholder Return
TSR Graph – eight years
Total Shareholder Return
)
£
(
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u
a
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l
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1500
1000
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+131%
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Rightmove
FTSE 250
FTSE 350
Source: Thomson Reuters
Rightmove
FTSE 250
FTSE 350
Source: Thomson Reuters
This graph shows the value by 31 December 2016 of £100 invested in Rightmove on
31 December 2013 compared with the value of £100 invested in the FTSE 250 Index
and the FTSE 350 Index, on a daily basis.
This graph shows the value by 31 December 2016, 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.
Rightmove plc annual report 2016
63
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Governance | Directors’ remuneration report continued
Total remuneration for the Chief Executive Officer
The table below shows the total remuneration figure for the Chief Executive Officer over an eight-year performance period.
The total remuneration figure includes the annual bonus and long-term incentive awards that vested based on performance
in those years.
Year
2016
2015
2014
2013
2012
2011
2010
2009
Executive
Nick McKittrick
Nick McKittrick
Nick McKittrick
Nick McKittrick
Ed Williams(1)
Ed Williams
Ed Williams
Ed Williams
Ed Williams
Total single figure
£
Annual
bonus outturn
(% of maximum)
Long-term
incentive outturn
(% of maximum)
2,126,923
2,300,349
1,599,610
2,199,335
1,531,515
2,219,882
4,934,942
652,800
627,641
92%
100%
70%
85%
n/a
90%
100%
100%
100%
100%
100%
92%
100%
100%
100%
100%
–(2)
–(2)
(1) Ed Williams was Chief Executive Officer until his retirement on 30 April 2013. Nick McKittrick was appointed Chief Executive Officer at this time.
(2) The table above includes share-based incentive awards in the period that the associated performance conditions, excluding service conditions are satisfied.
Certain pre-float share option awards prior to 2006, which had only service conditions and no performance conditions would have been included in the single figure
remuneration table in the year of grant in accordance with Schedule 8 of the Act. The table above therefore excludes £4,151,532 and £2,026,674 of awards with
no performance conditions, which vested in 2010 and 2009 respectively.
64 rightmove.co.uk
Directors’ remuneration (audited)
The information included below up to and including page 72 is audited.
The remuneration of the directors of the Company during the year for time served as a director is as follows:
Fixed pay
Salary/Fee
£
Benefits(1)
£
Pension
£
Fixed pay
subtotal
£
Annual
bonus(2)
£
incentives
(PSPs)(3)
£
Performance related pay
Long-term Performance
Total
related pay remuneration
in 2016
£
subtotal
£
Executive directors
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Non-executive directors
Scott Forbes
Colin Kemp
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
424,320
355,368
281,112
1,973
1,973
1,240
–
426,293
487,968 1,212,662 1,700,630 2,126,923
15,849
373,190
408,673 1,015,601 1,424,274 1,797,464
13,233
295,585
323,279
803,392 1,126,671 1,422,256
170,000
50,000
60,000
65,000
50,000
274(4)
–
–
–
–
–
–
–
–
–
–
–
–
170,000
50,000
60,000
65,000
50,000
274
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
170,000
50,000
60,000
65,000
50,000
274
(1) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in respect of the full year results for the year ended 31 December 2016 including the deferred element of 60%.
(3) The value of the nil cost PSPs vesting is calculated by taking the number of nil cost options expected to vest in March 2017 (including dividend roll-up), which are
dependent on the three-year performance period ended 31 December 2016 and multiplying by the year end closing share price of £39,03.
(4) Fee for two days from appointment on 30 December 2016 to year end.
Rightmove plc annual report 2016
65
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Governance | Directors’ remuneration report continued
The remuneration of the directors of the Company during 2015 was:
Fixed pay
Salary/Fee
£
Benefits(1)
£
Pension
£
Fixed pay
subtotal
£
Annual
bonus(2)
£
incentives
(PSPs)(3)
£
Performance related pay
Long-term Performance
Total
related pay remuneration
in 2015
£
subtotal
£
Executive directors
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Non-executive directors
Scott Forbes
Jonathan Agnew
Colin Kemp
Ashley Martin
Judy Vezmar
Peter Williams
Rakhi Goss-Custard
408,000
341,700
270,300
1,931
1,835
1,834
–
409,931
510,000 1,380,418 1,890,418 2,300,349
22,860
366,395
427,125 1,035,345 1,462,470 1,828,865
21,816
293,950
337,875
638,399(6) 976,274 1,270,224
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) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in respect of the full year results for the year ended 31 December 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 as Remuneration Committee Chairman and Senior Independent Director.
(6) These relate to nil cost PSPs granted to Robyn Perriss prior to her appointment as director.
Defined contribution pension
The Group operates a stakeholder pension plan for employees under which the employer contributes 6% of base salary,
subject to the employee contributing a minimum of 3% of base salary. Nick McKittrick chose not to participate in this
arrangement. Peter Brooks-Johnson and Robyn Perriss were members of the stakeholder pension plan during 2015 and
the Company contributed £22,860 and £21,816 that year respectively; both directors elected to withdraw from the pension
plan during 2016 with contributions made of £15,849 and £13,233 respectively. The Company does not contribute to any
personal pension arrangements.
66 rightmove.co.uk
How was pay linked to performance in 2016?
Annual bonus plan
The incentive for the financial year ended 31 December 2016 was in the form of a cash bonus of up to 50% of salary and a
DSP bonus of up to 75% of salary (i.e. 125% in total). The bonus (both cash and DSP elements) was determined by a mixture
of underlying operating profit performance (65%) and key performance indicators (35%) relating to underlying drivers of
long-term revenue growth.
When comparing performance against the 2016 bonus targets set, the Committee determined that 92% of the maximum
achievable cash and DSP bonus should be paid to the executive directors. Accordingly, a cash bonus of 46% of base salary will
be paid to the executives and 69% of base salary will be granted to the executives under the DSP, which will be deferred until
March 2019. More details are provided in the table below:
Measure
Hurdle
Financial targets
Underlying operating
profit before tax(1)
Targets:
• £153.3m: 25% payout
• £163.8m: 100% payout
Strategic targets
Traffic market share Growth in absolute visits on 2015
compared to nearest competitor:
• Same absolute growth: 25% payout
• 50% higher absolute growth:
Other revenue(2)
Employee
engagement(3)
100% payout
• Growth of 20%: 25% payout
• Growth of 30%: 100% payout
Percentage of respondents to the
employee survey who say ‘Rightmove
is a great place to work’:
• 90%: 25% payout
• 95%: 100% payout
As a % of
maximum bonus
opportunity
Actual performance achieved
Resulting
bonus
% achieved
65% Underlying operating profit achieved:
65%
£166.2m
The 2016 profit represented growth
of 15% on 2015
15% Growth in absolute visits was 17.75 times
higher than our nearest competitor
15% Revenue increased from £14.5m to
£17.8m, an increase of 23%
5% 95% of respondents say ‘Rightmove
is a great place to work’
15%
7%
5%
92%
Total
100%
(1) Operating profit before share-based payments and NI on share-based incentives.
(2) The targets relate to all revenue streams except Agency and New Homes.
(3) Based on the results of the annual employee survey.
Long-term incentives
The PSP awards granted in March 2014 were subject to EPS (75% of the awards) and relative TSR (25% of the awards)
performance conditions that related to the three-year period ended 31 December 2016.
The vesting schedule for the relative TSR element of executive directors’ 2014 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
Rightmove plc annual report 2016
67
Strategic reportFinancial statementsGovernance
Governance | Directors’ remuneration report continued
At the end of the performance period, Rightmove’s TSR was 53% compared to 24% for the FTSE 250 Index. As this level of
outperformance is 29% higher than the Index, these options will vest in full from 3 March 2017.
Rightmove’s EPS growth is measured over a period of three financial years (2014 to 2016). The EPS figure used is equivalent
to Rightmove’s reported underlying basic EPS (before share-based payments, NI on share-based incentives and no related
adjustments for tax) and the vesting schedule is set out below:
Underlying basic EPS growth
from 2014 to 2016
Less than 40%
40%
70%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 40% and 70%
Straight-line vesting
At the end of the performance period, underlying EPS was 142.8p which from an underlying basic EPS base of 81.0p results
in growth of 76%, exceeding the maximum 70% EPS growth target and will result in full vesting of this part of the award
(maximum of 75%) from 3 March 2017.
Share awards granted during the year
On 1 March 2016 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded shares under the PSP, which vest
in March 2019, and are subject to a mixture of EPS (75% of the awards) and relative TSR (25% of the awards) performance
with the greater weighting on EPS to reflect its particular relevance to the performance of the business.
Executive
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Basis of grant
Number of shares
Face value of award(1)
200% of base salary
200% of base salary
200% of base salary
21,912
18,351
14,516
£848,640
£710,736
£562,224
(1) Based on the average mid-market share price for the three consecutive days prior to grant, taken from the Daily Official List, of £38.73.
The vesting schedule for the relative TSR element of
executive directors’ 2016 PSP awards is set out below. It is
consistent with the TSR condition used for previous
grants under the share option scheme. Performance will
be measured over three financial years.
Rightmove’s EPS growth will be measured over a period of
three financial years (2016-2018). The EPS figure used will
be equivalent to the Group’s underlying basic EPS (before
share-based payments, NI on share-based incentives and
no related adjustments for tax).
Relative TSR condition
Less than the Index
Equal to the Index
25% higher than the Index
Intermediate performance
% of award vesting
(maximum 25%)
The following vesting schedule will apply for executive
directors’ awards granted in 2016:
0%
6.25%
25%
Underlying basic EPS growth
from 2016 to 2018
Less than 25%
Straight-line vesting
Equal to 25%
Equal to or greater than 55%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 25% and 55%
Straight-line vesting
The benchmark underlying basic EPS for the financial year
2015 from which these targets will be measured is 121.4p.
68 rightmove.co.uk
Share-based incentives held by the directors and not exercised as at 31 December 2016
Share-based Granted
in year/
incentives held
dividend
1 January
roll-up
2016
Date
granted
Exercise
price
Exercised
in year
Average
share
Share-based
price at incentives held at
31 December
date of
2016
exercise
Vesting
date
Expiry
date
Executive directors
Nick McKittrick
5/3/2009
(Unapproved)
1/10/2012
(Sharesave)
8/3/2013
(PSP)
3/3/2014
(DSP)
3/3/2014
(PSP)
1/10/2014
(Sharesave)
2/3/2015
(DSP)
2/3/2015
(PSP)
1/10/2015
(Sharesave)
1/3/2016
(DSP)
1/3/2016
(PSP)
279,755
694
32,279
9,224
30,018
456
7,546
29,321
304
–
–
–
–
–
–
–
–
–
£0.00
£19.72
£0.00
£0.00
£29.60
–
7,901(1)
£0.00
– 21,912(2)
£0.00
£2.24
–
–
279,755 5/3/2012 4/3/2019
£12.95
(694)(5) £41.93
– 1/11/2015 30/4/2016
£0.00
–
–
32,279 8/3/2016 7/3/2018
£0.00
(9,224)(3) £37.49
– 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
7,901 1/3/2018 28/2/2019
21,912 1/3/2019 28/2/2021
Total
389,597 29,813
(9,918)
409,492
Rightmove plc annual report 2016
69
Strategic reportFinancial statementsGovernance
Governance | Directors’ remuneration report continued
Share-based incentives held by the directors and not exercised as at 31 December 2016 continued
Share-based Granted
incentives held
in year/
dividend
1 January
roll-up
2016
Date
granted
Exercise
price
Exercised
in year
Average
share
Share-based
price at incentives held at
31 December
date of
2016
exercise
Vesting
date
Expiry
date
Executive directors
Peter
Brooks-Johnson
10/10/2007
(Unapproved)
5/3/2009
(Unapproved)
5/3/2010
(Unapproved)
75,000
139,286
52,553
–
–
–
£5.22
£2.24
£6.66
–
–
–
–
–
–
75,000 15/3/2011 9/10/2017
139,286 5/3/2012
4/3/2019
52,553 5/3/2013
4/3/2020
23,951
928
£0.00
(24,879)(4) £37.49
– 2/3/2015 1/3/2017
£0.00
–
–
24,210 8/3/2016 7/3/2018
£0.00
(6,918)(3) £37.44
– 3/3/2016 2/3/2017
2/3/2012
(PSP)
8/3/2013
(PSP)
3/3/2014
(DSP)
3/3/2014
(PSP)
1/10/2014
(Sharesave)
2/3/2015
(DSP)
2/3/2015
(PSP)
1/10/2015
(Sharesave)
1/3/2016
(DSP)
1/3/2016
(PSP)
24,210
6,918
25,140
456
6,320
24,556
304
–
–
–
–
–
–
–
£0.00
£19.72
£0.00
£0.00
£29.60
–
6,617(1)
£0.00
– 18,351(2)
£0.00
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
6,617 1/3/2018 28/2/2019
18,351 1/3/2019 28/2/2021
Total
378,694 25,896
(31,797)
372,793
70 rightmove.co.uk
Share-based incentives held by the directors and not exercised as at 31 December 2016 continued
Share-based Granted
in year/
incentives held
dividend
1 January
roll-up
2016
Date
granted
Exercise
price
Exercised
in year
Average
share
Share-based
price at incentives held at
31 December
date of
2016
exercise
Vesting
date
Expiry
date
Executive directors
Robyn Perriss
8/3/2013
(PSP)
3/3/2014
(DSP)
3/3/2014
(PSP)
1/10/2014
(Sharesave)
2/3/2015
(DSP)
2/3/2015
(PSP)
1/3/2016
(DSP)
1/3/2016
(PSP)
14,928
4,353
19,887
912
4,999
19,425
–
–
–
–
–
–
£0.00
£0.00
£0.00
£19.72
£0.00
£0.00
–
5,234(1)
£0.00
– 14,516(2)
£0.00
Total
64,504 19,750
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,928 8/3/2016 7/3/2018
4,353 3/3/2016 2/3/2017
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
5,234 1/3/2018 28/2/2019
14,516 1/3/2019 28/2/2021
84,254
(1) On 2 March 2016, the executive directors were awarded nil cost options under the DSP, which vest in March 2018. The average mid-market share price for the three
consecutive preceding days, used to calculate the number of shares awarded, was £38.73.
(2) On 2 March 2016, the executive directors were awarded nil cost shares under the PSP, which vest in March 2019. Further details are set out on page 68.
(3) The nil cost deferred shares granted under the DSP on 3 March 2014, were exercisable from 3 March 2016 subject to annual bonus targets which were met in full.
Nick McKittrick exercised 9,224 shares on 16 December 2016 and sold 4,353 shares at an average market price of £37.49 per share to satisfy the resulting tax liability
and retained the balance of 4,871 shares.
Peter Brooks-Johnson exercised 6,918 shares on 16 December 2016 and sold 3,266 shares at an average market price of £37.49 per share to satisfy the resulting tax
liability and retained the balance of 3,652 shares.
(4) On 2 March 2012, the executive directors were awarded nil cost options under the PSP which vested in 2015 subject to EPS and relative TSR performance measures,
which were met in full. Peter Brooks-Johnson exercised 24,879 shares (which included a dividend roll-up of 928 shares) in December 2016, sold 11,743 upon exercise
at an average market price of £37.44 to satisfy the resulting tax liability and retained the balance of 13,136 shares.
(5) In October 2012, Nick McKittrick was granted a Sharesave option over 694 shares which vested in November 2015 at an exercise price of £12.95. In April 2016,
Nick exercised the option in full and retained the shares.
Rightmove plc annual report 2016
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Governance | Directors’ remuneration report continued
Dilution
All existing executive share-based incentives can be satisfied from shares held in the Rightmove Employees’ Share Trust
(EBT) and shares held in treasury. It is intended that the 2017 share-based incentive awards will also be settled from shares
currently held in the EBT or from shares held in treasury without any requirement to issue further shares.
Directors’ interests in shares
The interests (both beneficial and family interests) of the directors in office at the date of this report in the share capital of the
Company were as follows:
Interests in
ordinary shares of £0.01
Interests in
share-based incentives
At
31 December 2016
At
1 January 2016
PSP & DSP
awards
(unvested)
PSP & DSP
awards
(vested but
unexercised)
Options
(unvested)
Options
(vested but
unexercised)
Executive directors
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Non-executive directors
Scott Forbes
Ashley Martin
Peter Williams
Colin Kemp
Rakhi Goss-Custard
Jacqueline de Rojas
Total
146,592
141,027
55,146
5,833
38,358
5,833
96,698
80,984
64,061
32,279
24,210
19,281
319,300
319,300
2,060
3,728
2,500
544
–
2,060
3,728
2,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
760
760
912
–
–
–
–
–
–
279,755
266,839
–
–
–
–
–
–
–
535,703
512,806
241,743
75,770
2,432
546,594
• The Company’s shares in issue (including 2,271,725 shares held in treasury) as at 31 December 2016 comprised 95,490,266 (2015: 97,741,977) ordinary shares of
£0.01 each.
• The closing share price of the Company was £39.03 as at 30 December 2016 (the last day of trading in 2016). The lowest and highest share prices during the year were
£31.73 and £43.02 respectively.
• The executive directors are regarded as being interested, for the purposes of the Companies Act 2006, in 343,275 (2015: 386,057) ordinary shares of £0.01 each in the
Company currently held by the EBT as they are, together with other employees, potential beneficiaries of the EBT.
• The directors’ beneficial holdings represent 0.6% of the Company’s shares in issue as at 31 December 2016 (2015: 0.5%) (excluding shares held in treasury).
• There have been no changes to the above interests between the year-end and the date of this report.
Executive director share ownership guidelines are set out in the Remuneration Policy Report on page 53. The interests of
the executive directors in office at 31 December 2016 in the share capital of the Company as a percentage of base salary
were as follows:
Number of
shares held at
1 January 2017 31 December 2016
Base salary
Value of shares at
31 December 2016
Value of
shares as a %
of base salary
£445,536
£373,136
£320,000
146,592
£5,721,486
55,146
5,833
£2,152,348
£227,662
1284%
576%
71%
Executive directors
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
72 rightmove.co.uk
Percentage increase in the remuneration of the Chief Executive Officer
The table below shows the movement in the salary, benefits and annual bonus for the Chief Executive Officer (CEO)
between the current and previous financial year compared to that of the total amounts for all employees of the Group for
each of these elements of pay.
The CEO’s salary increased by 4%, in line with the average workforce inflationary increase in 2016. The annual bonus of the
CEO decreased by 4% as a result of 92% of the maximum bonus being achieved in relation to the 2016 bonus targets,
compared with a pay-out of 100% in 2015.
The average salary for all employees increased by 5% due to a 4% universal cost of living increase in January 2016, together
with the investment in new heads in 2016, primarily being in sales and technology roles at higher than average salary levels.
The increase in average employee benefits relates to an increase in the cost of private healthcare from
1 March 2016, together with increased take-up of BUPA health checks throughout the year.
Chief Executive Officer
Salary
Benefits
Annual bonus
Average of all employees(1)
Salary
Benefits
Annual bonus
(1) Excludes the executive directors.
2016
£
2015
£
% change
424,320
408,000
1,973
1,931
487,968
510,000
45,148
834
2,394
42,883
734
2,364
4%
2%
(4)%
5%
14%
1%
Relative importance of the spend on pay
The table below shows the total pay for all of Rightmove’s employees compared to other key financial indicators. Additional
information on the number of employees, total revenue and underlying operating profit has been provided for context.
Employee costs (refer Note 7)
Dividends to shareholders (refer Note 12)
Purchase of own shares (refer Note 22)
Income tax (refer Note 10)
Average number of employees (refer Note 7)
Revenue
Underlying operating profit(1)
(1) Before share-based payments and NI on share-based incentives.
Year ended
Year ended
31 December 2016 31 December 2015
% change
£27,423,000
£23,464,000
£43,206,000
£36,469,000
£88,083,000
£76,071,000
£32,005,000
£27,636,000
469
412
£219,993,000 £192,129,000
£166,240,000 £144,271,000
17%
18%
16%
16%
14%
15%
15%
Rightmove plc annual report 2016
73
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Governance | Directors’ remuneration report continued
Retirement arrangements for Nick McKittrick
On 23 February 2017, Nick McKittrick notified the Board of his intention to retire as a director and Chief Executive Officer
following the AGM on 9 May 2017. His employment with the Group will end on 30 June 2017 following a handover period to
ensure a smooth transition process.
The Committee determined that he will continue to be paid his salary and normal package of benefits up to the date of his
departure. He will not receive any bonus for the part of the 2017 financial year worked or be eligible for a PSP award in March
2017, but will receive a bonus in respect of the 2016 financial year as set out on page 67. In line with our Policy, 40% of his
bonus will be paid in cash with the balance deferred in shares for a period of two years.
The Committee also determined that Nick McKittrick will be treated as a good leaver in relation to his outstanding PSP and
DSP awards, with these awards vesting in line with the relevant plan rules and the Remuneration Policy set out on pages 50 to
59. Outstanding PSP awards will also be subject to the achievement of performance conditions and vest pro-rata in
accordance with the plan rules.
Full details of the remuneration arrangements will be disclosed in the 2017 Annual Report and the Company will publish a
statement in accordance with Section 430(2B) of the Companies Act following the AGM.
The remuneration arrangements for Peter Brooks-Johnson who will replace Nick McKittrick as Chief Executive Officer will
be in line with our Policy and our recently concluded executive remuneration review. The Committee has recommended
that Peter Brooks-Johnson’s basic salary is increased to £445,536 with effect from 9 May 2017 to reflect his role and
responsibilities as Chief Executive Officer. The Committee also agreed that a further PSP award will be made on 9 May 2017
to bring his 2017 PSP award in line with his Chief Executive Officer salary.
74 rightmove.co.uk
Governance | Independent auditor’s report to the members of Rightmove plc only
Opinions and conclusions arising from our audit
1. Our opinion on the financial statements is unmodified
We have audited the financial statements of Rightmove plc
for the year ended 31 December 2016 set out on pages 78
to 116. In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and of the parent Company’s affairs as
at 31 December 2016 and of the Group’s profit for the year
then ended;
• the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European Union
(IFRSs as adopted by the EU);
• the parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted by
the EU and as applied in accordance with the provisions of
the Companies Act 2006; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation.
2. Our assessment of risks of material misstatement
We summarise below the risks of material misstatement
(unchanged from 2015) that had the greatest effect on
our audit, our key audit procedures to address those risks
and our findings from those procedures in order that the
Company’s members as a body may better understand
the process by which we arrived at our audit opinion. Our
findings are based on procedures undertaken in the context
of and solely for the purpose of our statutory audit opinion
on the financial statements as a whole and consequently are
incidental to that opinion, and we do not express discrete
opinions on separate elements of the financial statements.
Revenue recognition £220.0m (2015: £192.1m) Risk vs 2015: Unchanged
Refer to page 37 (Audit Committee Report), page 89 (accounting policy) and pages 94 to 95 (financial disclosures).
The risk:
Our response:
Our findings:
Revenue primarily consists of
subscription fees and customer
spend on additional advertising
products in respect of properties
listed on Rightmove platforms
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, membership offers some
of which include discounted
periods, and that revenue is
the most material figure in
the financial statements,
we consider a significant risk
exists in relation to revenue
recognition; specifically that the
billing of customers is not in line
with the contract terms, with
resulting revenue not being
recognised appropriately.
Our audit procedures included:
Revenue controls: 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;
Our procedures 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;
Analysis of amounts billed: For Agency, New Homes and
Overseas, which covers 95% of revenue recognised in the year,
we performed detailed procedures using computer assisted
audit techniques to analyse the amounts invoiced to customers
by product in order to identify and investigate any anomalies
and outliers. We considered whether amounts invoiced 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;
Our computer assisted audit
techniques did not reveal any
material anomalies or outliers
which we were unable to
corroborate and we found that
revenue was recognised in line
with the period of subscription
or usage of additional
advertising products;
Inspection of significant contracts: For a sample of the highest
revenue generating customers, as well new customers in
growing revenue streams, we inspected contracts signed in
the year, to assess whether revenue has been recognised in
accordance with the specific contract terms and conditions
and relevant accounting standards;
We found that revenue was
recognised in line with the
underlying contractual terms
in respect of the newly signed
contracts and membership
campaigns selected for testing;
Membership campaigns: For new membership offers during
the year, we selected a sample of customers from each new
membership offer, inspected the underlying contract and
reperformed the revenue recognition calculations;
Rightmove plc annual report 2016
75
Strategic reportFinancial statementsGovernance
Governance | Independent auditor’s report to the members of Rightmove plc only continued
The risk:
Our response:
Assessment of deferred revenue: We assessed the
appropriateness of deferred revenue at the period end with
reference to subscription fee billings in December, and specific
product deferrals where amounts are billed in advance but
revenue recognition deferred until use or expiry;
Inspection of journal entries: We obtained 100% of the
journals posted in respect of revenue and, using computer
assisted audit techniques, analysed these to identify and
investigate any entries which appeared unusual based upon the
specific characteristics of the journal, considering in particular
whether the debit side of the journal entry was as expected,
based on our business understanding; and
Our findings:
We found no errors in the
Group’s calculation of deferred
revenue at the year end;
Our analysis of unusual journal
entries did not reveal any
material anomalies or outliers
which we were unable to
corroborate; and
Adequacy of revenue disclosure: We also considered the
adequacy of the Group’s accounting policy and disclosures
(see Notes 1, 2 and 5) in respect of revenue recognition, and
whether disclosures properly reflect the risks inherent in
recognising revenue.
We found the Group’s
disclosures to be proportionate
in their description of the
judgements made by the
Group.
3. Our application of materiality and an overview of the
scope of our audit
The materiality for the Group financial statements as a whole
was set at £7.0m (2015: £6.7m), determined with reference
to a benchmark of Group profit before tax of which it
represents 4.3% (2015: 4.9%).
We reported to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £0.35m
(2015: £0.34m), in addition to other identified
misstatements that warranted reporting on qualitative
grounds. We report misstatements corrected by
management where we believe these will assist the Audit
Committee in fulfilling its governance responsibilities.
The Group audit team also audits the two (2015: one) wholly
owned subsidiaries, Rightmove Group Limited with a
component materiality of £5.6m (2015: £5.0m) and the
wholly owned subsidiary The Outside View Analytics Ltd,
acquired in the year, with a component materiality of
£25,000. The group procedures covered all of the operations
of the Group, and accordingly 100% of total Group revenue;
100% of Group profit before taxation and 100% of total
Group assets were audited.
4. Our opinion on other matters prescribed by the
Companies Act 2006 is unmodified
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with
the Companies Act 2006;
• the information given in the Strategic Report and the
Directors’ Report for the financial year is consistent with
the financial statements; and
Profit before tax
£161.5m
(2015: £137.1m)
Materiality
£7.0m (2015: £6.7m)
£7.0m
Whole financial statements
materiality (2015: £6.7m)
£5.6m
Range of materiality at 2
(2015: 1) components
(£5.6m-£25,000) (2015: £5.0m)
Profit before tax
Group Materiality
£0.35m
Misstatements reported
to the Audit Committee
(2015: £0.34m)
100%
(2015: 100%)
100
100
Group profit before tax
Group revenue
Group total assets
Full scope for Group audit
purposes 2016
Full scope for Group audit
purposes 2015
76 rightmove.co.uk
• the information given in the Corporate Governance Report
set out on pages 39 and 40 with respect to internal control
and risk management systems in relation to financial
reporting processes and about share capital structures
(“the specified Corporate Governance information”) is
consistent with the financial statements.
Based solely on the work required to be undertaken in the
course of the audit of the financial statements and from
reading the Strategic Report, the Directors’ Report and the
Corporate Governance Report:
• we have not identified material misstatements in the
Strategic Report, the Directors’ Report, or the specified
Corporate Governance information;
• in our opinion, the Strategic Report and the Directors’
Report have been prepared in accordance with the
Companies Act 2006; and
• in our opinion, the Corporate Governance Report has been
prepared in accordance with rules 7.2.2, 7.2.3, 7.2.5, 7.2.6
and 7.2.7 of the Disclosure Rules and Transparency Rules
of the Financial Conduct Authority.
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:
• the directors’ viability statement on page 23, concerning
the principal risks, their management, and, based on that,
the directors’ assessment and expectations of the
Group’s continuing in operation over the three years
to 31 December 2019; or
• the disclosures in Note 1 of the financial 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 identified other information in the annual report that
contains a material inconsistency with either that knowledge
or the financial statements, a material misstatement of fact,
or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between the
knowledge we acquired during our audit and the directors’
statement that they consider that the annual report and
financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Group’s position and
performance, business model and strategy; or
• the Audit Committee report does not appropriately
address matters communicated by us to the Audit
Committee.
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are not
in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit; or
• a Corporate Governance Statement has not been prepared
by the company.
Under the Listing Rules we are required to review:
• the directors’ statements, set out on pages 23 and 85 to 86,
in relation to going concern and longer-term viability; and
• the part of the Corporate Governance Statement on page
30 relating to the Company’s compliance with the eleven
provisions of the 2014 UK Corporate Governance Code
specified 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 45, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. A description of
the scope of an audit of financial 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
24 February 2017
Rightmove plc annual report 2016
77
Strategic reportFinancial statementsGovernance
Consolidated statement of comprehensive income for the year ended 31 December 2016
Revenue
Administrative expenses
Underlying operating profit
Share-based payments
NI on share-based incentives
Operating profit
Financial income
Financial expenses
Net financial expense
Profit before tax
Income tax expense
Profit for the year being total comprehensive income
Attributable to:
Equity holders of the parent
Earnings per share (pence)
Basic
Diluted
Dividends per share (pence)
Total dividends
Note
5
24
24
6
8
9
10
11
11
12
12
2016
£000
219,993
(58,346)
166,240
(4,142)
(451)
2015
£000
192,129
(54,954)
144,271
(3,765)
(3,331)
161,647
137,175
109
(209)
(100)
112
(183)
(71)
161,547
(32,005)
137,104
(27,636)
129,542
109,468
129,542
109,468
137.87
136.41
46.00
43,206
114.01
112.74
38.00
36,469
78 rightmove.co.uk
Consolidated statement of financial position as at 31 December 2016
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
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
Provisions
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
21
22
23
23
2016
£000
2,288
3,525
6,942
2015
£000
2,239
1,383
6,791
12,755
10,413
29,924
4,026
13,749
27,523
4,000
8,418
47,699
39,941
60,454
50,354
(35,796)
(16,256)
(185)
(31,618)
(11,863)
–
(52,237)
(43,481)
(175)
(175)
(236)
(236)
(52,412)
(43,717)
8,042
6,637
955
477
6,610
8,042
977
455
5,205
6,637
The financial statements were approved by the Board of directors on 24 February 2017 and were signed on its behalf by:
Nick McKittrick
Director
Robyn Perriss
Director
Rightmove plc annual report 2016
79
Strategic reportFinancial statementsGovernance
Company statement of financial position as at 31 December 2016
Non-current assets
Investments
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Note
15
16
2016
£000
2015
£000
546,202
3,757
544,464
3,581
549,959
548,045
549,959
548,045
19
(30,152)
(36,629)
(30,152)
(36,629)
519,807
511,416
22
23
23
955
113,051
405,801
977
109,631
400,808
Total equity attributable to the equity holders of the parent
519,807
511,416
The financial statements were approved by the Board of directors on 24 February 2017 and were signed on its behalf by:
Nick McKittrick
Director
Robyn Perriss
Director
80 rightmove.co.uk
Consolidated statement of cash flows for the year ended 31 December 2016
Note
2016
£000
2015
£000
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation charges
Amortisation charges
Financial income
Financial expenses
Share-based payments
Transaction costs on acquisition of subsidiary
Income tax expense
Operating cash flow before changes in working capital
Increase in trade and other receivables
Increase in trade and other payables
Increase in provisions
Cash generated from operating activities
Financial expenses paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of property, plant and equipment
Acquisition of intangible assets
Acquisition of subsidiary (net of cash acquired)
Money market deposits
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Purchase of own shares for cancellation
Purchase of own shares for share incentive plans
Share-related expenses
Proceeds on exercise of share-based incentives
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
13
14
8
9
24
27
10
21
13
14
27
18
12
22
23
22
23
129,542
109,468
1,241
378
(109)
209
4,142
42
32,005
934
361
(112)
183
3,765
–
27,636
167,450
142,235
(2,237)
3,913
124
(3,230)
4,140
36
169,250
143,181
(209)
(27,807)
(183)
(26,869)
141,234
116,129
134
(1,281)
(478)
(2,088)
(26)
117
(1,593)
(179)
–
(4,000)
(3,739)
(5,655)
(43,206)
(88,083)
(751)
(497)
373
(36,469)
(76,071)
(507)
(615)
401
(132,164)
(113,261)
5,331
8,418
(2,787)
11,205
Cash and cash equivalents at 31 December
18
13,749
8,418
Rightmove plc annual report 2016
81
Strategic reportFinancial statementsGovernance
Company statement of cash flows for the year ended 31 December 2016
Cash flows from operating activities
Profit for the year
Adjustments for:
Financial income
Financial expenses
Share-based payments
Income tax credit
Operating cash flow before changes in working capital
Increase in trade and other payables
Cash generated from operating activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Note
28
28
24
19
18
Restated
2015
(refer Note 1)
£000
2016
£000
136,648
123,757
(141,563)
527
2,404
(1,074)
(130,263)
547
2,105
(1,465)
(3,058)
(5,319)
3,058
5,319
–
–
–
–
–
–
–
–
82 rightmove.co.uk
Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2016
Share
Own
capital shares held
£000
£000
Note
Reverse
Other acquisition
reserve
£000
reserves
£000
Retained
earnings
£000
Total
equity
£000
At 1 January 2015
1,000
(14,823)
294
138
15,839
2,448
Total comprehensive income
Profit for the year
Transactions with owners recorded directly in equity
Share-based payments
Tax credit in respect of share-based incentives
recognised directly in equity
Dividends to shareholders
Exercise of share-based incentives
Purchase of shares for SIP
Cancellation of own shares
Share-related expenses
At 31 December 2015
At 1 January 2016
Total comprehensive income
Profit for the year
Transactions with owners recorded directly in equity
Share-based payments
Tax credit in respect of share-based incentives
recognised directly in equity
Dividends to shareholders
Exercise of share-based incentives
Purchase of shares for SIP
Cancellation of own shares
Share-related expenses
–
–
–
–
–
–
(23)
–
–
–
–
–
1,268
(507)
–
–
–
–
–
–
–
–
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)
977
(14,062)
317
138
19,267
6,637
977
(14,062)
317
138
19,267
6,637
–
–
–
–
–
–
(22)
–
–
–
–
–
366
(751)
–
–
–
–
–
–
–
–
22
–
– 129,542 129,542
–
–
–
–
–
–
–
4,142
4,142
5
(43,206)
7
–
(88,083)
(617)
5
(43,206)
373
(751)
(88,083)
(617)
24
10
12
23
23
22
22
24
10
12
23
23
22
22
At 31 December 2016
955
(14,447)
339
138
21,057
8,042
Rightmove plc annual report 2016
83
Strategic reportFinancial statementsGovernance
Company statement of changes in shareholders’ equity for the year ended 31 December 2016
Own
Share
capital shares held
£000
£000
Note
Reverse
Other acquisition
reserve
£000
reserves
£000
Retained
earnings
£000
Total
equity
£000
At 1 January 2015
1,000
(11,917)
6,088 103,520 396,657 495,348
Total comprehensive income
Profit for the year
Transactions with owners recorded directly in equity
Share-based payments
Tax credit in respect of share-based incentives
recognised directly in equity
Capital contribution
Dividends to shareholders
Transfer of shares to SIP
Exercise of share-based incentives
Cancellation of own shares
Share-related expenses
At 31 December 2015
At 1 January 2016
Total comprehensive income
Profit for the year
Transactions with owners recorded directly in equity
Share-based payments
Tax credit in respect of share-based incentives
recognised directly in equity
Capital contribution
Dividends to shareholders
Transfer of shares to SIP
Exercise of share-based incentives
Cancellation of own shares
Share-related expenses
–
–
–
–
–
–
–
(23)
–
–
–
–
–
–
(863)
883
–
–
–
–
–
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)
977
(11,897)
7,771 103,520 411,045 511,416
977
(11,897)
7,771 103,520 411,045 511,416
–
–
–
–
–
–
–
(22)
–
–
–
–
–
–
(517)
258
–
–
–
–
–
1,738
–
–
–
22
–
– 136,648 136,648
–
–
–
–
–
–
–
–
2,404
2,404
24
–
(43,206)
–
(258)
(88,083)
(617)
24
1,738
(43,206)
(517)
–
(88,083)
(617)
24
10
23
12
22
22
24
10
23
12
22
22
At 31 December 2016
955
(12,156)
9,531 103,520 417,957 519,807
84 rightmove.co.uk
Notes forming part of the financial statements
1 General information
Rightmove plc (the Company) is a company registered in England (Company no. 6426485) domiciled in the United Kingdom (UK).
The consolidated financial statements of the Company as at and for the year ended 31 December 2016 comprise the Company
and its interest in its subsidiaries (together referred to as the Group).
The consolidated financial statements of the Group as at and for the year ended 31 December 2016 are available upon request
to the Company Secretary from the Company’s registered office at Turnberry House, 30 Caldecotte Lake Drive, Caldecotte,
Milton Keynes MK7 8LE or are available on the corporate website at plc.rightmove.co.uk.
Statement of compliance
The Group and Company financial statements have been prepared and approved by the Board of directors in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union (Adopted IFRSs).
The consolidated financial statements were authorised for issue by the Board of directors on 24 February 2017.
Basis of preparation
On publishing the Company financial statements here together with the Group financial statements, the Company is taking
advantage of the exemption in s408 of the Companies Act 2006 not to present its individual statement of comprehensive
income and related notes that form a part of these approved financial statements.
The accounting policies set out below have been consistently applied to both years presented, unless otherwise stated.
Following a reassessment of the presentation of the settlement of dividends and share buybacks by Rightmove Group Limited
on behalf of the Company, the 2015 Company Statement of Cash Flows has been restated. The restatement decreased cash
generated from operating activities by £113,155,000 and decreased cash used in financing activities by £113,155,000 for the year
ended 31 December 2015. It has had no impact on net assets as at 1 January 2015 or 31 December 2015, or the net cash flows
and profit for the year ended 31 December 2015. Refer to Note 28 for further details of inter-group settlement arrangements.
The financial statements have been prepared on an historical cost basis.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has existing rights that give it the ability to direct
the relevant activities of an entity and has the ability to affect the returns the Group will receive as a result of its involvement with
the entity. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The
financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases.
During the year the Group acquired The Outside View Analytics Ltd (“Outside View”). The results of Outside View have been
consolidated from the date of acquisition, being 31 May 2016. Details of the acquisition are set out in Note 27.
Changes in accounting policies
The accounting policies applied by the Group in these consolidated financial statements are in accordance with Adopted IFRSs and
are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2015.
Amendments to IAS 1 were adopted for the first time for the financial year beginning 1 January 2016. This had no impact on the
Group financial statements.
Going concern
Throughout 2016, the Group was debt free and has continued to generate significant cash and has an overall positive net asset
position. The Group had net cash balances of £13,749,000 at 31 December 2016 (2015: £8,418,000). The Group also had
£4,026,000 of money market deposits (2015: £4,000,000).
The agreement with HSBC for a £10,000,000 committed revolving loan facility expired on 9 February 2017. This has been
replaced with a new 12 month agreement with Barclays Bank Plc for a £10,000,000 committed revolving loan facility that expires
on 12 February 2018. No amount has been drawn under either facility in either year.
During the year £131,289,000 (2015: £112,540,000) of cash was returned to shareholders via dividends and discretionary share
buy backs.
Rightmove plc annual report 2016
85
Strategic reportFinancial statementsGovernance
Notes continued
1 General information continued
The Board of directors is confident that with the existing cash resources and banking facilities in place, coupled with the strength
of the underlying business model, the Group and the Company will remain cash positive and will have adequate resources to
continue in operational existence for a period of 12 months from the date of signing these accounts.
Further information regarding the Group’s business activities, together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report on pages 1 to 27. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described on pages 17 to 19. In addition Note 4 to the financial statements includes
the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its
financial instruments and its exposures to credit risk and liquidity risk.
Capital structure
The Company was incorporated and registered in England and Wales on 14 November 2007 under the Companies Act 1985 as
a private company limited by shares with the name Rightmove Group Limited, registered no. 6426485. The Company was
re-registered as a public limited company under the name Rightmove Group plc on 29 November 2007. On 28 January 2008 the
Company became the holding company of Rightmove Group Limited (formerly Rightmove plc, Company no. 3997679) and its
subsidiaries pursuant to a Scheme of Arrangement under s425 of the Companies Act 1985. The shares in the Company were
admitted to trading on the Official List of the London Stock Exchange on 28 January 2008 and the Company immediately
changed its name to Rightmove plc. Details of the share capital of the Company are disclosed in Note 22.
Judgements and estimates
The preparation of the consolidated and Company financial statements in conformity with Adopted IFRSs requires management
to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods, if applicable.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in the consolidated and Company financial statements is
included in the following notes:
Note 2 (j)
Revenue recognition, specifically 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 satisfied. Management regularly performs a true-up of the estimate of the number of shares
that are expected to vest; this is dependent on the anticipated number of leavers.
Non-GAAP (Generally Accepted Accounting Principles) performance measures
In the analysis of the Group’s financial performance certain information disclosed in the financial statements may be prepared on
a non-GAAP basis or has been derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted
GAAP measure. These measures are reported in line with how financial information is analysed by Management. The key non-
GAAP measures presented by the Group are:
• Underlying operating profit – which is defined as operating profit before share-based payments and National Insurance on
share-based incentives; and
• Underlying basic EPS – which is defined as profit for the year before share-based payments and National Insurance, with no
related adjustment for tax, divided by the weighted average number of shares in issue for the year.
86 rightmove.co.uk
1 General information continued
The Directors believe that these non-GAAP measures provide a more appropriate measure of the Group’s business performance
as share-based payments, which are a significant non-cash charge are driven by a valuation model, and NI on share-based
incentives, is driven by reference to the Rightmove plc share price and so subject to volatility, rather than operational activity. The
directors therefore consider underlying operating profit to be the most appropriate indicator of the performance of the business
and year-on-year trends. For simplicity no adjustment for tax is made within the calculation of underlying basic EPS. The non-
GAAP measures are designed to increase comparability of the Group’s financial performance year-on-year.
2 Significant accounting policies
(a) Investments
Investments in subsidiaries are held at cost less any provision for impairment in the parent Company financial statements.
(b) Intangible assets
(i) Goodwill
Goodwill arising on a business combination represents the difference between the fair value of the consideration paid and the
fair value of the net identifiable assets acquired and is included in intangible assets.
In respect of acquisitions prior to 1 January 2004, goodwill is included on the basis of its deemed cost, which represents the
amount previously recorded under UK GAAP. The classification and accounting treatment of business that occurred prior to
1 January 2004 was not reconsidered in preparing the Group’s opening IFRS statement of financial position at 1 January 2004.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is tested annually for impairment. This applies to
all goodwill arising both before and after 1 January 2004.
(ii) Research and development
The Group undertakes research and development expenditure in view of developing new products and improving the existing
property platforms. Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and
understanding, is recognised in profit or loss as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of a
new product or substantially enhanced website, is capitalised if the new product or the enhanced website is technically and
commercially feasible, the Group has sufficient resources to complete development, future economic benefits are probable
and the Group can measure reliably the expenditure attributable to the intangible asset during its development. Capitalised
costs are held as an asset in progress until such point that the asset is brought into use, at which point it is transferred to the
appropriate intangible asset category and amortisation is charged.
The expenditure capitalised includes subcontractors and direct labour. Capitalised development expenditure is stated at cost
less accumulated amortisation and accumulated impairment losses. Subsequent expenditure on capitalised intangible assets
is capitalised only when it increases the economic benefits embodied in the specific asset to which it relates. All other
expenditure is expensed when incurred.
(iii) Computer software and licences
Computer software and externally acquired software licences are capitalised and stated at cost less accumulated
amortisation and impairment losses. Amortisation is charged from the date the asset is available for use. Amortisation is
provided to write off the cost less the estimated residual value of the computer software or licence by equal annual
instalments over its estimated useful economic life as follows:
Computer software
Software licences
20.0% – 33.3% per annum
20.0% – 33.3% per annum
(iv) Market appraisal algorithm
The market appraisal algorithm identified on the acquisition of the Outside View Analytics Ltd is valued using the
reproduction cost method based on market rate salaries. Amortisation is expensed in the profit or loss on a straight-line
basis over the estimated useful economic life as follows:
Market appraisal algorithm
33.3% per annum
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Notes continued
2 Significant accounting policies continued
(c) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation is provided
to write off the cost less the estimated residual value of property, plant and equipment by equal annual instalments over their
estimated useful economic lives as follows:
Office equipment, fixtures and fittings
Computer equipment
Leasehold improvements
20.0% per annum
20.0% – 33.3% per annum
remaining life of the lease
(d) Impairment
The carrying value of property, plant and equipment is reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount of
non-financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash flows,
the recoverable amount is determined for the cash generating unit to which the asset belongs.
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation but are tested for impairment
annually and whenever there is an indication that they might be impaired. An impairment loss is recognised for the amount by
which the carrying value of the asset exceeds its recoverable amount.
Investments are assessed for possible impairment when there is an indication that the fair value of the investments may be
below the Company’s carrying value. When such a condition is deemed to be other than temporary, the carrying value of the
investment is written down to its fair value and the amount written off is included in profit or loss. In making the determination as
to whether a decline is other than temporary, the Company considers such factors as the duration and extent of the decline, the
investee’s financial performance and the Company’s ability and intention to retain its investment for a period that will be sufficient
to allow for any anticipated recovery in the investment’s market value.
(e) Financial instruments
Trade receivables do not carry any interest and are initially recognised at fair value and subsequently measured at amortised cost
less any impairment loss. A provision for impairment of trade receivables is established when there is objective evidence that the
Group will not be able to collect all amounts due according to the receivables’ original terms.
Trade payables are not interest bearing and are initially recognised at fair value and subsequently measured at amortised cost.
Trade payables are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting date.
Money market deposits are initially recorded at fair value and subsequently measured at amortised cost. They represent deposits
with a maturity of over three months.
Inter-group balances and transactions, and any unrealised income and expenses arising from inter-group transactions, are
eliminated in preparing the consolidated financial statements.
(f) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.
(g) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessment of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a
finance cost.
(h) Employee benefits
(i) Pensions
The Group provides access to a stakeholder pension scheme (a defined contribution pension plan) into which employees
may elect to contribute via salary exchange. Obligations for contributions to defined contribution pension plans are
recognised as an employee benefit expense in profit or loss when they are incurred.
88 rightmove.co.uk
2 Significant accounting policies continued
(ii) Employee share schemes
The Group provides share-based incentive plans allowing executive directors and other employees to acquire shares in the
Company. An expense is recognised in profit or loss, with a corresponding increase in equity, over the period during which
the employees become unconditionally entitled to acquire equity settled share-based incentives.
Fair value at the grant date is measured using either the Monte Carlo or Black Scholes pricing model as is most appropriate
for each scheme. Measurement inputs include share price on measurement date, exercise price of the instrument, expected
volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information),
weighted average expected life of the instruments (based on historical experience and general option behaviour), expected
dividends, and risk-free interest rates (based on government bonds). Service and non-market performance conditions
attached to the awards are not taken into account in determining the fair value.
For share-based incentive awards with non-vesting conditions, the grant date fair value of the share-based incentives is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. When
either the employee or the Company chooses not to meet the non-vesting condition, the failure to meet the non-vesting
condition is treated as a cancellation and the cost that would have been recognised over the remainder of the vesting period
is recognised immediately in profit or loss.
(iii) Own shares held by The Rightmove Employees’ Share Trust (EBT)
The EBT is treated as an agent of Rightmove Group Limited, and as such EBT transactions are treated as being those of
Rightmove Group Limited and are therefore reflected in the Group’s consolidated financial statements. In particular, at a
consolidated level, the EBT’s purchases of shares in the Company are charged directly to equity.
(iv) Own shares held by The Rightmove Share Incentive Plan Trust (SIP)
The SIP is treated as an agent of Rightmove plc, and as such SIP transactions are treated as being those of Rightmove plc and
are therefore reflected in the Group’s consolidated financial statements. In particular, at a consolidated level, the SIP’s
purchases of shares in the Company are charged directly to equity.
(v) National Insurance (NI) on share-based incentives
Employer’s NI is accrued, where applicable, at a rate of 13.8%, which management expects to be the prevailing rate when
share-based incentives are exercised. In the case of share options, it is provided on the difference between the share price at
the reporting date and the average exercise price of share options. In the case of nil cost performance shares and deferred
shares, it is provided based on the share price at the reporting date.
(i) Treasury shares and shares purchased for cancellation
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable
costs, is recognised as a deduction from equity. Repurchased shares are either held in treasury or cancelled.
(j) Revenue
Revenue principally represents the amounts receivable from customers in respect of membership of the Rightmove platforms.
Agency, New Homes, Overseas and Commercial revenue comprises subscriptions for core listing fees and amounts paid for
additional advertising products. Contracts for these services are per branch or branch equivalent for Agency and per development
for New Homes. They vary in length from one month to five years, but are typically for periods of six to 12 months. Revenue is
recognised over the period of the contract or as advertising products are used. Membership offers take place from time to time
and may include discounted products and free periods. These are recognised on a monthly basis over the contract term.
Agency, Overseas and Commercial services are typically billed in advance with revenue deferred until the service commencement
date. New Homes developers are billed monthly in arrears. Where invoices are raised on other than a monthly basis, the amounts
are recognised as deferred or accrued revenue and released to the profit or loss on a monthly basis in line with the provision of
services as stipulated in the contract terms.
Data Services revenue relates to fees generated for data and valuation services under a variety of contractual arrangements.
Revenue is recognised when the service has been provided. Third party advertising revenue represents amounts paid in respect of
non-property advertising on the Rightmove platforms and is recognised in the month in which the service is provided. Consumer
Services revenue principally relates to payment for leads and is recognised when the lead is generated. Data Services, third party
advertising and Consumer Services revenue is typically billed in arrears.
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Notes continued
2 Significant accounting policies continued
(k) Segmental reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An
operating segment’s operating results are reviewed regularly by the Group’s Chief Executive Officer to make decisions about
resources to be allocated to the segment and assess its performance and for which discrete financial information is available.
(l) Leases
Operating lease rentals are charged to profit or loss on a straight-line basis over the period of the lease. Where cash is received in
exchange for entering into a lease with rates above market value, this upfront payment is deferred and released on a straight-line
basis over the lease term.
(m) Financial income and expenses
Financial income comprises interest receivable on cash balances, money market deposits and dividend income. Interest income is
recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the Company’s
right to receive payment is established.
Financial expenses comprise banking facility fees and bank charges and the unwinding of the discount on provisions.
(n) Taxation
Income tax on the results for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the
extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period net of any charge or credit posted directly to
equity, using tax rates enacted or substantially enacted at the reporting date and any adjustment to tax payable in respect of
previous periods.
Deferred tax is provided in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the
initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and the differences relating to investments in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised.
In accordance with IAS 12, the Group policy in relation to the recognition of deferred tax on share-based incentives is to include
the income tax effect of the tax deduction in profit or loss to the value of the income tax charge on the cumulative IFRS 2 charge.
The remainder of the income tax effect of the tax deduction is recognised in equity.
(o) Dividends
Dividends unpaid at the reporting date are only recognised as a liability (and deduction to equity) at that date to the extent that
they are appropriately authorised and are no longer at the discretion of the Company. Unpaid dividends that do not meet these
criteria are disclosed in the notes to the financial statements.
(p) Earnings per share
The Group presents basic, diluted and underlying basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS
is calculated by dividing the profit or loss attributable to equity holders of the Company by the weighted average number of
ordinary shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or
loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own
shares held, for the effects of all potential dilutive instruments, which comprise share-based incentives granted to employees.
The calculation of underlying basic and diluted EPS is disclosed in Note 11.
90 rightmove.co.uk
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 2016 and have not been applied in preparing these consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers was issued in 2014 and was endorsed by the EU in 2016. IFRS 15 establishes
a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue
recognition guidance, including IAS 18 Revenue. IFRS 15 is effective for annual periods beginning on or after 1 January 2018, with
early adoption permitted. The Group plans to adopt IFRS 15 in its financial statements for the year ending 31 December 2018
and to use the practical expedients for completed contracts.
At present revenue is recognised either over time where there is continuing service provided by Rightmove to the customer or
at the point in time when the risks and rewards of ownership transfer to the customer. Under IFRS 15 revenue will be recognised
when performance obligations are satisfied. For the Group the transfer of control under IFRS 15 and satisfaction of performance
obligations is over time. We have undertaken a detailed analysis of the impact of IFRS 15 on the Group which has shown that the
recognition of revenue will be consistent with the transfer of risks and rewards to the customer under IAS 18. We have concluded
following this assessment that the implementation of IFRS 15 will not have a significant impact on the Group’s consolidated
financial statements.
IFRS 16 Leases
IFRS 16 Leases was issued in January 2016, although it has not yet been endorsed by the EU. IFRS 16 introduces a single,
on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use
the underlying asset and a corresponding lease liability representing its obligation to make lease payments. There are optional
exemptions for short-term leases and leases of low value items.
IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a
Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a
Lease. The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for entities
that apply IFRS 15 Revenue from Contracts with Customers at or before the date of initial application of IFRS 16.
The Group has started a detailed assessment to quantify the impact on its reported assets and liabilities of adoption of IFRS 16.
So far, the most significant impact identified is that the Group will recognise new assets and liabilities for its operating leases in
respect of office premises and company cars. In addition, the nature of expenses related to those leases will change as the
straight-line operating lease expense will be replaced with a depreciation charge for right-of-use assets and interest expense
on lease liabilities. The quantitative effect will depend on the transition method chosen, the extent to which the Group uses the
practical expedients and recognition exemptions, and any additional leases that the Group enters into. Once the detailed
assessment has been completed in 2017 the Group will confirm its transition date, approach and related quantitative information.
Other amendments
There are no other new or amended standards expected to have a significant impact on the Group’s consolidated
financial statements.
4 Risk and capital management
Overview
The Group has exposure to the following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market risk
This note presents information about the Group and Company’s exposure to each of the above risks, the Group’s objectives,
policies and processes for measuring and managing risk and the Group’s management of capital. Further quantitative disclosures
are included throughout these consolidated financial statements.
The Board of directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The primary method by which risks are monitored and managed by the Group is through the monthly Executive Management
Board, where any significant new risks or change in status to existing risks will be discussed and actions taken as appropriate.
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Notes continued
4 Risk and capital management continued
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and
obligations.
The Audit Committee oversees how management monitors compliance with the Group’s internal controls and reviews the
adequacy of the risk management framework in relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or banking institution fails to meet its contractual obligations.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group provides
credit to customers in the normal course of business. The Group provides its services to a wide range of customers in the UK and
overseas and therefore believes it has no material concentration of credit risk.
More than 90.0% (2015: 90.0%) of the Group’s Agency and New Homes customers pay via monthly direct debit, minimising the
risk of non-payment. The Group establishes an allowance for impairment that represents its estimate of incurred losses in
respect of trade and other receivables based on individually identified loss exposures.
The Group’s treasury policy is to monitor cash and deposit balances on a daily basis to ensure that no more than £30,000,000 is
held with any single institution.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting the obligations associated with its financial liabilities
that are settled by delivering cash. The Group and Company’s approach to managing liquidity is to ensure, as far as possible, that
it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group’s revenue model is largely subscription-based, which results in a regular level of cash conversion allowing it to service
working capital requirements.
The Group and Company ensure that they have sufficient cash on demand to meet expected operational expenses excluding the
potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Throughout the year,
the Group typically had sufficient cash on demand to meet operational expenses, before financing activities, for a period of 95
days (2015: 137 days).
The agreement with HSBC for a £10,000,000 committed revolving loan facility expired on 9 February 2017. This has been
replaced with a new 12 month agreement with Barclays Bank Plc for a £10,000,000 committed revolving loan facility that expires
on 12 February 2018. No amount has been drawn under either facility in either year.
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 97.0% (2015: 95.0%) of the Group’s purchases are Sterling denominated, accordingly
it has no significant currency risk.
(ii) Interest rate risk
The Group and Company have no interest bearing financial liabilities. The Group is exposed to interest rate risk on cash and
money market deposit balances.
92 rightmove.co.uk
4 Risk and capital management continued
Capital management
The Board of directors’ policy is to maintain an efficient statement of financial position so as to maintain investor, creditor and
market confidence and to sustain future development of the business. The Board of directors considers that the future working
capital and capital expenditure requirements of the Group will continue to be low and accordingly return on capital measures are
not key performance targets. The Board of directors monitors the spread of the Company’s shareholders as well as underlying
basic EPS.
The Board’s policy is to return surplus capital to shareholders through a combination of dividends and share buybacks.
(i) Dividend policy
The Board of directors has a progressive dividend policy and monitors the level of dividends to ordinary shareholders in
relation to the growth in underlying basic EPS. The Board has adopted this policy in order to align shareholder returns with
the underlying growth achieved in the profitability in the Group.
The capacity of the Group to make dividend payments is primarily determined by the level of available retained earnings in the
Company, after deduction of own shares held, and the cash resources of the Group. The retained earnings of the Company,
after deduction of own shares held, are £405,801,000 (2015: £400,808,000) as set out in the Company statement of
changes in shareholders’ equity on page 84. The Group has cash and money market deposits at 31 December 2016 of
£17,775,000 (2015: £12,418,000), the majority of which are held by the principal operating subsidiary Rightmove Group
Limited. The Group is well positioned to fund its future dividends given the strong cash generative nature of the business and
in 2016 cash generated from operating activities was £169,250,000 (2015: £143,181,000) representing an operating cash
conversion in excess of 100%.
(ii) Share buybacks
The Company purchases its own shares in the market; the timing of these purchases depends on available free cash flow and
market conditions. In 2016, 2,251,711 (2015: 2,251,340) shares were bought back and were cancelled at an average price of
£39.12 (2015: £33.79).
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 financial losses and damage to the Group’s
reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior
management within each business unit. This responsibility is supported by the development of overall Group standards for the
management of operational risk in the following areas:
• requirements for appropriate segregation of duties, including the independent authorisation of transactions;
• requirements for the reconciliation and monitoring of transactions;
• compliance with regulatory and other legal requirements;
• documentation of controls and procedures;
• requirements for the periodic assessment of operational risks faced and the adequacy of controls and procedures to address
the risks identified;
• requirements for reporting of operational losses and proposed remedial action;
• development and regular testing of business continuity and disaster recovery plans;
• regular testing of the security of the IT systems and platforms, regular backups of key data and ongoing threat monitoring to
protect against the risk of cyber attack;
• training and professional development; and
• risk mitigation, including insurance where this is effective.
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernance
Notes continued
5 Operating segments
The Group determines and presents operating segments based on internal information that is provided to the Chief Executive
Officer, who is the Group’s Chief Operating Decision Maker.
The Group’s reportable segments are as follows:
• The Agency segment which provides resale and lettings property advertising services on Rightmove’s platforms; and
• The New Homes segment which provides property advertising services to new home developers and housing associations
on Rightmove’s platforms.
The Other segment which represents activities under the reportable segments threshold, comprises Overseas and Commercial
property advertising services and non-property advertising services which include our third party advertising and Consumer
Services as well as Data Services. Management monitors the business segments at a revenue and trade receivables level
separately for the purpose of making decisions about resources to be allocated and of assessing performance. All revenues in
both years are derived from third parties and there are no inter-segment revenues.
Operating costs, financial income, financial expenses and income taxes in relation to the Agency, New Homes and the Other
segment are managed on a centralised basis at a Rightmove Group Limited level and as there are no internal measures of
individual segment profitability, relevant disclosures have been shown under the heading of Central in the table below.
The Company has no reportable segments.
Year ended 31 December 2016
Revenue
Operating profit(1)
Depreciation and amortisation
Financial income
Financial expenses
Trade receivables(3)
Other segment assets
Segment liabilities
Capital expenditure
Year ended 31 December 2015
Revenue
Operating profit(1)
Depreciation and amortisation
Financial income
Financial expenses
Trade receivables(3)
Other segment assets
Segment liabilities
Capital expenditure
Agency
£000
168,311
–
–
–
–
19,040
–
–
–
147,102
–
–
–
–
17,184
–
–
–
New
Homes
£000
33,893
–
–
–
–
5,266
–
–
–
30,475
–
–
–
–
5,626
–
–
–
Subtotal
£000
Other
£000
Central Adjustments
£000
£000
Total
£000
202,204
–
–
–
–
24,306
–
–
–
177,577
–
–
–
–
22,810
–
–
–
17,789
–
–
–
–
2,188
–
–
–
14,552
–
–
–
–
1,654
–
–
–
–
166,240
(1,619)
109
(209)
–
33,753
(52,205)
1,759
–
144,271
(1,295)
112
(183)
–
25,742
(43,569)
1,772
–
(4,593)(2)
–
–
–
139(4)
68(5)
(207)(4)(5)
–
–
(7,096)(2)
–
–
–
145(4)
3(5)
(148)(4) (5)
–
219,993
161,647
(1,619)
109
(209)
26,633
33,821
(52,412)
1,759
192,129
137,175
(1,295)
112
(183)
24,609
25,745
(43,717)
1,772
(1) Operating profit is stated after the charge for depreciation and amortisation.
(2) Operating profit does not include share-based payments charge of £4,142,000 (2015: £3,765,000) and NI on share-based incentives charge of £451,000
(2015: £3,331,000).
(3) The only segment assets that are separately monitored by the Chief Operating Decision Maker relate to trade receivables net of any associated provision for
impairment. All other segment assets are reported on a centralised basis.
(4) The adjustments column reflects the reclassification of credit balances in accounts receivable made on consolidation for statutory accounts purposes.
(5) The adjustments column reflects the reclassification of debit balances in accounts payable made on consolidation for statutory accounts purposes.
94 rightmove.co.uk
5 Operating segments continued
Geographic information
In presenting information on the basis of geography, revenue and assets are based on the geographical location of customers.
Revenue
£000
214,536
5,457
219,993
2016
Trade receivables
£000
26,124
509
26,633
Revenue
£000
188,102
4,027
192,129
Group
UK
Rest of the world
6 Operating profit
Operating profit is stated after charging:
Employee benefit expense
Depreciation of property, plant and equipment
Amortisation of intangibles
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 financial statements
Audit of the Company’s subsidiaries pursuant to legislation
Total audit remuneration
Fees payable to the Company’s auditor in respect of non-audit related services
Half year review of the condensed financial statements
Tax compliance services and advisory
All other services
Total non-audit remuneration
2015
Trade receivables
£000
24,220
389
24,609
2015
£000
23,464
934
361
365
874
537
2015
£000
15
90
105
15
14
1
30
2016
£000
27,443
1,241
378
437
898
549
2016
£000
18
131
149
18
1
2
21
Rightmove plc annual report 2016
95
Strategic reportFinancial statementsGovernance
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
2016
Number of
employees
2015
Number of
employees
448
21
469
2016
£000
23,760
2,793
870
391
21
412
2015
£000
20,313
2,398
753
27,423
23,464
Social security costs do not include a charge of £451,000 (2015: £3,331,000) 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
9 Financial expenses
Financial expenses
2016
£000
109
2016
£000
209
2015
£000
112
2015
£000
183
96 rightmove.co.uk
10 Income tax expense
Current tax expense
Current year
Adjustment to current tax charge in respect of prior years
Deferred tax credit
Origination and reversal of temporary differences
Adjustment to deferred tax in respect of prior years
Reduction in tax rate
2016
£000
33,048
(407)
32,641
(636)
–
–
(636)
2015
£000
27,922
(257)
27,665
(105)
(1)
77
(29)
Total income tax expense
32,005
27,636
Income tax credit 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 recognised directly in equity
2016
£000
2015
£000
(441)
(1,876)
436
–
436
(2,408)
149
(2,259)
(5)
(4,135)
Total income tax recognised directly in equity in respect of the Company was a credit of £24,000 (2015: £2,482,000 credit).
Reconciliation of effective tax rate
The Group’s income tax expense for the year is lower in both years than the standard rate of corporation tax in the UK of 20.0%
(2015: 20.3%). The differences are explained below:
Profit before tax
Current tax at 20.0% (2015: 20.3%)
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
2016
£000
2015
£000
161,547
137,104
32,309
–
70
33
(407)
–
27,764
77
46
7
(257)
(1)
32,005
27,636
The Group’s consolidated effective tax rate on the profit of £161,547,000 for the year ended 31 December 2016 is 19.8%
(2015: 20.2%). The difference between the standard rate and effective rate at 31 December 2016 is attributable to a prior year
adjustment of 0.3% (2015: 0.2%), primarily in respect of research and development tax relief, offset by disallowable expenditure
of 0.1% (2015: 0.1%).
Rightmove plc annual report 2016
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Notes continued
11 Earnings per share (EPS)
Year ended 31 December 2016
Basic EPS
Diluted EPS
Underlying basic EPS
Underlying diluted EPS
Year ended 31 December 2015
Basic EPS
Diluted EPS
Underlying basic EPS
Underlying diluted EPS
Weighted average
number of
ordinary shares
93,960,353
94,967,543
93,960,353
94,967,543
96,014,753
97,097,566
96,014,753
97,097,566
Total
earnings
£000
129,542
129,542
134,135
134,135
109,468
109,468
116,564
116,564
Pence
per share
137.87
136.41
142.76
141.24
114.01
112.74
121.40
120.05
Weighted average number of ordinary shares (basic)
Issued ordinary shares at 1 January less ordinary shares held by the EBT and SIP Trust
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
2015
Number of shares Number of shares
2016
97,318,120
(2,322,314)
(1,069,275)
34,560
(738)
99,396,818
(2,505,430)
(1,034,666)
158,344
(313)
Issued ordinary shares at 31 December less ordinary shares held by the EBT and SIP Trust
93,960,353
96,014,753
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
2015
Number of shares Number of shares
2016
93,960,353
1,007,190
96,014,753
1,082,813
94,967,543
97,097,566
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.
98 rightmove.co.uk
11 Earnings per share (EPS) continued
Underlying EPS
Underlying EPS is calculated by taking basic earnings for the year and adding back the charge for share-based payments and the
charge for NI on share-based incentives but without any adjustment to the tax charge in respect of these items. A reconciliation
of the basic earnings for the year to the underlying earnings is presented below:
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:
2014 final dividend paid
2015 interim dividend paid
2015 final dividend paid
2016 interim dividend paid
2016
£000
129,542
4,142
451
2015
£000
109,468
3,765
3,331
134,135
116,564
Pence per share
£000 Pence per share
2016
2015
–
–
27.0
19.0
–
–
25,442
17,764
46.0
43,206
22.0
16.0
–
–
38.0
£000
21,162
15,307
–
–
36,469
After the reporting date a final dividend of 32.0p (2015: 27.0p) per qualifying ordinary share being £29,696,000 (2015: £25,547,000)
was proposed by the Board of directors.
The 2015 final dividend paid on 3 June 2016 was £25,442,000 being a difference of £105,000 compared to that reported in the
2015 Annual Report, which was due to a decrease in the ordinary shares entitled to a dividend between 31 December 2015 and
the final dividend record date of 6 May 2016.
The 2016 interim dividend paid on 4 November 2016 was £17,764,000 being a difference of £172,000 compared to that reported
in the 2016 Half Year Report, which was due to a decrease in the ordinary shares entitled to a dividend between 30 June 2016 and
the interim dividend record date of 7 October 2016.
The terms of the EBT provide that dividends payable on the ordinary shares held by the EBT are waived. No provision was made
for the final dividend in either year and there are no income tax consequences.
Rightmove plc annual report 2016
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Notes continued
13 Property, plant and equipment
Group
Cost
At 1 January 2016
Additions
Acquired through a business combination
At 31 December 2016
Depreciation
At 1 January 2016
Charge for year
At 31 December 2016
Net book value
At 31 December 2016
At 1 January 2016
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
Office equipment,
fixtures & fittings
£000
Computer
equipment
£000
Leasehold
improvements
£000
769
58
2
829
5,823
1,223
7
7,053
451
–
–
451
Total
£000
7,043
1,281
9
8,333
(586)
(92)
(4,010)
(1,091)
(208)
(58)
(4,804)
(1,241)
(678)
(5,101)
(266)
(6,045)
151
183
1,952
1,813
185
243
Office equipment,
fixtures & fittings
£000
Computer
equipment
£000
Leasehold
improvements
£000
713
56
769
4,286
1,537
5,823
451
–
451
2,288
2,239
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
2,239
1,580
The Company had no property, plant or equipment in either year.
100
rightmove.co.uk
14 Intangible assets
Group
Cost
At 1 January 2016
Additions
Internally generated
Acquired through a business combination
At 31 December 2016
Amortisation
At 1 January 2016
Charge for year
At 31 December 2016
Net book value
At 31 December 2016
At 1 January 2016
Goodwill
£000
Computer
software
£000
Asset in
progress
£000
Market
appraisal
algorithm
£000
732
–
–
1,733
4,364
275
–
–
2,465
4,639
–
–
–
(3,713)
(318)
(4,031)
2,465
732
608
651
–
–
203
–
203
–
–
–
203
–
–
–
–
309
309
–
(60)
(60)
249
–
Total
£000
5,096
275
203
2,042
7,616
(3,713)
(378)
(4,091)
3,525
1,383
Goodwill acquired of £1,733,000 relates to the goodwill recognised on the acquisition of The Outside View Analytics Ltd (‘Outside
View’), being intangible assets that are not separately identifiable under IFRS 3. The goodwill represents value arising from the
skills and knowledge of Outside View’s workforce as well as the ability to develop an enhanced product and service offering that
the Board believe will drive an increase in the quantity and quality of predictive analytical data services provided to customers.
The asset in progress consists of capitalised development costs for a significant upgrade to a customer facing software
application used by our Data Services business. The market appraisal algorithm relates to the intangible asset recognised on
acquisition of Outside View.
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
Goodwill
£000
Computer
software
£000
Total
£000
4,917
179
5,096
4,185
179
4,364
(3,352)
(361)
(3,352)
(361)
(3,713)
(3,713)
651
833
1,383
1,565
732
–
732
–
–
–
732
732
The Company had no intangible assets in either year.
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernance
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 Agency segment which represents the lowest level
within the Group at which goodwill is monitored for internal management purposes, which is not higher than the Group’s
operating segments as reported in Note 5.
The carrying value of £2,465,000 goodwill, comprises £732,000 of purchased goodwill arising pre-transition to IFRS and
£1,733,000 on acquisition of the Outside View. Goodwill arising from the acquisition of the Outside View has been allocated to
the Agency segment as the revenue expected from the Outside View product is attributable to Agency customers.
Given the low level of significance of the total goodwill balance and strong growth in the Agency segment revenue in the year,
with no impairment indicators present, the disclosures as required by IAS 36 Impairment of Assets have not been made.
15 Investments
The subsidiaries of the Group as at 31 December 2016 are as follows:
Company
Rightmove Group Limited
The Outside View Analytics Ltd
Rightmove.co.uk Limited
Rightmove Home Information
Packs Limited
Nature of business
Country of
incorporation
Online property advertising
Property analytics services
Dormant
England and Wales
England and Wales
England and Wales
Holding
Class of shares
100%
100%
100%
Ordinary
Ordinary
Ordinary
Dormant
England and Wales
100%
Ordinary
All the above subsidiaries are included in the Group consolidated financial statements. The registered office for all subsidiaries of
the Group is Turnberry House, 30 Caldecotte Lake Drive, Caldecotte, Milton Keynes MK7 8LE.
Company
Investment in subsidiary undertakings
At 1 January
Additions – subsidiary share-based payments charge (refer Note 23)
At 31 December
2016
£000
2015
£000
544,464
1,738
542,804
1,660
546,202
544,464
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 £1,738,000 (2015: £1,660,000)
being recognised in the Company accounts as a capital contribution to its subsidiary.
102
rightmove.co.uk
16 Deferred tax assets
Deferred tax is presented net on the balance sheet in so far as a right of offset exists. The net deferred tax asset is attributable to
the following:
Share-
based
incentives
£000
6,509
–
531
(436)
6,604
4,224
26
2,259
6,509
Property,
plant and
equipment
£000
Group
Provisions
£000
Market
appraisal
algorithm
£000
179
–
73
–
252
197
(18)
–
179
103
–
22
–
125
82
21
–
103
–
(49)
10
–
(39)
–
–
–
–
Company
Share-
based
incentives
£000
3,581
–
346
(170)
Total
£000
6,791
(49)
636
(436)
6,942
3,757
4,503
29
2,259
6,791
2,667
(86)
1,000
3,581
At 1 January 2016
Arising on business combination
Recognised in income
Recognised directly in equity
At 31 December 2016
At 1 January 2015
Recognised in income
Recognised directly in equity
At 31 December 2015
The increase in the deferred tax asset relating to share-based incentives at 31 December 2016 is due to fewer exercises of
shares options in 2016 which together with the number of new share scheme awards has outweighed the reduction in the
Company’s share price from £41.25 at 31 December 2015 to £39.03 at 31 December 2016.
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was 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, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016.
This will reduce the Group’s future current tax charge accordingly. The deferred tax asset at 31 December 2016 has been calculated
at the rate of 19% which represents the average expected rate at which the net deferred tax asset will reverse in the future.
17 Trade and other receivables
Group
Trade receivables
Less provision for impairment of trade receivables
Net trade receivables
Prepayments
Accrued income
Interest receivable
Other debtors
2016
£000
27,061
(428)
26,633
2,826
338
–
127
2015
£000
25,055
(446)
24,609
2,529
301
25
59
29,924
27,523
Exposure to credit and currency risks and impairment losses relating to trade and other receivables are disclosed in Note 26.
The Company has no trade and other receivables in either year.
Rightmove plc annual report 2016
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Notes continued
18 Cash and deposits
Group
Cash and cash equivalents
Money market deposits
2016
£000
13,749
4,026
2015
£000
8,418
4,000
17,775
12,418
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 0.4% (2015: 0.5%).
The cash at bank balance includes £1,848,000 which is restricted to use in accordance with the deeds of the EBT.
Money market deposits with an original maturity of more than three months and less than a year, attracted interest at a weighted
average rate of 0.7% (2015: 0.8%).
The Company had cash and cash equivalent balances at 31 December 2016 of £180 (2015: £148).
19 Trade and other payables
Trade payables
Trade accruals
Other creditors
Other taxation and social security
Deferred revenue
Inter-group payables
Group
Company
2016
£000
1,266
7,644
46
9,172
17,668
–
2015
£000
592
7,336
69
7,428
16,193
–
2016
£000
–
4,835
–
–
–
25,317
2015
£000
–
4,721
–
–
–
31,908
35,796
31,618
30,152
36,629
Exposure to currency and liquidity risk relating to trade and other payables is disclosed in Note 26.
20 Loans and borrowings
The agreement with HSBC for a £10,000,000 committed revolving loan facility expired on 9 February 2017. This has been
replaced with a new 12 month agreement with Barclays Bank Plc for a £10,000,000 committed revolving loan facility that expires
on 12 February 2018. No amount has been drawn under either facility in either year.
The Company had no loans and borrowings in either year.
104
rightmove.co.uk
21 Provisions
At 1 January
Charged in the year
At 31 December
Current
Non-current
Dilapidations
provision
£000
236
36
272
185
87
2016
Other
£000
–
88
88
–
88
2015
Dilapidations
provision
£000
200
36
236
–
236
Total
£000
236
124
360
185
175
Total
£000
200
36
236
–
236
The lease dilapidations 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 floor area of each of the premises.
The Company had no provisions in either year.
22 Share capital
In issue ordinary shares of £0.01 each
At 1 January
Purchase and cancellation of own shares
2016
2015
Amount
£000
Number
of shares
Amount
£000
Number
of shares
977
(22)
97,741,977
(2,251,711)
1,000
(23)
99,993,317
(2,251,340)
At 31 December
955
95,490,266
977
97,741,977
The authorised share capital is 300,000,000 ordinary £0.01 shares in both years.
All issued shares are fully paid. The holders of ordinary shares are entitled to receive dividends as declared from time to time and
are entitled to one vote per ordinary share at general meetings of the Company.
In June 2007, the Company commenced a share buyback programme to purchase its own ordinary shares. The total number of
shares bought back in 2016 was 2,251,711 (2015: 2,251,340) representing 2.4% (2015: 2.4%) of the ordinary shares in issue
(excluding shares held in treasury). All of the shares bought back in both years were cancelled. The shares were acquired on the
open market at a total consideration (excluding costs) of £88,083,000 (2015: £76,071,000). The maximum and minimum prices
paid were £42.50 (2015: £41.44) and £33.11 (2015: £21.18) per share respectively. Share-related expenses in relation to stamp
duty charges and broker expenses were £617,000 (2015: £533,000).
Included within shares in issue at 31 December 2016 are 343,275 (2015: 386,057) shares held by the EBT, 50,150 (2015: 37,800)
shares held by the SIP and 2,271,725 (2015: 2,322,314) shares held in treasury.
Rightmove plc annual report 2016
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Strategic reportFinancial statementsGovernance
Notes continued
23 Reconciliation of movement in capital and reserves
Group
Own shares held – £000
EBT shares
reserve
£000
SIP shares
reserve
£000
Own shares held as at 1 January 2015
Shares purchased for SIP
Shares transferred to SIP
Share-based incentives exercised in the year
SIP releases in the year
Increase in shares released from EBT due to rolled up dividend payments
(2,906)
(507)
863
378
–
7
–
–
(863)
–
11
–
Treasury
shares
£000
(11,917)
–
–
856
–
16
Total
£000
(14,823)
(507)
–
1,234
11
23
Own shares held as at 31 December 2015
(2,165)
(852)
(11,045)
(14,062)
Own shares held as at 1 January 2016
Shares purchased for SIP
Shares transferred to SIP
Share-based incentives exercised in the year
SIP releases in the year
Increase in shares released from EBT due to
rolled up dividend payments
(2,165)
(751)
517
107
–
1
(852)
–
(517)
–
17
–
(11,045)
–
–
232
–
(14,062)
(751)
–
339
17
9
10
Shares held as at 31 December 2016
(2,291)
(1,352)
(10,804)
(14,447)
Own shares held – number
Own shares held as at 1 January 2015
Shares purchased for SIP
Shares transferred to SIP
Share-based incentives exercised in the year
Reduction in shares released due to net settlement (refer Note 24)
SIP releases in the year
Increase in shares released from EBT due to
rolled up dividend payments
EBT shares
reserve
number of
shares
596,499
12,700
(38,300)
(181,552)
–
–
SIP shares
reserve
number of
shares
–
–
38,300
–
–
(500)
Treasury
shares
number of
shares
2,505,430
–
–
(199,751)
19,930
–
Total
number of own
shares held
3,101,929
12,700
–
(381,303)
19,930
(500)
(3,290)
–
(3,295)
(6,585)
Own shares held as at 31 December 2015
386,057
37,800
2,322,314
2,746,171
Own shares held as at 1 January 2016
Shares purchased for SIP
Shares transferred to SIP
Share-based incentives exercised in the year
SIP releases in the year
Increase in shares released from EBT due to
rolled up dividend payments
386,057
20,250
(12,950)
(49,985)
–
37,800
–
12,950
–
(600)
2,322,314
–
–
(48,750)
–
2,746,171
20,250
–
(98,735)
(600)
(97)
–
(1,839)
(1,936)
Shares held as at 31 December 2016
343,275
50,150
2,271,725
2,665,150
106
rightmove.co.uk
23 Reconciliation of movement in capital and reserves continued
(a) EBT shares reserve
This reserve represents the cost of own shares acquired by the EBT less any exercises of share-based incentives. An additional
97 shares were issued as a result of rolled up dividend payments in relation to performance shares.
At 31 December 2016, the EBT held 343,275 (2015: 386,057) ordinary shares in the Company of £0.01 each, representing 0.4%
(2015: 0.4%) of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held in the EBT at
31 December 2016 was £13,398,000 (2015: £15,925,000).
(b) SIP shares reserve (Group and Company)
In November 2014, the Company established the Rightmove Share Incentive Plan Trust (SIP). This reserve represents the cost
of acquiring shares less any exercises or releases of SIP awards. Employees of the Group were offered 50 free shares (2015: 50),
subject to a three year service period, with effect from 3 January 2017 (4 January 2016). 600 (2015: 500) shares were released by
the SIP during the year in relation to good leavers and retirees. 12,950 (2015: 38,300) shares were transferred to the SIP reserve
from the EBT.
At 31 December 2016 the SIP held 50,150 (2015: 37,800) ordinary shares in the Company of £0.01 each, representing 0.05%
(2015: 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 £1,957,000 (2015: £1,559,000).
(c) Treasury shares (Group and Company)
This represents the cost of acquiring shares held in treasury less any exercises of share-based incentives. These shares were
bought back in 2008 at an average price of £4.76 and may be used to satisfy certain share-based incentive awards. An additional
1,839 shares were issued as a result of rolled up dividend payments in relation to performance shares.
Other reserves
This represents the Capital Redemption Reserve in respect of own shares bought back and cancelled. The movement of £22,000
(2015: £23,000) is the nominal value of ordinary shares cancelled during the year.
Retained earnings
The gain on the exercise of share-based incentives of £7,000 (2015: £867,000 loss) is the difference between the value that the
shares held by the EBT, SIP and treasury shares were originally acquired at and the exercise price at which share-based incentives
were exercised or released during the year. Details of share buybacks and cancellation of shares are included in Note 22.
Company
Reverse acquisition reserve
This reserve resulted from the acquisition of Rightmove Group Limited by the Company and represents the difference between
the value of the shares acquired at 28 January 2008 and the nominal value of the shares issued.
Other reserves
Awards relating to share-based incentives made to Rightmove Group Limited employees have been treated as a deemed capital
contribution. The principal movement in other reserves for the year comprises £1,738,000 (2015: £1,660,000) in respect of the
share-based incentives charge for employees of Rightmove Group Limited.
In addition other reserves include £339,000 (2015: £317,000) of Capital Redemption Reserve. A movement of £22,000
(2015: £23,000) has been recorded in relation to the nominal value of ordinary shares cancelled during the year.
Rightmove plc annual report 2016
107
Strategic reportFinancial statementsGovernance
Notes continued
24 Share-based payments
The Group and Company operate a number of share-based incentive schemes for executive directors and employees.
All share-based incentives are subject to a service condition. Such conditions are not taken into account in the fair value of the
service received. The fair value of services received in return for share-based incentives is measured by reference to the fair value
of share-based incentives granted. The estimate of the fair value of the share-based incentives is measured using either the
Monte Carlo or Black Scholes pricing model as is most appropriate for each scheme.
The Group recognised a total share-based payments charge for the year of £4,142,000 (2015: £3,765,000) with a Company
charge for the year of £2,404,000 (2015: £2,105,000), as set out below:
Sharesave Plan
Performance Share Plan (PSP)
Deferred Share Bonus Plan (DSP)
Share Incentive Plan (SIP)
Group
Company
2016
£000
204
2,755
884
299
2015
£000
157
2,553
917
138
2016
£000
4
1,879
521
–
Total share-based payments charge
4,142
3,765
2,404
NI on applicable share-based payment schemes at 13.8%
451
3,331
232
2015
£000
5
1,580
519
1
2,105
2,605
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 £36,000 (2015: £49,000).
Approved and Unapproved Plans
There has been no award of share options for Approved and Unapproved Plans since 5 March 2010.
Group
Outstanding at 1 January
Exercised
2016
Weighted average
exercise price
(pence)
Number
2015
Weighted average
exercise price
(pence)
Number
546,527
–
307.42
–
663,131
(116,604)
369.53
660.65
Outstanding at 31 December
546,527
307.42
546,527
307.42
Exercisable at 31 December
546,527
307.42
546,527
307.42
The weighted average market value per ordinary share for options exercised in 2016 was nil (2015: £37.39).
The options outstanding at 31 December 2016 have an exercise price in the range of £2.24 to £6.66 in both years and a weighted
average contractual life of 2.1 years (2015: 3.1 years).
108
rightmove.co.uk
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:
Share price
at grant date
(pence)
Exercise Expected
volatility
(%)
price
(pence)
Option
life
(years)
Risk free
rate
(%)
Dividend
yield
(%)
Fair value
condition per option
(pence)
(%)
Employee
turnover
before vesting/
non-vesting
1577.00
2371.00
2144.00
3639.00
4293.00
1295.00
1896.00
1972.00
2960.00
3315.00
34.8
27.3
25.3
24.7
27.8
3.0
3.0
3.0
3.0
3.0
0.5
0.7
1.0
0.8
0.4
1.3
1.1
1.4
1.0
1.1
475.00
25.0
659.00
25.0
430.00
25.0
25.0
933.00
25.0 1233.00
Grant date
1 October 2012
1 October 2013
1 October 2014
1 October 2015
1 October 2016
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
2016
Weighted average
exercise price
(pence)
Number
104,019
43,451
(9,939)
(20,598)
2273.13
3315.00
2695.91
1809.87
2015
Weighted average
exercise price
(pence)
Number
116,032
35,794
(16,406)
(31,401)
1733.49
2960.00
1932.63
1244.84
Outstanding at 31 December
116,933
2712.71
104,019
2273.13
Exercisable at 31 December
4,601
1896.00
2,211
1295.00
The weighted average market value per ordinary share for Sharesave options exercised in 2016 was £38.34 (2015: £37.27).
The Sharesave options outstanding at 31 December 2016 have an exercise price in the range of £18.96 to £33.15
(2015: £12.95 to £29.60) and a weighted average contractual life of 2.3 years (2015: 2.4 years).
Rightmove plc annual report 2016
109
Strategic reportFinancial statementsGovernance
Notes continued
24 Share-based payments continued
Performance Share Plan (PSP)
The PSP permits awards of nil cost options or contingent shares which will only vest in the event of prior satisfaction of a
performance condition.
89,041 PSP awards were made on 1 March 2016 (the grant date) subject to EPS and TSR performance. Performance will be
measured over three financial years (1 January 2016 to 31 December 2018). The vesting in March 2019 (vesting date) of 25% of
the 2016 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 2016 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. The assumptions used in the measurement of the fair value at grant date of the PSP awards are as follows:
Share price
at grant date
(pence)
Exercise Expected
volatility
(%)
price
(pence)
Option
life
(years)
Risk free
rate
(%)
Dividend
yield
(%)
Fair value
condition per option
(pence)
(%)
Employee
turnover
before vesting/
non-vesting
1781.00
1781.00
2688.00
2688.00
3044.00
3044.00
4069.00
4069.00
nil
nil
nil
nil
nil
nil
nil
nil
27.3
n/a
25.3
n/a
24.7
n/a
27.8
n/a
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
0.4
0.4
1.0
1.0
0.8
0.8
0.4
0.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.8
4.8
4.8
4.8
5.2
5.2
4.4
4.4
1003.00
1781.00
1219.00
2688.00
2258.00
3044.00
1985.00
4069.00
Grant date
8 March 2013 (TSR dependent)(1)
8 March 2013 (EPS dependent)(1)
3 March 2014 (TSR dependent)(1)(2)
3 March 2014 (EPS dependent)(1) (2)
2 March 2015 (TSR dependent)(1)
2 March 2015 (EPS dependent)(1)
1 March 2016 (TSR dependent)(1)
1 March 2016 (EPS dependent)(1)
(1) For details of TSR and EPS performance conditions refer to the Directors’ Remuneration Report on pages 47 to 74.
(2) Both the TSR and EPS performance conditions for PSPs with a grant date of 3 March 2014 have been met in full and 100% of the awards are expected to vest in
March 2017.
Expected volatility is estimated by considering historic average share price volatility at the grant date.
Group
Outstanding at 1 January
Granted
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2016
Number
388,002
89,041
(22,688)
(51,403)
2015
Number
438,365
129,645
–
(180,008)
402,952
388,002
82,467
23,953
The weighted average market value per ordinary share for options exercised in 2016 was £38.86 (2015: £35.19). The weighted
average exercise price was nil in both years.
The PSP awards outstanding at 31 December 2016 have a weighted average contractual life of 2.7 years (2015: 3.1 years).
110
rightmove.co.uk
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:
Share price at
grant date
(pence)
Award
date
Exercise
price
(pence)
Expected
term
(years)
Risk free
rate
(%)
Employee
turnover
before vesting/
non-vesting
condition
(%)
Dividend
yield
(%)
Fair value
per share
(pence)
3 March 2014
2 March 2015
1 March 2016(1)
–(2)
1781.00
2688.00
3044.00
4069.00
nil
nil
nil
nil
3.0
3.0
3.0
3.0
0.4
1.0
0.8
0.4
1.4
1.0
1.2
1.1
5.3 1708.00
5.6 2605.00
2941.00
6.0
3942.00
5.7
Grant date
8 March 2013
3 March 2014
2 March 2015
1 March 2016
(1) Following the achievement of 100% of the 2015 internal performance targets, 36,276 nil cost deferred shares were awarded to executives and senior management
on 1 March 2016 (the Award Date) with the right to the release of the shares deferred until March 2018.
(2) Based on the 2016 internal performance targets, the Remuneration Committee determined that 92% of the maximum award in respect of the year will be made in
March 2017. The number of shares to be awarded will be determined based on the share price at the Award Date in March 2017.
Group
Outstanding at 1 January
Awarded
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2016
Number
68,309
36,276
(1,677)
(26,736)
2015
Number
90,909
33,864
–
(56,464)
76,172
68,309
7,709
–
The weighted average market value per ordinary share for deferred shares exercised in 2016 was £38.60 (2015: £32.42). The
weighted average exercise price was nil in both years.
The DSP awards outstanding at 31 December 2016 have a weighted average contractual life of 1.5 years (2015: 0.7 years).
Rightmove plc annual report 2016
111
Strategic reportFinancial statementsGovernance
Notes continued
24 Share-based payments continued
Share Incentive Plan
In 2014, the Group established the Rightmove Share Incentive Plan Trust (SIP). Employees were offered 50 shares (2015: 100) as
a gift, subject to a three year service period (the Vesting Period). The SIP awards have been valued using the Black Scholes model
and the resulting share-based payments charge spread evenly over the Vesting Period of three years. The SIP shareholders are
entitled to dividends paid in cash over the Vesting Period. No performance criteria are applied to the exercise of SIP options.
The assumptions used in the measurement of the fair value at grant date of the SIP awards are as follows:
Share price
at grant date
(pence)
Exercise Expected
volatility
(%)
price
(pence)
Option
life
(years)
Risk free
rate
(%)
Dividend
yield
(%)
Fair value
condition per option
(pence)
(%)
Employee
turnover
before vesting/
non-vesting
2245.00
4093.00
nil
nil
24.7
27.8
3.0
3.0
0.8
0.4
nil
nil
45.0 2245.00
45.0 4093.00
Grant date
1 January 2015
1 January 2016
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
2016
Number
30,200
20,550
(5,850)
(600)
2015
Number
–
38,300
(7,600)
(500)
44,300
30,200
–
–
The weighted average market value per ordinary share for SIP awards released in 2016 was £37.90 (2015: £34.45). The weighted
average exercise price in both years was nil.
The SIP shares released relate to good leavers and retirements from the SIP, in accordance with the terms of the Trust.
The SIP options outstanding at 31 December 2016 have a weighted average contractual life of 1.4 years (2015: 2.0 years).
25 Operating lease commitments
Non-cancellable operating lease rentals are payable as follows:
Group
Less than one year
Between one and five years
More than five years
Plant &
machinery
£000
234
157
–
391
2016
Land &
buildings
£000
491
1,172
3
1,666
Total
£000
725
1,329
3
2,057
Plant &
machinery
£000
359
165
–
524
2015
Land &
buildings
£000
949
1,370
296
2,615
Total
£000
1,308
1,535
296
3,139
The Company had no operating lease commitments in either year.
112
rightmove.co.uk
26 Financial instruments
Credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was:
Group
Net trade receivables
Accrued interest receivable
Other debtors
Cash and cash equivalents
Money market deposits
Note
17
17
17
18
18
2016
£000
26,633
–
127
13,749
4,026
2015
£000
24,609
25
59
8,418
4,000
44,535
37,111
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
The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was:
Group
Property advertisers
Other
Note
17
2016
£000
26,124
509
2015
£000
24,220
389
26,633
24,609
2016
£000
25,361
1,272
2015
£000
23,055
1,554
26,633
24,609
The Group’s most significant customer accounts for £1,589,000 (2015: £1,305,000) of the trade receivables carrying amount as
at 31 December 2016.
Rightmove plc annual report 2016
113
Strategic reportFinancial statementsGovernance
Notes continued
26 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
Gross
£000
24,010
1,876
880
58
237
2016
Impairment
£000
(7)
(70)
(56)
(58)
(237)
Gross
£000
21,227
2,654
593
104
477
27,061
(428)
25,055
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
2016
£000
446
437
(455)
428
2015
Impairment
£000
(5)
(55)
(19)
(7)
(360)
(446)
2015
£000
490
365
(409)
446
The Group has identified specific balances for which it has provided an impairment allowance on a line by line basis across all
ledgers, in both years. No general impairment allowance has been provided in either year.
The allowance accounts in respect of trade receivables are used to record impairment losses unless the Group is satisfied that no
recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the financial
asset directly.
Liquidity risk
The contractual maturities of undiscounted financial liabilities, including undiscounted estimated interest payments, as at year
end were:
Group
At 31 December 2016
Trade payables being non-derivative financial liabilities
At 31 December 2015
Trade payables being non-derivative financial liabilities
Carrying
amount
£000
Contractual
cash flows
£000
6 months
or less
£000
1,266
(1,266)
(1,266)
592
(592)
(592)
The Company had no non-derivative financial liabilities in either year.
It is not expected that the cash flows included in the maturity analysis could occur earlier or at significantly different amounts and
all payables are due within six months of the balance sheet date.
Currency risk
During 2016 all the Group’s sales and more than 97.0% (2015: 95.0%) of the Group’s purchases were Sterling denominated and
accordingly it has no significant currency risk.
Interest rate risk
The Group has exposure to interest rate risk on its cash and money market deposit balances. As at 31 December 2016 the Group
had total cash of £13,749,000 (2015: £8,418,000) and money market deposits of £4,026,000 (2015: £4,000,000).
Fair values
The fair values of all financial instruments in both years are equal to the carrying values.
114
rightmove.co.uk
27 Acquisition of subsidiary
On 31 May 2016, Rightmove Group Limited acquired the entire ordinary share capital of The Outside View Analytics Ltd
(“Outside View”), a predictive analytics business. The Outside View have developed an algorithm to predict which homeowners
are most likely to sell their property in the next 180 days. Rightmove plans to launch an enhanced version of the product using its
combined know how and unique dataset. The product will help customers to identify and market to their target audience and will
complement the Local Valuation Alert product. The total cash consideration paid of £2,096,000 excludes acquisition costs of
£42,000 which have been recognised as an expense in the period in the Consolidated Statement of Comprehensive Income.
The following table provides a reconciliation of the amounts included in the Consolidated Statement of Cash Flows:
Net cash flow on acquisition
Cash paid for subsidiary
Transaction costs on acquisition
Cash acquired
Net cash outflow
2016
£000
(2,096)
(42)
50
(2,088)
In the seven month period to 31 December 2016, Outside View contributed revenue of £174,000 and profit of £80,000 to the
Group’s results.
The following table details the fair values of the assets and liabilities acquired at the date of acquisition:
Net assets acquired
Non-current assets
Property, plant and equipment
Intangible assets – market appraisal technology(2)
Current assets
Trade and other receivables(3)
Cash and cash equivalents
Current liabilities
Non-current liabilities
Deferred tax liabilities(2)
Fair value of net assets acquired
Cash consideration
Total consideration
Goodwill(1)
Carrying values
pre-acquisition
£000
Fair value
adjustments
£000
Fair values
£000
9
–
191
50
(145)
–
105
–
309
(2)
–
–
(49)
258
9
309
189
50
(145)
(49)
363
2,096
2,096
1,733
(1) The goodwill recognised on acquisition represents value arising from intangible assets that are not separately identifiable under IFRS 3. These items include the
skills and knowledge of the Outside View’s workforce as well as the ability to develop an enhanced product and service offering that the Board believe will drive an
increase in the quantity and quality of predictive analytical data services provided to customers.
(2) In addition to the goodwill recognised on consolidation, the market appraisal algorithm and supporting technology obtained through the acquisition met the
requirements to be separately identifiable under IFRS 3. The fair value has been obtained by estimating the cost of independently building similar technology.
The asset will be amortised over its useful economic life of three years. A deferred tax liability has been recognised in respect of this asset and will be unwound
over the useful economic life.
(3) The receivables acquired (which principally comprised trade receivables) with a fair value of £191,000 had gross contractual amounts of £210,000. The best estimate
at acquisition date of the contractual cash flows not expected to be collected is £21,000 resulting in a fair value adjustment of £2,000.
Rightmove plc annual report 2016
115
Strategic reportFinancial statementsGovernance
Notes continued
28 Related party disclosures
Inter-group transactions with subsidiaries
Under the inter-group loan agreement dated 30 January 2008, Rightmove Group Limited settles all expenses on behalf of the
Company, including dividends paid to shareholders and share buybacks and related costs. During the year, the Company was
charged interest of £527,000 (2015: £547,000) under this agreement and at 31 December 2016, the inter-group loan balance
was £25,317,000 (2015: £31,908,000) including capitilised interest (refer Note 19).
On 30 June 2016 Rightmove Group Limited declared an interim dividend of 55p per ordinary share to the Company. Additionally,
on 13 December 2016, Rightmove Group Limited declared a further interim dividend of 54p per ordinary share to the
Company. The dividends of £141,046,000 (2015: £129,400,000) 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 £517,000
(2015: £863,000), representing the cost of the SIP shares transferred from the EBT to the SIP during the year.
Inter-group transactions between subsidiaries
During the year, following its acquisition on 31 May 2016, the Outside View became a related party to the Company.
Since acquisition Rightmove Group Limited has settled liabilities on behalf of the Outside View and the balance owing under
an inter-group loan agreement dated 13 June 2016 was £15,000 as at 31 December 2016.
Directors’ transactions
There were no transactions with directors in either year other than those disclosed in the Directors’ Remuneration Report.
Information on the emoluments of the directors who served during the year, together with information regarding the beneficial
interest of the directors in the ordinary shares of the Company is included in the Directors’ Remuneration Report on pages 47
to 74.
During the year, the directors in office in total had gains of £1,566,000 (2015: £9,263,000) arising on the exercise of share-based
incentive awards. The total share-based payments charge in relation to the directors in office was £2,404,000 (2015: £2,105,000).
Key management personnel
No other Rightmove employees are considered to meet the definition of key management personnel other than those disclosed
in the Directors’ Remuneration Report on pages 47 to 74.
29 Contingent liabilities
The Group and the Company had no contingent liabilities in either year.
30 Subsequent events
There have been no subsequent events having a material impact on the financial statements between 31 December 2016 and
the reporting date.
116
rightmove.co.uk
Rightmove is
the UK’s largest
property portal
Our aim is to create a more
transparent and efficient
property marketplace and
to make home moving easier
in the UK
Advisers and shareholder information
Contacts
Chief Executive Officer:
Chief Operating Officer:
Finance Director:
Company Secretary:
Website:
Nick McKittrick
Peter Brooks-Johnson
Robyn Perriss
Sandra Odell
www.rightmove.co.uk
Financial calendar 2017
2016 full year results
Final dividend record date
Annual General Meeting
Final dividend payment
Half year results
Interim dividend
24 February 2017
5 May 2017
9 May 2017
2 June 2017
28 July 2017
3 November 2017
Registered office
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in
England no. 6426485
Corporate advisers
Financial adviser
UBS Investment Bank
Joint brokers
UBS Limited
Numis Securities Limited
Auditor
KPMG LLP
Bankers
Barclays Bank Plc
HSBC Bank plc
Santander UK Plc
Solicitors
Slaughter and May
Pinsent Masons
Registrar
Capita Asset Services*
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Strategic report
Highlights
1
Our strategy
2
3
Business model
Chairman’s statement
4
6 What makes us excited
10
14
17
21 Risk management
21 Principal risks and uncertainties
23 The EU referendum
23 Viability statement
24
Chief Executive’s review
Key performance indicators
Financial review
Corporate responsibility
Corporate governance report
Governance
28 Directors and officers
30
43 Directors’ report
46
47
75
Statement of directors’ responsibilities
Directors’ remuneration report
Auditors’ report
Financial statements
78
Consolidated statement of
comprehensive income
Consolidated statement of financial
position
Company statement of financial position
Consolidated statement of cash flows
Company statement of cash flows
Consolidated statement of changes in
shareholders’ equity
Company statement of changes in
shareholders’ equity
Notes forming part of the financial
statements
Advisers and shareholder information
79
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82
83
84
85
117
*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: 0371 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.
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Rightmove plc annual report 2016
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Rightmove plc | annual report 2016
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Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Caldecotte, Milton Keynes
MK7 8LE
Registered in England no 6426485
the UK’s number one
property website