Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Caldecotte, Milton Keynes
MK7 8LE
Registered in England no 6426485
Rightmove plc | annual report 2017
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the UK’s number one
property website
Rightmove plc | annual report 2017
Advisors and shareholder information
Making home moving easier
Rightmove is the UK’s largest property portal.
Our aim is to make home moving easier by
creating a simpler and more efficient property
market place.
Strategic report
Highlights
1
Our strategy
2
Chairman’s statement
3
Business model
5
Chief Executive’s review
8
Key performance indicators
14
17
Financial review
21 Risk management
22 Principal risks and uncertainties
24 The EU referendum
24 Viability statement
25
Corporate responsibility
Corporate governance report
Governance
30 Directors and officers
32
46 Directors’ report
49
50
77
Statement of directors’ responsibilities
Directors’ remuneration report
Auditors’ report
Financial statements
82
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
83
84
85
86
87
88
89
121
Contacts
Chief Executive Officer:
Finance Director:
Company Secretary:
Website:
Peter Brooks-Johnson
Robyn Perriss
Sandra Odell
www.rightmove.co.uk
Registered office
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in
England no. 6426485
Financial calendar 2018
2017 full year results
Final dividend record date
Annual General Meeting
Final dividend payment
Half year results
Interim dividend
23 February 2018
4 May 2018
4 May 2018
1 June 2018
27 July 2018
2 November 2018
Corporate advisers
Financial adviser
UBS Investment Bank
Joint brokers
UBS Limited
Numis Securities Limited
Auditor
KPMG LLP
Bankers
Barclays Bank Plc
Santander UK Plc
Solicitors
EMW LLP
Slaughter and May
Pinsent Masons
Registrar
Link Asset Services*
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*Shareholder enquiries
The Company’s registrar is Link Asset Services (formerly Capita Asset Services). They will be pleased to deal with any questions
regarding your shareholding or dividends. Please notify them of your change of address or other personal information.
Their address details are:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Link Asset Services is a trading name of Link Market Services Limited.
Shareholder helpline: 0371 664 0300 (calls cost 10p per minute plus network extras) (Overseas: +44 20 8639 3399)
Email: enquiries@linkgroup.co.uk
Share portal: www.signalshares.com
Through the website of our registrar, Link Asset Services, shareholders are able to manage their shareholding online and facilities
include electronic communications, account enquiries, amendment of address and dividend mandate instructions.
Designed and produced by The Team www.theteam.co.uk
Rightmove plc annual report 2017 121
Strategic report | Highlights
Financial highlights
Revenue
Underlying operating profit(1)
Operating profit
+11%
Revenue up 11% year on year to
£243.3m (2016: £220.0m) with
growth driven by our Agency and
New Homes businesses
+11%
Underlying operating profit(1)
up 11% to £184.4m
(2016: £166.2m)
+10%
Operating profit up 10%
to £178.3m (2016: £161.6m)
Basic earnings per share
Underlying basic earnings per share(2)
Dividend
+14%
Basic earnings per share up 14%
to 156.8p (2016: 137.9p)
+14%
Underlying basic earnings
per share(2) up 14% to 163.3p
(2016: 142.8p)
+14%
Final dividend of 36.0p
(2016: 32.0p) per ordinary share
making a total dividend of 58.0p
for the year (2016: 51p), up 14%
(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
Customer numbers
Properties advertised
Traffic: visits
20,427
Record customer numbers
with Agency and New Homes
customers up 2% to 20,427
(2016: 20,121)
1 million
1 million UK residential properties
advertised on Rightmove which
is a significant stock advantage
compared to any other UK portal
+4%
Visits up 4% averaging over
125 million visits per month(1)
Traffic: time on site
Average Revenue Per Advertiser(2)
Employee engagement
1 billion
Time on site unchanged year
on year at nearly 1 billion minutes
per month(1)
£922
Average Revenue Per Advertiser
up 10% to £922 per month
(2016: £842)
90%
90% of employee respondents
think Rightmove is a great place
to work
(1) Source: Google Analytics.
(2) For Agency and New Homes customers.
“The UK public has once again moved
with Rightmove, spending 11.7 billion
minutes on Rightmove platforms in
2017. Our focus and innovation
continue to make us the place that
consumers turn to first and that
property professionals turn to
most often.
Our customer numbers increased to a
record high of nearly 20,500, testament
to our aim to provide customers with
the most effective marketing exposure
and the highest quality leads, as well as
helping to drive efficiencies within their
businesses through tools and support.
As the industry becomes more digital
our software has become even more
valuable to our customers with 90% of
our Agency members making use of it
each month. Our market leading
position, our culture of restlessness,
and our ambition to make our
marketplace even more efficient
means there are many reasons to be
excited by the opportunities ahead for
Rightmove, and the Board remains
confident of making further progress
in 2018.”
Peter Brooks-Johnson
Chief Executive Officer
1
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 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
It is not in our DNA to stand still and we
continue to restlessly innovate for both
our customers and our consumers.
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 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
2
rightmove.co.uk
Strategic report | Chairman’s statement
Scott Forbes
Chairman
I am pleased to present Rightmove plc’s results for the year
ended 31 December 2017.
Throughout our history we have enabled our property
industry partners to be more informed, make better and faster
decisions and realise efficiencies both during robust and
quieter housing market cycles. Perhaps the most notable
feature of 2017 was our continued innovation of digital
solutions for the UK housing market. We have also continued
to be the only place where consumers can see almost the
entire UK property market, giving our customers access to an
unrivalled audience for their brands and exposure for their
sales and rental properties.
Rightmove’s higher value Optimiser product package is a
perfect example of the changing and improved nature of our
digital product suite. It gives our customers the ability to select
the tools and advertising that best strengthen their marketing
plans and achieve their business goals after discussion with
and insight from Rightmove account managers.
Notable new products in 2017 include Rightmove Discover,
which leverages Artificial Intelligence to assist estate agents
with identifying instruction opportunities which are the raw
material for our customers’ businesses. Property data
has always been at the core of our business and we are
excited about continuing to harness the power of our data
to drive further efficiency in the property market, predict
market opportunities and drive success for our customers
and consumers.
Rightmove’s culture is to remove complexity and our
ambition is to make home moving easier and more
efficient. Our attachment to our homes and the
emotional experience of moving house over a lifetime
is not lost on us. That recognition is underscored in our
recent television advertising campaign that captures not
only a series of personal home moving experiences, but also
reflects our focus on the end game. We make home search
simple. The quality and clarity of user experience across
desktop, smartphone and tablet is testament to our
developers and designers who seek to achieve this outcome.
It was a proud year of achievement serving property
professionals and home hunters. We are committed to
continue that effort with the same level of energy, innovation
and sensitivity to the needs and demands of all our
stakeholders in 2018.
Financial results
The strength of our business model and core value
proposition once again underpins our robust financial results
in 2017. Underlying operating profit(1) was up 11% to £184.4m
(2016: £166.2m) and operating profit was up 10% at £178.3m
(2016: £161.6m) driven by revenue growth of 11% to
£243.3m (2016: £220.0m) and a disciplined approach to
cost control. Underlying basic earnings per share(2) and
basic earnings per share were both up 14% at 163.3p
(2016: 142.8p) and 156.8p (2016: 137.9p) respectively, even
greater than the percentage increase in profits and in part as a
result of 2.2m shares bought back during the year at a cost of
£90.8m as part of our policy of returning cash to shareholders.
Returns to shareholders and dividend
Our commitment to return excess cash promptly to investors
continues to be as strong as ever and in 2017 we returned a
further £140.4m (2016: £131.3m) to shareholders through
dividends and share buybacks. Operating cash conversion(3)
was again very strong and remains in excess of 100% of
operating profit.
The Board increased the interim dividend to 22.0p
(H1 2016: 19.0p) per ordinary share, which was paid on
3 November 2017. We are confident in our ability to deliver
(1) Before share-based payments charge of £4.9m (2016: £4.1m) and NI charge of
£1.2m (2016: £0.5m) on share-based incentives.
(2) Before share-based payments charge of £4.9m (2016: £4.1m) and NI charge of
£1.2m (2016: £0.5m) on share-based incentives and no related adjustment for tax.
(3) Cash generated from operating activities of £183.9m compared to operating profit
as reported in the profit or loss of £178.3m
3
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 It was a proud year of achievement serving
property professionals and home hunters.
We are committed to continue that effort
with the same level of energy, innovation
and sensitivity to the needs and demands
of all our stakeholders in 2018.
sustainable returns to shareholders and consistent with our
policy of increasing the total dividend for the year broadly in
line with earnings per share, the Board recommends a final
dividend of 36.0p (2016: 32.0p) per ordinary share. This brings
the total dividend for the year to 58.0p (2016: 51.0p), an
increase of 14%. The final dividend, subject to shareholder
approval, will be paid on 1 June 2018 to all shareholders on
the register on 4 May 2018.
Corporate governance
One of the Board’s responsibilities is ensuring that the Group
applies good governance to facilitate effective management
of a high growth business. As the Company’s Chairman I am
pleased to note that the Group is continuing to foster an
environment of entrepreneurial leadership and innovation in a
framework of responsible governance and risk management as
set out in the Corporate Governance Report on pages 32 to 45.
Board changes
In May 2017, after 16 years of leadership, Nick McKittrick
retired from the Board. Nick had led the Company as Chief
Executive Officer since April 2013 and together with his
management team helped deliver an outstanding financial
performance with revenues growing by over 50% and a strong
share price rise during that period that reflected our delivery
of continued improvements in value provided to customers
and consumers alike.
Nick passed the baton to Peter Brooks-Johnson, our
Chief Operating Officer and Board director since 2011,
and I am pleased to say, that as anticipated, the transition
has been seamless with the strong results in 2017 and
continued positive outlook being testament to this.
Andrew Findlay to the Board in advance of the retirement of
our current Audit Committee Chairman, Ashley Martin, in
May 2018. Andrew brings a wealth of financial expertise,
commercial experience and a strong consumer-centric
background and will be appointed Chair of the Audit
Committee in May 2018. Ashley leaves Rightmove after
nine years of providing sage advice during a period in
which our business, financial systems and controls have
evolved significantly. The Board has benefited from his
valuable contributions and I am personally grateful for
his wise counsel.
Following the year end, we announced the appointment of
Lorna Tilbian as a Non-Executive Director with effect from
1 February 2018. Lorna has had a distinguished career in the
media sector and I am delighted to welcome her to the Board.
Lorna’s addition to the Board is also notable in that from
May 2018, this will bring our female Board representation to
50% overall with a 50:50 representation of men and women
at both executive and non-executive director level.
Looking forward
The Board and I are grateful for the confidence and support
of all our customers and for the talent and dedication of our
employees. We are clear that our goal is to continue to work
together to position Rightmove as the essential marketplace
for home hunters and for property advertisers to reach by far
the widest possible audience.
Having completed three full terms, Colin Kemp retired from
the Board as a Non-Executive Director in May 2017. In June
2017 as part of our Board succession plans, we welcomed
Scott Forbes
Chairman
4
rightmove.co.uk
Strategic report | Business model
What we do
Rightmove is the UK’s number
one property portal and the UK’s
largest property marketplace.
We bring the UK’s largest and most
engaged property audience and
the largest inventory of properties
together in one place. We benefit
from strong network effects as
our property audience and the
properties our customers
advertise create a ‘virtuous circle’
enhancing the Rightmove value
proposition.
Our customers are primarily
estate agents, letting agents
and new homes developers
advertising properties for
sale and to rent in the UK.
The Rightmove network effect
C
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BUYERS
SELLERS
RENTERS
LANDLORDS
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AGENTS
DEVELOPERS
SIMPLICITY
The place consumers
turn to first and
engage with most
Unrivalled exposure,
leads and products for
our customers
Our aim is to create a more efficient housing
marketplace and make home moving easier
The UK housing market, both in
sales and rentals, is complex and
often inefficient. Moving home can
be a stressful and time consuming
experience for consumers and an
inefficient, frustrating process for
professionals often with elements
of wasted effort and unavoidable
manual processes. We believe
by creating a simpler and more
efficient marketplace we can make
home moving in the UK easier.
A better marketplace which
empowers consumers and
property professionals alike
creates a better housing market.
By creating value for, and building
long-term partnerships with,
both consumers and property
professionals we are able to grow
our revenue. Our continued
growth allows us to innovate
to create more value for all.
How we make the market more efficient for consumers
Rightmove is free to consumers,
and it is the only place where home
buyers and renters can see almost
the entire UK property market in one
place. The ease of accessing the
UK property market through fast,
always available digital platforms
means Rightmove has become the
place consumers turn to first when
they think about moving home.
The simplicity Rightmove brings can
reduce the stress of finding your
next home. The carefully designed
website avoids distractions in
pursuit of simplicity, putting home
hunters in control of their search and
research. Rightmove takes some of
the effort out of the home search by
bringing suitable properties to home
hunters, and in 2017 we sent more
than half a billion instant alerts to
over two million people. Knowing the
moment a new property comes to
market allows a home hunter to stay
abreast of the market wherever they
are. Combined with our near whole
of market view, consumers need not
fear missing their dream property
when it comes to market.
Rightmove uses its unrivalled data to
create well-designed features which
5
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Strategic report | Business model continued
‘Where can I live?’ mobile app screenshots
How we make the market
more efficient for consumers
(continued)
help people make more informed
decisions. Finding the place to
move to, that is affordable, meets
ones commuting criteria and fulfils
ones property dreams can prove
challenging. This year we launched
the innovative ‘Where can I live?’
feature which helps home hunters
work through the bewildering array
of location choices in the initial
stages of their property search and
opens up possibilities to find the
next home which is right for them.
Rightmove is compelling to home
sellers and landlords too. It’s no
wonder, when home sellers and
landlords are so much more likely
to find their buyer or tenant on
Rightmove compared to any other
portal, that 85%(1) of people selling
their home rank Rightmove as the
most important site for marketing
their property.
Beyond finding a buyer or tenant,
the tools we provide for researching
the market bring simplicity and
confidence to sellers and landlords
as they consider one of the largest
transactions of their lives and
choose an agent to help them on
their home moving journey.
(1) Property Academy - Home Moving Trends Survey 2017
How we make the market more efficient
for industry professionals
By creating the UK’s largest
property marketplace we have
brought together virtually all the
audience our customers want to
attract. We are able to offer the
most significant and effective
exposure for their brands and
properties resulting in the largest
source of high quality leads,
thereby significantly increasing our
customers’ marketing efficiency.
We also help drive efficiencies
within our customers’ businesses
by providing best in class software
that delivers data, market insight
and tools to help them inform their
decisions. 90% of our Agency
customers now use our software
each month.
We continue to innovate to create
value for our customers. In 2017 we
significantly enhanced our market
intelligence software, known as
Rightmove Intel, for agents.
Rightmove Intel focuses on the key
information a business owner
wants to know: how they measure
up against their competition and
where they can win new business.
Previously, many of our customers
would have manually gathered
valuation and comparable data or
paid a third party to count ‘For Sale’
and ‘Sold’ advertising boards for
market share information. This was
quickly out of date whereas today
this is available in real time as part
of their membership subscription.
Winning new business is a resource
intensive activity for our customers.
Rightmove Intel now highlights
both new and secondary business
6
rightmove.co.uk Rightmove Intel homepage
How we make the market
more efficient for industry
professionals (continued)
opportunities meaning agents can
spend more of their time on the
most valuable opportunities.
The value of our unrivalled whole
of market view extends beyond
property search and research, it
also helps make the process of
valuing properties for mortgage
applications simpler and more
efficient. In 2017 we released the
latest version of our market leading
‘Surveyors Comparable Tool’.
The tool is used by surveyors to
support their valuations in the
majority of all successful mortgage
applications. The new version
supports our surveyor customers’
increasingly mobile ways of working
both on and offline giving them
flexible access to key data and
allowing them to have more choice
on where and when they work.
How we create value for our shareholders
Our principal sources of revenue
are the monthly subscription fees
paid by customers to advertise
all of their properties and the fees
paid for our additional advertising
products and packages. Our
additional advertising products
increase a customer’s share of
voice and competitiveness.
These are critical factors for our
customers and particularly for
an agent to help to win the
instruction opportunity to sell or
rent a home, which remains the
lifeblood of their business.
In 2017 our Average Revenue Per
Advertiser was again driven by our
customers adopting our higher
value packages and products.
We now have over 45% of
independent agency customers
spending over £1,000 per month
on Rightmove, up from 36% a
year ago.
As the property industry becomes
more digital, Rightmove’s market
leading audience and best in class
software is becoming even more
valuable to customers. Average
Revenue Per Advertiser growth
will continue to be driven by
increased product penetration,
pricing and innovation and is
underpinned by the value of our
audience and data, our substantial
product inventory and our culture
and track record of innovation.
We also continue to develop
a number of smaller adjacent
businesses such as advertising
overseas and commercial
properties and providing
property related data and
valuation services.
7
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Strategic report | Chief Executive’s review
Peter Brooks-Johnson
Chief Executive Officer
Rightmove, the UK’s number one property portal, has
delivered another year of record results. Our number of
advertisers grew by 2% to reach an all-time high of nearly
20,500 and with advertisers spending more on our products,
data and services, our revenue increased by 11% to £243.3m
with underlying operating profit(1) up 11% to £184.4m and
operating profit up 10% to £178.3m.
Home movers visited Rightmove over 1.5 billion times in
2017, an increase of over 4% on 2016 and they spent nearly
a billion minutes on Rightmove every month.
Our continued progress is testament to our restless focus
on the UK property advertising market and the huge effort
‘Rightmovers’ have made to build our business in partnership
with our industry customers. This restless innovation was
recognised by Forbes in 2017, ranking Rightmove as the
world’s most innovative growth company for the second year
in a row. Our innovation is focused on making our marketplace
simpler and more efficient, creating even more reasons to be
excited by the opportunities ahead for Rightmove.
Our Strategy – making home moving easier
The place consumers ‘turn to first’ and engage with most
At the core of our strategy is a relentless focus on continual
improvement and innovation to create the most compelling
experience for consumers so that they turn to us first. With
our focus on doing the right thing for both consumers and
customers, Rightmove is a trusted and valuable source of
property information. We provide support for home movers
enabling them to feel confident, inspired and in control.
This not only results in more consumers turning to Rightmove
first and engaging with us, but importantly it generates more
and better quality leads for our customers than anywhere
else, leading to better outcomes and greater value for them.
We continue to achieve this by providing consumers with the
most up to date, engaging and comprehensive property
content together with search, research and home moving
tools to support their home moving journey. In addition to
the hundreds of updates to our platforms each month,
recent improvements and innovations include: redesigning
map-based search and the introduction of ‘Where can I live?’
discovery-based search functionality which helps consumers
find homes in areas which are affordable and convenient for
them. Innovation requires experimentation, and in 2017 we
piloted an experimental app, ‘RentLondon’, which explored
trends in search to make the process of finding a rental
property more efficient. It incorporated a ‘messenger bot’ to
enable renters to conduct their entire search using natural
language via Facebook Messenger. The future is exciting as
we take the learnings from RentLondon and apply them to
our core search functionality in 2018.
We continued to invest in our brand in 2017, concentrating on
two market sectors: renters, and those looking to find the right
home near the right school. We launched the latest iteration
of our ‘find your happy’ television campaign on Christmas Day.
This next phase brings to life strong emotional stories which
many home hunters connect with. The stories all relate to why
people move, not just the search process. Our first critically
acclaimed advert in the series addresses downsizing and
growing families. It not only created a bit of a stir on social
media but reflects our position at the heart of home moving
for all generations. Brand building will continue to focus on
national television through our partnership with Channel 4
supported by online video on demand. We will also continue
to add further presence in London with 400 branded taxis,
additional outdoor media and our exclusive partnerships
with the Evening Standard and Time Out.
(1) Before share-based payments charge of £4.9m (2016: £4.1m) and
NI charge of £1.2m (2016: £0.5m) on share-based incentives.
8
rightmove.co.uk Home movers visited Rightmove over
1.5 billion times in 2017 and they spent
nearly a billion minutes on Rightmove
every month.
More consumers than ever turned to Rightmove in 2017 with
over 1.5 billion visits across all our platforms. Time spent on
the Rightmove platforms was unchanged year on year at a
record equalling 11.7 billion minutes. Against the backdrop of
a new, faster site infrastructure rolled out during 2016, a less
frenetic lettings market and the increase in use of mobile
devices, which typically have lower average time per visit,
this demonstrates the continued popularity and importance
of our platforms. Our market share of traffic across both
desktop and mobile was 73%(2) with the mobile component
even higher at 79%(2).
The tools we provide for researching the market bring
simplicity and confidence to sellers and landlords. Traffic to
our research tools also grew significantly in 2017 as sellers
and landlords turned to Rightmove first to help inform their
decisions. Our research tools, such as sold prices data, are
by far the most widely used in the UK and provide the unique
benefit of access to our catalogue of one million currently
listed properties and 45 million historical property records.
Consumers spent over 420 million minutes using our research
tools in 2017 which is up by over 15% on the previous year.
Visits to our Overseas property site remained consistent
with levels seen in 2016, suggesting the dream of owning a
property abroad for many of the British public continues to
be a popular one, despite the fall in Sterling and uncertainty
around the UK’s relationship with Europe. Given the
environment, it is testament to the value of our advertising
platform that the number of overseas properties we
advertised increased by 6% on average despite the
number of overseas estate agent and developer
customers advertising falling by 7%.
Our Commercial property advertising business continues
to gain momentum with commercial property professionals
and occupiers spending over 11 million minutes per month
searching commercial property listings on Rightmove.
This activity generated more than 650,000 leads for our
customers. As a result more and more commercial agents
and commercial landlords are choosing to advertise with us.
Our Data Services business continues to help the property
industry by leveraging our unmatched pool of property data.
In addition to providing our Agency and New Homes
customers with invaluable data driven insights, we use our
data and technology to run a market leading automated
valuation model for some of the largest lenders and help the
surveying industry to drive efficiencies in their businesses.
For example, our Surveyors Comparable Tool saves surveyors
preparation time, improves valuation accuracy and provides
documentary proof of the process making it the go-to tool
for the industry. During 2017 the tool assessed and scored
over 1.7 billion comparable property records to create over
two million compatible reports for surveyors.
Unrivalled exposure, leads and products for our customers
With visits to our platforms growing for the 16th consecutive
year we continued to increase the exposure for our
customers’ brands and properties. This exposure generated
43.6 million leads for our customers, seven percent down on
2016. The surge in lettings stock following the stamp duty
increase for second properties in April 2016 meant for most
of 2017 the lettings market was less frenetic giving potential
tenants more choice. In these market conditions each tenant
typically sends fewer leads as they are more assured of
securing the property they want. In addition, this takes
account of the full year impact of changes we made to the
search flow in the second half of 2016 to further increase the
quality of our leads. In order to help agents become more
efficient every lead sent through Rightmove is now about a
specific property.
(2) Source: comScore, December 2017.
9
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Strategic report | Chief Executive’s review continued
Our focus on the quality of our leads continues to stand us in
good stead as they convert far more often to instructions,
sales and lets for our customers. In fact, we generate 86%(3)
of the sales and lets from portals for our Agency customers,
our fourth year of consecutive growth. No wonder, when
home sellers and landlords are so much more likely to find
their buyer or tenant on Rightmove compared to any other
portal, that 85%(4) of people selling their home rank Rightmove
as the most important site for marketing their property.
Winning the right to an instruction to sell or let a property is
critical to an agent’s success. Over a million of the email leads
sent by home movers to agents highlighted that they had a
property to sell, each one creating an instruction opportunity
for a customer. These were in addition to the instruction
opportunities that came via our telephone leads, which
accounted for around 60% of all leads. We also delivered
175,000 leads from people asking for a valuation on their
home, for those customers who bought our popular Local
Valuation Alert product.
Following the acquisition of the Outside View in 2016 we
launched our new ‘Rightmove Discover’product in July 2017.
Using our combined knowhow and Rightmove’s unique
dataset, Rightmove Discover uses predictive analytics to
identify the most likely potential sellers in a local area within the
next six months and markets to them on behalf of an agent.
The early success of Rightmove Discover is encouraging and
since launch, we have delivered nearly 16,000 high quality email
leads to our customers in 750 areas. Customers also report an
increase in potential vendors contacting them via telephone
and their own websites. Our customers who have purchased
the product have benefitted from exclusive, early contact from
vendors of an equivalent of 5% of resale properties which
came to market in the second half of the year.
There is significant headroom to grow product revenue as we
leverage data to increase the penetration of existing products,
evolve their value and pricing, and continue to innovate and
introduce new products as customers look to invest more to
drive their brand exposure and gain market share. This year
(3) Source: Independent software provider to the estate agency industry.
(4) Source: The Property Academy 2017 Home Moving Trends Survey.
Average Revenue Per Advertiser increased by 10% to
£922 driven by customers spending more on products
and packages and price increases.
Innovation to create a simpler and more
efficient marketplace
Combining our software and whole of market dataset whilst
supported by our dedicated account management teams, we
help customers drive operational efficiencies and inform their
business decisions. Our focus is in the areas our customers
value most, which in the case of our agents is identifying
potential business and winning and retaining that business.
Whilst our software tools are already recognised as being
best in class and widely adopted with 90% of our Agency
customers using our tools each month, it is not in our DNA
to stand still and we have continued to innovate our market
intelligence software for agents, Rightmove Intel. Winning
new business is a resource intensive activity for our customers
and 2017 saw the introduction of a number of reports which
highlight both new and secondary business opportunities
meaning agents can spend more of their time on the most
valuable opportunities.
These innovations have been warmly received by customers.
For example in November 2017 our customers ran over two
million reports, a remarkable 67,000 reports per day and more
than double the number in November 2016.
Rightmove Intel also helps customers more efficiently
communicate the marketing performance of properties to
their vendors. The Marketing Report, which shows the interest
a property is generating compared to similar properties on the
market, launched at the end of 2016, was run on over 400,000
different properties for sale in 2017, covering nearly a third of
all properties listed in the year.
2018 will see us continue on this path. We will be releasing a
number of new tools to help agents become more efficient
including a tool to help prioritise vendor enquiries from
Rightmove and a solution to better manage the process
of referencing rental tenants in advance of the looming
tenant fee ban.
10
rightmove.co.uk We care about our customers’ business
success and building strong partnerships
is vital to support their ambitions.
Beyond Rightmove Discover our data continues to provide
the basis for a rich seam of innovation. Following successful
experiments during 2017, we intend to launch Rightmove
Active Display in 2018, which will allow our New Homes
customers to target their potential audience on Rightmove
based on the home hunter’s usage of Rightmove over time,
not just their current search criteria.
The digitalisation of the property industry and the efficiencies
our software and tools bring help to reduce the cost per
Agency office and have also enabled the growth in the
number of customers. Over the last 12 months our
membership base has grown to close to 20,500 customers.
We care about our customers’ business success and building
strong partnerships is vital to support their ambitions,
especially in light of the significant digital changes that are
taking place. To that end we are spending more time with
customers than ever before and making sure that more
of our conversations lead to recommendations that our
customers truly value.
In 2017 we evolved our event programme with the
introduction of ‘Rightmove Live’. These events brought
together speakers from a range of industries covering content
applicable to all small and medium sized businesses, with an
objective of inspiring and motivating. Speakers included
Dr David Lewis, ‘father of neuromarketing’; Nicky Moffat CBE,
British Army highest-ranking female officer and Andrew
McMillan, Head of Customer Service at John Lewis. In keeping
with an online culture these events are now hosted on an ‘on
demand’ platform, meaning our customers can benefit from
this content irrespective of whether they were able to attend
on the day.
We also recognise our role in helping our customers keep up
to date with a changing industry. Bringing together industry
experts covering a range of changes facing agents in 2018,
including the General Data Protection Regulation and lettings
legislation, ‘Legislation Live’ was attended by over 250 agents
from around the country with a further 600 watching a live
stream of the event.
In parallel with these new events we continue to run our ever
popular webinar series which allows estate agency teams to
learn how to make the most of the Rightmove platforms
while also covering industry topics and more general business
practices. In 2017 we ran 170 webinars attended by over
16,500 people.
Build great teams with a culture to innovate
Rightmove is people and our people define Rightmove.
Rightmove has a culture which is both restless and focused.
We strive to create one team of Rightmovers with as few
barriers as possible to rapid growth and innovation. We believe
that this comes from a process-light, highly connected
organisation with little constraining hierarchy and bureaucracy.
It is about employing the right people, giving them the
freedom and authority to innovate and lead, and then guiding
them to succeed. In order to hear the symphonies produced
by a well-functioning team we need every Rightmover to be
both individually empowered and accountable.
A diverse Rightmove is important to us. We recognise that a
diverse team will provide a wide range of perspectives that
promote innovation and business success. Drawing on what
is unique about individuals adds value to the way we do
business and helps us anticipate and provide what our
customers want from us and what home hunters want
from the Rightmove platforms.
Foremost in the design of our expanded London home,
we have taken care to create a physical environment that
encourages open and honest discussion, including social
spaces for the teams to enjoy each other’s company.
Our workplace is free from offices and the usual trappings
of hierarchy.
We believe in sharing often and early and reinforce this
through events such as ‘townhalls’ which share progress,
successes and challenges. In June 2017 the whole of
Rightmove spent a day and a summer night under canvas
together building and reinforcing cross team connections.
11
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Developing our brand
Investing in our
market leading brand
Our marketing connects with the strong positive
emotions that moving home often generates and
reaffirms that the UK public moves with Rightmove.
The place consumers ‘turn to first’ and engage with most
With the focus on doing the right thing for both consumers
and customers, Rightmove is a trusted and valuable
source of property information.
Mr & Mrs Smart and family
Rightmove home hunters
12
rightmove.co.uk Strategic report | Chief Executive’s review continued
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.
Our culture is not solely built on events like these, but
also from the everyday small gestures, including sending
employees monkey puzzle tree seeds to celebrate National
Tree week or a ‘Rightmove-versary’ card to mark their first
anniversary at Rightmove. Everything together creates a
unique and driven environment that we believe results in
people feeling a sense of belonging and a passion to perform.
By striving to make Rightmove a great place to work we can
attract and retain the best talent and provide the best service
for consumers and customers.
Great talent and passion to perform is not enough to make
a great Rightmover; the way in which we behave towards
each other, our customers and consumers is vital. We expect
the very highest standards of ethical behaviour from all
employees. How we go about our work is central to our
recruitment, feedback and personal development processes.
We also have a scheme to allow Rightmovers to recognise
their peers who embody the behaviours we aspire to.
The biggest influence on our culture, of course, comes from
our people. Their actions and behaviours create the sense of
belonging and connection and allow the business to continue
to thrive and attract great people. In our 2017 ‘Have Your Say’
people survey, 90% of Rightmovers responded that they think
‘Rightmove is a great place to work’. Whilst this is a very strong
result, it is below the record high level of 95% achieved in 2016.
To celebrate those employees who have been part of the
Rightmove journey for more than ten years we have continued
with our well known, although not widely replicated, practice of
creating a gnome in their image. In the fast moving world of
today, long tenures with single organisations are becoming
rarer so I’m pleased that we have expanded our ‘gnome tree’
to accommodate an ever growing collection of gnomes.
Our culture sets us apart from many organisations and is
defined by everyone of the nearly 500 people who are proud
to call themselves Rightmovers. I would like to thank them
all for creating a culture which continues to drive our
business success.
Current trading and outlook
We believe the outlook for the UK online property advertising
market remains positive, despite the continuing uncertainties
stemming from the result of the EU referendum. Consumers
and customers are becoming increasingly digital and therefore
spend continues to transition from traditional advertising
channels.
Our clear market leadership coupled with the value of
our products and data positions us well for the future.
With Average Revenue Per Advertiser continuing to
grow from a stable membership base the Board remains
confident of making further progress in 2018.
Peter Brooks-Johnson
Chief Executive Officer
23 February 2018
13
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017
Strategic report | Operational key performance indicators
We use the metrics set out below to track our operational performance.
Number of advertisers
Number of advertisers
21,000
20,000
19,000
18,000
17,000
16,000
20,121
20,427
19,752
19,304
18,425
2013
2014
2015
2016
2017
S
o
u
r
c
e
:
i
R
g
h
t
m
o
v
e
Definition
The total number of paid for
UK estate and lettings Agency
branches and New Home
developments advertising
properties on Rightmove
2017 performance
+2%
Number of advertisers
Average Revenue Per Advertiser (ARPA in £ per month)
Strategic link
The place consumers ‘turn to first’
and engage with most; and
innovation to create a simpler and
more efficient marketplace
Risks
1
2
3
684
754
607
922
842
S
o
u
r
c
e
:
i
R
g
h
t
m
o
v
e
1,000
800
600
400
200
0
2013
2014
2015
2016
2017
Traffic - time on site (billions of minutes)
Traffic (time on site measured in billions of minutes)
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
Strategic link
Unrivalled exposure, leads and
products for our customers
Risks
1
2
3
2017 performance
+10%
10.2
11.1
11.7
11.7
8.1
14
12
10
8
6
4
2
0
i
S
o
u
r
c
)
e
s
e
:
t
G
u
n
o
m
o
g
f
o
e
s
n
A
o
n
a
b
l
(
y
t
i
c
s
i
l
l
i
l
Definition
Total time measured in billions
of minutes spent on Rightmove
platforms during the year
2017 performance
Unchanged year
on year
Strategic link
The place consumers ‘turn to first’
and engage with most
Risks
2
3
4
2013
2014
2015
2016
2017
Employee engagement
Employee engagement – ‘Rightmove is a great place to work’
100%
95%
90%
85%
80%
75%
96%
94%
95%
91%
90%
2013
2014
2015
2016
2017
S
o
u
r
c
e
:
i
R
g
h
t
m
o
v
e
Definition
Based on number of employee
respondents selecting ‘agree’ or
‘strongly agree’ as a response to this
question in the annual employee survey
2017 performance
-5% points
Strategic link
Build great teams with a
culture to innovate
Risks
5
Risks relevant to our KPIs (read more on pages 22 to 23)
1 Macroeconomic environment
2 Competitive environment
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
Strategic report | Financial key performance indicators
We use the metrics set out below to track our financial performance.
Revenue £m
Revenue £m
250
200
150
139.9
100
50
0
243.3
220.0
192.1
167.0
2013
2014
2015
2016
2017
Underlying operating profit £m
Underlying operating profit(1) £m
184.4
166.2
144.3
124.6
104.4
200
150
100
50
0
2017 performance
+11%
Revenue grew strongly in 2017 up
11% to £243.3m (2016: £220.0m)
Risks
1
2
3 4 5
2017 performance
+11%
Underlying operating profit(1) increased by 11% to
£184.4m (2016: £166.2m) with underlying operating
margin increasing to 75.8% (2016: 75.5%)
Risks
)
m
£
(
)
m
£
(
2013
2014
2015
2016
2017
1
2
3 4 5
200
150
100
50
0
Underlying basic EPS (pence)
Underlying basic EPS (pence)
Underlying basic EPS(2) (pence per ordinary share)
163.3
142.8
121.4
100.3
200.0
150.0
100.0
0
50.0
81.0
163.3
142.8
121.4
100.3
81.0
200
150
100
50
0
2013
2014
2015
2016
2017
2013
2014
2015
2016
2017
2017 performance
+14%
Underlying basic EPS(2) increased by 14%
to 163.3p (2016: 142.8p). Basic EPS grew by
14% to 156.8p (2016: 137.9p)
Risks
1
2
3 4 5
Cash returned to shareholders £m
Cash returned to shareholders £m
160.0
120.0
80.0
40.0
0
103.4
112.5
85.6
131.3
140.4
)
m
£
(
2017 performance
+7%
During the year free cash flow was returned to shareholders
in the form of share buybacks and dividends with cash returns
totalling £140.4m (2016: £131.3m)
Risks
2013
2014
2015
2016
2017
1
2
3 4 5
(1) Before share-based payments charge of £4.9m (2016: £4.1m) and NI charge of £1.2m (2016: £0.5m) on share-based incentives.
(2) Before share-based payments charge of £4.9m (2016: £4.1m) and NI charge of £1.2m (2016: £0.5m) on share-based incentives
and no related adjustment for tax.
15
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017
Continuing to innovate
A relentless focus on continual
improvement and innovation
Our whole of market dataset continues to provide the basis for
a rich seam of innovation and we continue to innovate to create
a simpler and more efficient marketplace.
Innovative tools and features
In 2017, we introduced ‘Where can I live?’ discovery-based search functionality
which helps consumers find homes in areas which are affordable and convenient
for them together with the pilot of an experimental ‘Rent London’ app which
helps renters find their next home more quickly.
Alessandro Binetti
Product Development Team Leader
16
Naga Nama
Quality Analyst
rightmove.co.uk Strategic report | Financial review
Robyn Perriss
Finance Director
Revenue
We have experienced another strong year of revenue growth
with revenue up 11% at £243.3m.
Agency
New Homes
Other
Total revenue
2017
£m
185.2
39.5
18.6
243.3
2016
£m
168.3
33.9
17.8
220.0
Change
10%
16%
4%
11%
Our Agency business was the main driver of the overall
revenue growth increasing by £16.9m year on year to
£185.2m (2016: £168.3m). Agency continues to be our
largest business, contributing 76% (2016: 77%) of our total
revenue. The majority of the revenue increase came from
ARPA growth as a result of the further adoption of additional
advertising products together with increases to core
membership prices. Spending by agents increased across our
range of additional advertising products due to increased
segmentation of our customer base and continued adoption
of higher value packages.
The number of Agency offices was up 1% since the start of
the year to a record high of 17,626 (2016: 17,462), with the
growth attributable to an increase in resale branch numbers
(including growth in the number of branch equivalents for
members operating an online or a hybrid model).
Revenue from our New Homes business grew strongly to
£39.5m (2016: £33.9m), an increase of 16% driven by the
sale of additional advertising products and by increases to
core membership prices, together with healthy growth in
development numbers, up 5% year on year to 2,801
developments (2016: 2,659) their highest level since 2009.
Other revenue which includes Overseas, Data Services,
Commercial and Third party advertising services increased by
£0.8% to £18.6m in 2017, driven by growth in our Commercial
business. The revenue in our Overseas business, which in
(1) Before share-based payments charge of £4.9m (2016: £4.1m) and NI charge
of £1.2m (2016: £0.5m) on share-based incentives.
prior years has been a strong contributor to growth, was
flat year on year, being impacted by the fall in sterling
and continuing uncertainties following the result of the
EU referendum.
Underlying operating profit
Revenue
Underlying operating costs
Underlying operating profit
Share-based payments
NI on share-based incentives
Operating profit
2017
£m
243.3
(58.9)
184.4
(4.9)
(1.2)
178.3
2016
£m
220.0
(53.8)
166.2
(4.1)
(0.5)
161.6
Change
11%
9%
11%
20%
140%
10%
Underlying operating profit(1) increased by 11% to £184.4m
(2016: £166.2m) and underlying operating margin(1) increased
to 75.8% (2016: 75.5%). This was due to continued strong
revenue growth coupled with a slightly lower percentage
increase in underlying operating costs(1).
Underlying operating costs(1) increased by 9% or £5.1m to
£58.9m (2016: £53.8m). Of the cost increase, £1.5m related
to technology costs due to continued innovation in our
platforms and tools for our customers and ongoing
investment in cyber threat detection systems. Premises
costs increased by £1.3m representing rent and rates and
office refit costs associated with additional space at our
London Soho Square offices. The balance of the increase
relates to general wage inflation and the full year impact of
additional heads recruited in 2016 together with ongoing
marketing investment in the Rightmove brand.
Underlying operating profit(1) is reported before share-based
payments, which are a significant non-cash charge driven by
a valuation model, and National Insurance on share-based
incentives, which is driven by reference to the Rightmove plc
share price and so subject to volatility, rather than operational
activity. The directors consider underlying operating profit(1)
to be the most appropriate indicator of the performance of
the business and year on year trends.
17
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017
Supporting our customers
Helping our customers
win more business
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.
Customer focused tools and products
We have continued to innovate our market
intelligence software for agents, Rightmove
Intel, with 90% of our Agency customers
using our tools each month.
Tony Cicchirillo
and Enzo Giardina
VIA Properties,
Hoddesdon,
Hertfordshire
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 £4.9m
(2016: £4.1m) is reflected in the income statement
representing the amortisation of the fair value of
share-based incentives granted.
NI is being accrued, where applicable, at a rate of 13.8% on the
potential employee gain on share-based incentives granted.
Based on a year on year increase in the closing share price
from £39.03 at 31 December 2016 to £45.00 at 31 December
2017 in respect of the outstanding share-based incentives
granted, together with the realised NI cost on share-based
incentives exercised in the year, there was a charge of £1.2m
(2016: £0.5m).
Taxation
The consolidated tax rate for the year ended 31 December
2017 was 19.1% (2016: 19.8%). The effective tax rate was
slightly lower than the UK enacted rate of 19.3% due to
research and development relief claimed in relation to the
prior year.
We are committed to being a responsible tax payer acting in a
straightforward and open manner in all tax matters. The total
tax payable in respect of 2017 was £96.6m (2016: £78.5m).
£38.6m (2016: £31.6m) related to corporation tax and
employer’s NI and apprenticeship levy borne by the Group
while the remaining £58.0m (2016: £46.9m) was collected in
respect of payroll taxes and VAT. The Company currently has
no open tax authority enquiries in respect of any tax and there
are no known material tax risks based on the positions
adopted. The Company has therefore not recognised any
uncertain liabilities in relation to estimates of additional tax
which may be pursuant to enquiries.
Earnings per share (EPS)
Underlying basic EPS(2) increased by 14% to 163.3p
(2016: 142.8p). Basic EPS also increased by 14% to 156.8p
(2016: 137.9p). The growth in EPS was mainly attributable
to the increase in profitability in the year together with the
benefit of our continued share buyback programme which
reduced the weighted average number of ordinary shares
in issue to 91.9m (2016: 94.0m).
Balance sheet
Rightmove’s balance sheet at 31 December 2017 showed
total equity of £17.2m (2016: £8.0m) reflecting growth in
profit and retained earnings less the continued return of
capital to shareholders in the form of share buybacks and
dividends during the year.
cash collections over the year end. Trade and other payables
increased by £3.1m to £38.9m (2016: £35.8m) due to an
increase in deferred revenue in line with trading. Our deferred
tax asset, representing the future tax benefits from share-
based incentives, is lower at £5.7m (2016: £6.9m) due to the
exercise of share options during the year.
Cash flow
Rightmove continues to see strong cash generation
and to return all free cash generated to shareholders.
Predictable cash flows reflect the subscription nature of
the business coupled with low working capital requirements.
Cash generated from operating activities(3) was up 9% to
£183.9m (2016: £169.3m) and operating cash conversions
was once again in excess of 100%.
Tax payments increased to £33.2m (2016: £27.8m) and
£0.2m (2016: £0.2m) was paid in relation to bank charges
and bank facility fees resulting in net cash from operating
activities of £150.5m (2016: £141.2m).
Capital expenditure of £2.2m (2016: £1.8m) includes
capitalised leasehold improvements and works in relation
to our London office refit together with investment in
new servers.
Proceeds of £0.7m (2016: £0.4m) were received on the
exercise of share-based incentives and £0.8m (2016: £0.8m)
was applied to purchase shares to fund the Rightmove Share
Incentive Plan.
During 2017, £90.8m was spent on the repurchase of
our own shares (2016: £88.1m) whilst a further £49.6m
(2016: £43.2m) was paid in dividends reflecting the increased
final dividend for 2016 and the 3p increase in the interim
dividend this year. This brings the total cash returned to
shareholders in the year to £140.4m (2016: £131.3m).
The closing Group cash and money market deposit balance
at the end of the year was £25.0m (2016: £17.8m).
Dividends
Consistent with our policy of growing the dividend broadly
in line with the increase in underlying earnings per share,
the directors are recommending a final dividend of 36.0p
(2016: 32.0p) per ordinary share, which together with the
interim dividend makes a total dividend for the year of 58.0p
(2016: 51.0p), an increase of 14%. The final dividend, subject
to shareholder approval, will be paid on 1 June 2018 to all
shareholders on the register on 4 May 2018.
Trade receivables increased by 14% to £30.3m (2016: £26.6m)
reflecting the year on year growth in revenue and the timing of
(2) Before share-based payments charge of £4.9m (2016: £4.1m) and NI charge of
£1.2m (2016: £0.5m) on share-based incentives and no related adjustment for tax.
(3) Cash generated from operating activities of £183.9m compared to operating
profit as reported in the profit or loss of £178.3m.
Robyn Perriss
Finance Director
23 February 2018
19
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Building great teams
A place where everyone
has the space to grow
We focus on building great teams and making
Rightmove a great place to work.
Building great teams with a culture to innovate
Rightmove has a culture which is both restless
and focused. We strive to create one team of
Rightmovers with as few barriers as possible
to rapid growth and innovation.
Yolanda Cuccurullo
Customer
Training Team
Talissa Webb
Human Resources
Training and
Development
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.
The Group operates a cautious approach to risk and its ‘risk
appetite’ is relatively low. The open culture which is embedded
throughout Rightmove is such that objective views are made
when assessing risks and internal controls, dialogue is
encouraged, and decisions are not made until risks have
been appropriately considered.
On a bi-annual basis, risk is reviewed by operational
management across each business area. This review includes
a detailed assessment of new and existing identified risks, the
likelihood of each risk occurring and the potential impact,
together with controls and mitigating procedures in place.
This information is combined to form a consolidated risk
register which is reported to the Executive Committee for
review and challenge, ahead of final review and approval by the
Board. A nominated director has responsibility for each risk.
The Board reviewed the risk register at both the February 2017
and November 2017 Board meetings, with a particular focus
on the principal risks identified and any new or emerging risks.
Risk management is reinforced by the Group’s continuous
process to design and embed strong internal controls across
the business as we grow, particularly in relation to smaller
breadth business areas. The Group’s internal control
framework is aligned to a ‘three lines of defence’ model.
Operational management is the organisation’s first line of
defence as they are primarily responsible for the direct
management of risk and ensuring that appropriate mitigating
controls are in place and that they are operating effectively.
The second line is formed by the Group’s internal compliance
and oversight functions such as company secretariat, finance,
tax, treasury and legal. The third line includes both internal and
external audit reporting to the Audit Committee.
The Audit Committee receives and analyses regular reports
from management and the outsourced internal audit function
on matters relating to risk and control and reviews the
timeliness and effectiveness of corrective action taken by
management. The Audit Committee on behalf of the Board
also considers the findings and recommendations of its
external auditor throughout the year to design and implement
effective financial controls. Further detail of these activities are
included within the Audit Committee report on pages 38 to 43.
Risk management framework
Board/Audit Committee
Executive Committee
Risk register and risk review
Operational management
Internal controls
and compliance
External audit and
outsourced internal audit activities
21
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Strategic report | Principal risks and uncertainties
A description of the principal risks and uncertainties faced by
the Group in 2017, together with the potential impact and
monitoring and mitigating activities is set out in the table below.
We recognise that the Group is exposed to risks wider than
those listed, however we have disclosed those that we believe
are likely to have the greatest impact on the Group delivering its
strategic objectives and those that have been the subject of
discussion at recent Board and Audit Committee meetings.
Key risk and description
Impact
Monitoring and mitigation
Change
from
prior
year
1 Macroeconomic environment
The Group derives almost all its
revenues from the UK and is therefore
dependent on the macroeconomic
conditions surrounding the UK housing
market and consumer confidence
which impacts on property
transaction levels.
Specific considerations resulting from
the UK’s decision to leave the European
Union have been outlined on page 24.
Substantially fewer housing transactions
than the norm may lead to a reduction
in the number of Agency branches or
New Home developments, a major
determinant of the Group’s revenue.
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.
2 Competitive environment
The Group operates in a competitive
marketplace with attractive margins
and low barriers to entry. This may
result in increased competition from
existing competitors or new entrants
targeting the Group’s primary revenue
markets.
This may impact on Rightmove’s ability to
grow revenue due to the potential loss of:
• Audience
• Advertisers
• Demand for additional
advertising products
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.
Under-performance and impact on
Rightmove’s ability to grow revenue
due to the potential loss of:
• Audience engagement
• Advertisers
• Demand for additional
advertising products
• Monitoring of housing market
including 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
• 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
customers
• Continual improvements to our
platforms including ongoing investment
in mobile and tablet platforms
• Developing our product proposition to
meet our customers’ needs and
evolving business models
• Large in-house technology team
with culture 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
• Regular contact with the start-up and
prop-tech communities to stay abreast
of innovations in the marketplace
22
rightmove.co.uk
Key risk and description
Impact
Monitoring and mitigation
Change
from
prior
year
Potential reputational damage and
financial losses arising from penalties
and fines due to loss of consumer and
customer confidence in the Rightmove
brand and platforms.
4 Cyber security and IT systems
The Group has a high dependency on
technology and internal IT systems.
In today’s digital world there are
increased risks associated with external
cyber attacks which could result in
unavailability of our platforms.
A security breach such as corruption
or loss of key data may disrupt the
efficiency and functioning of the
Group’s day to day operations.
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.
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.
• 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 investment in security
systems
• Ongoing monitoring of external
threats through updates from external
specialists and collaboration with
other online organisations
• Regular internal security training and
‘spearphishing’ tests to minimise risk
of social engineering attacks
• 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
• Introduced a number of initiatives to
improve the gender balance across
various Rightmove teams as set out
in our Gender Pay Gap Report
Increased risk
Decreased risk
Risk unchanged
23
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017
Strategic report | The EU referendum
The result of the UK’s EU referendum in 2016 increased the
level of macroeconomic uncertainty and could increase the
likelihood of the housing market macroeconomic risks set
out on page 22.
During 2017 the Board has continued to assess the impact
of the EU referendum result on the Group and its potential
implications and has concluded that there has been no
material change to the severity of this risk. In particular, the
directors considered the following:
• The Rightmove business is largely subscription based and
is therefore less susceptible to short-term shocks or
variations in the property market or wider economy;
• Around two-thirds of our estate agency customers also
provide lettings services which may mitigate the impact of
any downturn in the property market on their business; and
• A reduction in housing market activity increases the
propensity for advertisers to evaluate their marketing
spend both offline and on other portals and we remain
confident in the strength of the Rightmove value
proposition.
The directors believe that our strong market position and
relationships with our customers, and the value embedded
in our membership continue to position us well providing
that housing transaction volumes do not take a sharp
downward turn.
Strategic report | Viability statement
In accordance with provision C.2.2. of the Code, the directors
have assessed the viability of the Group over a three-year
period, taking into account the Group’s current position and
the potential impact of the principal risks and uncertainties
set out on pages 22 to 23. Based upon the robust
assessment of the principal risks facing the Group, including
those that would threaten its business model, future
performance, solvency or liquidity, the directors have a
reasonable expectation that the Group and the Company will
be able to continue in operation and meet its liabilities as they
fall due over the three-year period to 31 December 2020.
The directors have determined that a three-year period
to 31 December 2020 constitutes an appropriate period
over which to provide its viability statement, as the Group
operates within the online digital marketplace, and
projections looking out further than three years become
significantly less meaningful in the context of the fast
moving nature of the market. Three years is also the period
considered under the Group’s current three-year strategic
plan. The three-year plan is reviewed by the directors and is
developed on a segment by segment basis using a bottom
up model. The three-year plan makes certain assumptions
about Agency and New Homes customer numbers, Average
Revenue Per Advertiser (ARPA) growth and other breadth
revenue streams and considers the Group’s profitability,
cash flows and dividend cover over the period.
The plan is subject to robust downside sensitivity analysis
which involves flexing a number of the main assumptions
underlying the plan. Where appropriate, analysis is carried
out to evaluate the potential financial impact over the
period of the Group’s principal risks actually occurring.
Specific scenarios that have been modelled include
downside scenarios in relation to the key drivers of revenue
being customer numbers and ARPA together with the
impact of a plausible combination of these scenarios.
Furthermore, our business model is structured so that the
Group is not overly reliant on a small customer base with no
single customer constituting more than 3% of Group sales.
Also, given our significant free cash flow and our ability
to adjust our discretionary share buyback programme
provides long-term comfort around viability in the face
of adverse economic or competitive conditions.
Whilst this review does not consider all the risks that the Group
may face, the directors consider that this stress-testing based
assessment of the Group’s prospects is reasonable in the
circumstances of the inherent uncertainty involved.
24
rightmove.co.uk Strategic report | Corporate responsibility
Our people
We believe that our people are the key to Rightmove’s success
and our most valued asset. We have always strived to make
Rightmove a great place to work and embedded this into our
strategic management objectives. We are proud of the energy,
talent and experience our people bring to the business.
Our culture is open and supportive, with an encouraging
and restless yet focussed approach which fosters innovation
and dedication to excellent customer service.
Recruitment
Recruiting the right people with capability and experience
to drive growth is vital to our business plan. The highly
competitive market for technology and customer centric
skills means that we are strongly focussed on maintaining a
happy, collegiate working environment and the top benefits
to attract and retain the best people.
Referrals from existing employees are a valuable source of
new recruits, typically ensuring a higher quality candidate
with a better cultural fit. All new vacancies are advertised
internally first to give our colleagues an opportunity to apply
or recommend someone. In 2017, 8% of new employees
were introduced to Rightmove by an existing employee.
We also believe that long-term commitment from
Rightmove employees is key to our culture and success.
For a relatively young company we are proud to have
67 people who have celebrated ten or more years’
service, which represents over 14% of our employees
and contributes to our strong people survey results.
We continue to support Milton Keynes College in preparing
students for their future careers. During the year we
welcomed six students completing their Level 3 Higher
National Diplomas in our design studio and offered two
students internships. In addition, our designers have offered
support and mentoring to students on campus. We have
continued to expand our intern programme across
Rightmove. Our technology teams took on four computer
and data science interns from University College London.
People development and training
Every new employee attends two office based ‘How
Rightmove fits together’ days to introduce them to the
business and our customers. They also attend an off-site
residential induction course to introduce them to
Rightmove’s culture and values.
To ensure our colleagues can work to the best of their ability,
we continue to invest in extensive training and leadership
programmes, designed to equip them with all the necessary
skills to provide exceptional service to our customers and
consumers. We have also developed a suite of internal
development courses for our employees covering both
technical and non-technical skills to improve their performance
through continual professional and personal development.
Employee benefits
Whilst we believe that being a great place to work helps us
attract the best talent we also reward our employees with
a range of additional and competitive benefits.
Rightmove contributes towards a group stakeholder pension
plan. Opt out rates are low and currently 95% of employees
are members of the pension plan. We also offer private
healthcare complemented by a cash plan scheme for all
our employees’ medical needs.
It is important that our people can directly benefit from their
contribution to the success of Rightmove and we offer two
all-employee share plans. Every employee can join the
Group’s Save As You Earn Scheme (Sharesave), which allows
employees to save money from their salary with the option to
purchase shares at a discount after three years. In November
2017, the Group’s ninth Sharesave contract matured allowing
employees to benefit from the Group’s success and strong
share price growth over the last three years. 67% of our
employees currently participate in Sharesave.
The Rightmove Share Incentive Plan was launched in 2015
with an award of 100 free shares for all employees. Those
shares were available to sell from January 2018, with those
employees benefiting from the Rightmove share price more
than doubling over that period. Further awards of 50 free
shares have been made annually in subsequent years to all
qualifying employees.
25
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Strategic report | Corporate responsibility continued
We offer flexible working arrangements, fully support part-
time working and reduced hours to allow our employees to
balance their work and family commitments. In 2017, we also
introduced a flexible holiday scheme to operate from 2018,
allowing employees to buy or sell up to five days (or the
part-time equivalent) of holiday each year to suit their
personal circumstances.
Engagement
We encourage employee involvement and keep colleagues
informed of the Group’s activities through ‘townhalls’,
business performance updates with senior management
and quarterly sales conferences.
We have an employee recognition scheme, based on the
‘Rightmove behaviours’ which allow us to focus on how we
work not just on what we achieve. It is an opportunity to
nominate colleagues who have demonstrated the best
behaviours in action and it continues to prove popular with
awards presented every two months at our ’townhalls’.
We conduct an annual ‘Have your Say’ people survey to
gauge what our employees think and how they feel about
working for Rightmove. The survey results are followed up
by every manager and we are never complacent about the
importance of acting on colleagues’ feedback. We are proud
of another set of strong results from the survey with
highlights including:
• 90% of respondents think Rightmove is a great place
to work;
• 90% are proud to tell people they work for Rightmove; and
• 92% enjoy working in their teams.
An employee engagement score will again form part of the
senior management bonus criteria in 2018, demonstrating
the importance of employee management to the continuing
success of Rightmove.
The management team continues to work hard to improve
the employee experience at Rightmove. In 2017, we took on
additional space and refurbished our London office, taking
employee preferences into account; the result being a
creative and welcoming space.
Equality and diversity
Rightmove has a firm commitment to equality of opportunity
in all our employment policies and practices. Our recruitment
and selection processes focus on selecting the best
candidate for a role, regardless of their age, gender, sexuality,
full-or part-time status, disability and marital status.
We recognise that a diverse workforce reflects Rightmove’s
broad consumer base and our many customers. Our people
have a wide range of experience and perspectives that we
believe promote innovation, constructive challenge and
success. Drawing on a wide variety of personal attributes
drives value in the way we do business and helps us
anticipate and provide what our customers need from
us and what home hunters want from Rightmove.
At 31 December 2017, female representation on the Board
was 38% and with the appointment of Lorna Tilbian in
February 2018 that proportion has risen to 44% of Board
members. Following the retirement of Ashley Martin in
May 2018, we are delighted that female representation on
the Board will rise to 50%.
The Board continues to focus on succession planning and
developing potential within the senior management team
to enable us to promote internal candidates to the Board.
The Group succession plan also identifies individuals with
potential to join the senior management team in the wider
organisation. As at 31 December 2017, 26% (2016: 21%)
of our leadership team(1), were female. The Board is keen to
strengthen female representation in senior roles and has
been a contributor to the Hampton-Alexander Review, a
Government sponsored initiative which aims to increase
female leadership within the FTSE350. In line with the
Hampton-Alexander Review, Rightmove has set a target
for 33% female leadership by 2020.
26
rightmove.co.uk
(1) Being the Executive Committee and their direct reports as per
the Hampton-Alexander definition.
A breakdown by gender of the number of persons as at
31 December 2017 by various classifications as required
by the Companies Act, is set out below:
Directors
Senior management(1)
Hampton-Alexander(2)
All Rightmove employees
3
5
7
8
22
23
237
244
Female (38%)
Male (62%)
Female (24%)
Male (76%)
Female (26%)
Male (74%)
Female (51%)
Male (49%)
(1) The Senior Management Team comprises the Hampton-Alexander cohort, excluding the executive directors.
(2) The Hampton-Alexander cohort comprises members of the Executive Committee and their direct reports.
Gender Pay
Rightmove has reported its gender pay gap for 2017 and
full details can be found on the Company’s website at plc.
rightmove.co.uk
We are confident that all Rightmove employees are paid
equally for working in the same jobs and we are pleased to
report that men and women are almost equally represented
in our wider workforce. The main contributor to Rightmove’s
gender pay gap is the mix in Rightmove communities
comprising the highest and lowest quartile salaries. Women
are underrepresented in the higher paid senior management
and technology teams and men are underrepresented in the
customer experience team.
Technology is a sector blighted by a lack of gender diversity,
but accepting the status quo is not in our DNA. Below is our
gender pay gap as at April 2017, together with a description
of some of the initiatives that we have underway for
improving our gender balance going forward.
Difference between male and female pay
Difference in hourly rate of pay(1)
Difference in bonus pay(2)
Mean
30.6%
70.4%
Median
37.0%
36.5%
(1) Calculated using Rightmove Group Limited pay data from April 2017.
(2) Calculated using 12 months of Rightmove Group Limited bonus pay data
to 5 April 2017.
We work hard to create an environment where men and
women have the opportunity to build careers throughout the
business and believe that our open, collaborative culture is key
to that objective. We are committed to a number of actions to
balance our teams in a fair and transparent way, including:
Balance for all
• We have developed maternity and paternity workshops to
support Rightmovers through the changing dynamic of
family and work responsibilities and their return to work
after a career break; and
• We recognise that balancing work and life commitments
can make people shy away from taking the next step in
their career. New flexible working arrangements have
been rolled out for all employees.
Addressing imbalance
• We are developing a mentoring programme to support
career development. We aim to exceed the Hampton-
Alexander review target of 33% of the leadership team
being female by 2020;
• We are creating an internal talent pipeline to promote
the next generation of leaders;
• We have launched a graduate programme in technology
to attract the best new talent to help create balance in
our technology teams over the longer term; and
• We have reviewed all job specifications and updated the
format of our recruitment days to guarantee universal
appeal and attract the best talent.
Human rights
Rightmove does not have a specific human rights policy,
we have a framework of policies and statements covering
equal opportunities, dignity at work, disability, anti-slavery
and anti-bribery that adhere to internationally recognised
human rights principles.
27
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017
Strategic report | Corporate responsibility continued
Charitable activity
We continue to encourage our employees to raise funds for
their chosen charities. In 2017 we match funded £24,000
(2016: £18,000), supporting charities including The Stroke
Association, The Carers Trust, Scope and many more. From
breakfast mornings to running marathons we are delighted
that so many of our colleagues devote their time and energy
to such good causes. For the second year running we have
supported food banks at Christmas; this year we delivered a
car packed full of food to the Milton Keynes Food Bank.
In 2017, we contributed £56,000 (2016: £49,000) via Agents
Giving to support our customers’ charitable initiatives, which
ranged from a Mount Everest trek to Tough Mudders,
triathlons and fun runs. We contribute to the costs of setting
up the fundraising activity, which allows more of the money
raised by our customers to go directly to charities through a
charitable sponsorship fund we set up with Agents Giving.
We are very proud that the fund has raised over £1 million
since 2014 for charitable causes supported by our customers.
Looking ahead to 2018 we are pleased to be partnering with
the Milton Keynes marathon as headline sponsor in 2018 (the
home of Rightmove) in aid of Meningitis Now and Winter Night
Shelter. These two causes are very important to our employees
and fund raising efforts are well underway as part of our ‘On The
Move’ campaign, with over £1,200 raised in the last four weeks
of 2017. We have set our employees a target of raising £26,000,
to be split equally between both charities and Rightmove will
make a significant additional contribution. Over 50 employees
will be volunteering their time, training and being creative with
their fundraising efforts to support these charities.
We will be sponsoring the Milton Keynes College Football
Academy again in 2018. We have worked closely with the
college over the last few years, enabling the academy to
create more opportunities for their students to study for
off-pitch roles in sport.
Environment
We are conscious of playing our part in tackling climate
change and always encourage the efficient use of resources
that contribute to environmental damage.
Rightmove has changed the way people search for
property, reducing the reliance on printed media and the
environmental impact that goes with it. Our platforms are
designed to optimise the information available to home
hunters, giving our customers the ability to advertise high
quality photographs, floor plans and property particulars and
reducing the need for paper copies of property particulars.
The quality of property information available on Rightmove
also reduces the amount of time home hunters waste in
visiting inappropriate properties, usually by car. We have
worked hard to improve the functionality of our platforms
with better photographs and property floor plans to
comprehensive map searches and aerial photographs,
which helps to identify the specific location of a property.
We continue to add information to help home hunters
customise their property search on Rightmove including
School Checker and broadband speeds. All these
innovations have helped to reduce the carbon footprint
generated by prospective buyers and renters making
unnecessary journeys to visit unsuitable properties.
The Rightmove platforms enable our customers to display
Energy Performance Certificates which allow prospective
buyers to evaluate the energy efficiency of a property before
buying and to identify opportunities to improve the energy
efficiency once they have purchased the property.
As an internet-based business with most staff employed in
two office locations, our environmental footprint is small.
We continue to encourage our employees to minimise their
use of resources and recycle materials wherever possible.
There are no individual waste bins in our London and
Milton Keynes offices to encourage and increase the
amount of recycling.
As an operator of an online property portal, our main
environmental impact is from the power usage of our data
centres. Our procurement policy is to purchase hardware
with the best computational performance which uses the
least electrical power.
We encourage our employees to use public transport rather
than driving between our two office locations in London and
Milton Keynes. We encourage participation in our Cycle to
Work scheme and have many keen cyclists. We have also
introduced the option for staff entitled to a company car to
select hybrid electric cars as an alternative to petrol or diesel
engines. In 2017, our fuel card provider Allstar, again partnered
with Forest Carbon to capture the CO2 emissions from our
fleet of company cars and turn them into new UK woodlands.
As an online business, we tend towards a paperless
environment. However, we recognise that our responsibilities
do not stop with how we operate internally and we encourage
all our customers, business partners and suppliers to use
online records and reduce printing, especially emails.
Wherever possible we have replaced paper-based services
and communications with online alternatives, including
e-communications for shareholders, online customer
membership forms, management information and
marketing reports and product documentation.
28
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 2017. Scope 3 is not
mandatory, however, the Group has again chosen to report
Scope 3 emissions as it relates to electricity used in data
centres, in which the Group rents space to house and
operate various servers, which host our platforms.
Rightmove emissions by scope:
Scope
Source
Scope 1
Company cars
Scope 2
Electricity
Tonnes CO2e(1) Tonnes CO2e(1)
2016
2017
495
255
257
486
303
298
Scope 3
Outsourced – data centres
Total
1,007
1,087
(1) UK emissions factors have been used for all data. All emission factors have
been selected from the emissions conversion factors published annually
by Defra. www.gov.uk/measuring-and-reporting-environmental-impacts-
guidance-for-businesses.
Higher fuel consumption was due to increased business
mileage by employees entitled to Company cars.
The reduction in electricity use is partly due to closing one
floor of our London office for refurbishment during 2017
and lower electricity consumption on the two new floors.
We expect Scope 2 emissions to return to historic levels
in 2018.
Emissions have also been calculated using an ‘intensity
metric’, which will enable the Group to monitor how well we
are controlling emissions on an annual basis, independent of
fluctuations in the levels of their activity. As Rightmove is a
‘people’ business, the most suitable metric is ‘Emissions per
Employee’, based on the average number of employees
during the year. The Group’s emissions per employee are
shown in the table below.
Emissions per Employee
Scope
Source
Scope 1
Company cars
Scope 2
Electricity
Scope 3
Outsourced – data centres
Total
Tonnes CO2e
Tonnes CO2e
per employee(1) per employee(1)
2016
2017
1.0
0.5
0.5
2.0
1.0
0.7
0.7
2.4
(1) Based on 479 (2016: 469) employees taken as the average number of
employees in the Group throughout the year.
Scope 2 and 3 emissions per employee have declined year on
year due in part to an increase in average headcount which has
not had a proportionate impact on emissions from running
our offices or the outsourced data centres. We will continue
to monitor and look for ways to improve energy efficiency.
Methodology
We have reported on all of the emission sources required
under the Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013. We have used the
GHG’s Protocol’s Operational Control consolidation
method. We do not have responsibility for any emission
sources that are not included in the above information.
Health and safety
The Group’s policy on health and safety is to provide
adequate control of the health and safety risks arising from
work activities. This is delivered through consultation with,
and training of, employees, the provision and maintenance of
plant and equipment, safe handling and use of all substances
and the prevention of accidents and causes of ill health. At
Rightmove, our approach to the effective management of
health and safety is to treat it as an integral part of business
management. During the year, we continued our fire safety,
first aid and work place safety training.
29
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017
Governance | Directors and officers
Scott Forbes
Chairman
Appointment to the Board
13 July 2005
Committee membership
Nomination (Chairman)
Current external commitments
Chairman of Ascential plc
Non-Executive Director of Travelport Worldwide Ltd
Chairman of Innasol Group Limited
Chairman of Cars.com Inc
Previous roles and relevant experience
Chairman of Orbitz Worldwide until September 2015.
Director of NetJets Management Ltd, a subsidiary of
Berkshire Hathaway until October 2009. Scott has over
35 years’ experience in operations, finance and mergers
and acquisitions including 15 years at Cendant
Corporation which was formerly the largest worldwide
provider of residential property services. Scott
established Cendant’s international headquarters
in London in 1999 and lead this division as Group
Managing Director until he joined Rightmove.
Peter Brooks-Johnson
Chief Executive Officer
Appointment to the Board
10 January 2011
Current external commitments
None
Previous roles and relevant experience
Peter joined Rightmove in 2006 and became
Chief Operating Officer in April 2013 having
been Managing Director of rightmove.co.uk
since 2011 and head of the Agency business
since 2008. He was promoted to Chief Executive
Officer in May 2017. Prior to joining Rightmove,
Peter was a management consultant with
Accenture and the Berkeley Partnership.
Robyn Perriss
Finance Director
Appointment to the Board
30 April 2013
Current external commitments
None
Previous roles and relevant experience
Robyn joined Rightmove in 2007 as Financial
Controller with responsibility for day to day
financial operations and was promoted to the
Board as Finance Director in April 2013. She
was also Company Secretary from April 2012
to July 2014 and from June to October 2016.
Robyn qualified as a chartered accountant in
South Africa with KPMG and worked in both
audit and transaction services. Prior to joining
Rightmove, Robyn was Group Financial
Controller at the online media business,
Auto Trader.
Rakhi Goss-Custard
Non-Executive Director
Appointment to the Board
28 July 2014
Committee membership
Remuneration, Nomination
Current external commitments
Non-Executive Director of Kingfisher plc
Non-Executive Director of Schroders plc
Non-Executive Director of Intu Properties plc
Non-Executive Director of Be Heard Group plc
Previous roles and relevant experience
Rakhi was previously Director of UK Media at
Amazon to June 2014. She held various other
senior positions during her 11-year tenure at
Amazon including Media, Entertainment,
General Merchandise and Book divisions as
well as Product Development. Prior to Amazon,
Rakhi previously advised Zappos and held
strategy roles at TomTom and Oliver Wyman.
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.
Andrew Findlay
Non-Executive Director
Appointment to the Board
1 June 2017
Committee membership
Audit, Nomination
Current external commitments
Director of easyJet plc
Previous roles and relevant experience
Andrew has been the Chief Financial Officer of
easyJet plc since 2015. Before joining easyJet,
Andrew was Chief Financial Officer of Halfords
plc and prior to that Director of Finance, Tax and
Treasury at Marks and Spencer. He formerly
held senior finance roles at the London Stock
Exchange and at Cable and Wireless, both in
the UK and US. Andrew qualified as a chartered
accountant with Coopers & Lybrand.
30
rightmove.co.uk Peter Williams
Senior Independent Non-Executive Director
Appointment to the Board
3 February 2014
Committee membership
Remuneration (Chairman), Audit, Nomination
Current external commitments
Chairman of DP Eurasia NV
Chairman of boohoo.com plc
Chairman of Mister Spex GmbH
Chairman of U and I plc
Previous roles and relevant experience
Peter was previously senior independent director
of ASOS plc and Sportech plc, Chairman of
Jaeger, held non-executive director roles in
Cineworld Group plc, the EMI group, Blacks
Leisure Group plc, JJB Sports plc, GCap Media plc
and Capital Radio Group plc. In his executive
career, Peter was Chief Executive at Alpha Group
plc and prior to that, Chief Executive of Selfridges
plc where he also acted as Chief Financial Officer
for over ten years.
Jacqueline de Rojas CBE
Non-Executive Director
Appointment to the Board
30 December 2016
Committee membership
Remuneration, Nomination
Current external commitments
President of techUK
Non-Executive Director of Costain Group plc
Non-Executive Director of AO World plc
Previous roles and relevant experience
Jacqueline has been employed throughout her career
by global blue-chip software companies and has held
senior positions at Citrix, CA Technologies, McAfee
and Ascential Software. She was a non-executive
director of Home Retail Group from 2012 to 2016.
Jacqueline is an advisor to the Digital Leaders
Technology Group and a passionate advocate for
diversity and inclusion in the workplace with a particular
focus on getting women and girls into digital careers
and studying STEM subjects. She was awarded a CBE
for services to international trade in the technology
industry in the 2018 New Year’s Honours list.
Lorna Tilbian
Non-Executive Director
Appointment to the Board
1 February 2018
Current external commitments
Non-Executive Director of Jupiter UK
Growth Investment Trust plc
Non-Executive Directorr of Proven VCT plc
Non-Executive Director of Finsbury Growth
& Income Trust PLC
Non-Executive Director of Euromoney
Institutional Investor PLC
Non-Executive Director M&C Saatchi PLC
Previous roles and relevant experience
Lorna was Executive Director and Head of the
Media Sector in Corporate Broking & Advisory at
Numis Corporation PLC until September 2017.
She was a founder of Numis when it launched in
2001 having worked at Sheppards, as a director
of SG Warburg and executive director of WestLB
Panmure. Lorna sits on the Advisory Panel of Tech
City UK’s Future Fifty programme and has served
as a Cabinet Ambassador (for Creative Britain)
for the Department of Culture, Media & Sport.
Sandra Odell
Company Secretary
Appointment as officer to the Board
1 November 2016
Current external commitments
None
Previous roles and relevant experience
Sandra is a Fellow of the Institute of Chartered
Secretaries and Administrators. Prior to joining
Rightmove, Sandra was Company Secretary
of Quintain, the London property developer,
and before that held various senior company
secretarial positions in listed financial
services companies.
31
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statementsStrategic reportGovernanceFinancial statements Governance | Corporate governance report
Introduction
The following sections explain how the Company applies
the main provisions of the UK Corporate Governance Code
(the Code) issued by the Financial Reporting Council (FRC),
as required by the Listing Rules of the Financial Conduct
Authority (FCA) and meets the relevant information provisions
of the Disclosure and Transparency Rules of the FCA.
The statement of corporate governance covers:
• the structure and role of the Board and its committees;
• relations with the Company’s shareholders and the Annual
General Meeting (AGM); and
• the reports of the Audit Committee and Nomination
Committee including Board effectiveness and evaluation.
Statement of compliance
The Code sets out the principles and provisions relating to
good governance of UK listed companies and can be found
on the FRC’s website at frc.org.uk.
We are pleased to confirm that, for the year under review,
the Company has complied fully with the principles and
provisions of the Code.
The Board’s role
The Board is collectively responsible to shareholders for the
overall direction and control of the Group and has the powers
and duties set out in the Companies Act and the Company’s
Articles of Association. The Board delegates certain matters to
the Board committees and delegates the day to day operational
aspects of the business to the executive directors.
The report of the Remuneration Committee is set out
separately in the Directors’ Remuneration Report on
pages 50 to 51.
The Group’s risk management and internal control
framework and the principal risks and uncertainties are
described on pages 21 to 23. The Directors’ Report on
pages 46 to 48 also contains information required to be
included in this statement of corporate governance.
The schedule of matters requiring Board approval includes:
• Rightmove’s business strategy;
• the annual business plan;
• changes to the Group’s capital structure;
• the capital management and dividend policies;
• the annual and half year results and shareholder
communications;
• major acquisitions and disposals;
• appointment and removal of officers of the Company; and
• the system of internal control and risk management.
The key responsibilities and actions carried out by the Board during the year are set out below:
Responsibility
Specific actions and information received during the year
Strategy 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
Strategic initiatives
identified at the strategy
away day were prioritised
then monitored, analysed
and discussed at every
Board meeting
The Group’s 2018 budget
and three-year business
plan was approved
Performance
monitoring
Regular market updates
and reports were received
on the competitive
landscape including new
business models and
innovation
The Board regularly
reviewed updates on
business performance
in relation to analyst
consensus forecasts
and the business plan
Senior management gave
detailed presentations on
Agency and Overseas
business performance
and progress against
other business initiatives
Presentations were
received in relation to
innovation in the rental
market including:
RentLondon, an
experimental app that
explores trends in search
to make the process of
finding a rental property
more efficient and
incorporates a messenger
bot and RentReady, a
tenant passport initiative
The Board received an
update on Rightmove
Discover, the predictive
algorithm product
launched in 2017 to
Agency customers,
following the acquisition
of The Outside View in
the prior year
32
rightmove.co.uk Responsibility
Specific actions and information received during the year
Shareholder
engagement
Governance
and risk
People and
values
Investor feedback was
received via the executive
directors throughout the
year, particularly following
the results and investor
roadshows
Monthly reports are
received on the
shareholder demographic
and analysis of significant
changes to the share
register
Rightmove’s corporate
broker UBS gave a
presentation, updating
the Board on the key
market drivers of the
Group’s valuation
The Board conducts a
bi-annual review of the
entire risk register, with
particular focus on
principal risks affecting
the business together
with the consideration of
new and emerging risks
Reports were received
from the Audit
Committee on Rightmove
Assurance reviews, with
particular focus on the
Group’s readiness for the
General Data Protection
Regulation in May 2018
The Group’s regulatory
results announcements
and Annual Report were
reviewed in detail and
approved
The Remuneration
Committee initiated
investor correspondence
relating to the application
of the Remuneration
Policy for 2018
Senior management gave
briefings and
presentations covering a
wide range of topics
including cyber and
information security risks,
corporate governance
and the 2017 insurance
renewal programme
The Board received
presentations from senior
managers throughout the
year to ensure exposure
to the breadth and depth
of talent supporting
business growth
Group employee
satisfaction scores as part
of the ‘Have your say’
survey were monitored
across a range of criteria
The Board considered the
gender pay gap analysis
and the proposed actions
to reduce the gap going
forward
The Board considered the
organisation’s strengths,
capability requirements
and succession for senior
managers as well as skills
and experience
possessed by its directors
relative to those skills and
capabilities identified in
the Board Strategy Review
that are necessary to help
Rightmove achieve its
strategic objectives
There are usually seven scheduled Board meetings each
year including one meeting or away day devoted to
consideration of the Group’s strategy. Additional meetings
can be arranged at short notice at the request of any
director, if required. In addition to scheduled Board meetings,
there is regular informal dialogue between the directors.
Directors receive Board papers well in advance of meetings
to allow sufficient time for review and consideration. If any
director raises a concern or challenges any aspect of the
business conducted at a Board meeting, the Company
Secretary will ensure their comments are appropriately
recorded in the Board minutes. In addition to formal Board
papers, directors receive monthly management and financial
reports on the operational and financial performance of the
business, setting out actual and forecast financial
performance against approved budgets and other key
performance indicators. The Board also receives copies of
broker reports and market reviews relating to Rightmove.
Board committees
The Board has established three principal committees,
the Audit Committee, the Remuneration Committee and
the Nomination Committee, to assist it in the execution
of its duties. The Chairman of each Committee reports on
the respective Committee’s activities at the subsequent
Board meeting.
The Committees’ terms of reference are available on the
Company’s corporate website, plc.rightmove.co.uk or by
request from the Company Secretary.
Each of the Committees is authorised, at the Company’s
expense, to obtain legal or other professional advice to
assist in carrying out its duties. No person other than a
Committee member is entitled to attend the meetings
of these Committees, except by invitation of the
Chairman of that Committee.
Current membership of the Committees is shown on
page 36. The composition of these Committees is reviewed
regularly, taking into consideration the recommendations
of the Nomination Committee.
33
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 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.
Board composition
The Board at the date of this report comprises two executive
directors and seven non-executive directors, including the
Chairman. The two executive directors are Peter Brooks-
Johnson (Chief Executive Officer) and Robyn Perriss
(Finance Director) and the non-executive directors are Scott
Forbes (Chairman), Peter Williams (Senior Independent
Director), Ashley Martin, Rakhi Goss-Custard, Jacqueline de
Rojas, Andrew Findlay and Lorna Tilbian.
Biographical details of all directors at the date of this report
appear on pages 30 to 31 and details of Committee
membership appear on page 36.
The Board’s size and composition is kept under regular
review by the Nomination Committee.
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
38 to 43
Two
At least three members
who should be
independent non-
executive directors
50 to 51 and
63 to 76
Two
At least three members,
the majority of whom
should be independent
non-executive directors
44 to 45
Board changes
Nick McKittrick, Chief Executive Officer, retired from the Board
on 9 May 2017 and Peter Brooks-Johnson, formerly Chief
Operating Officer, was appointed as Chief Executive Officer
from that date. Colin Kemp retired from the Board on 9 May
2017, having served nine years as a non-executive director.
Andrew Findlay was appointed as a non-executive director
on 1 June 2017 and Lorna Tilbian was appointed with effect
from 1 February 2018. All other directors served throughout
the year.
34
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
stakeholders; and
• with the assistance of the Company Secretary, setting the Board’s agenda and ensuring that
adequate time is available for discussion and effective decision making, and that directors receive
sufficient, relevant, timely and clear information.
Responsible for the day to day management of the Group, including:
• the operational and financial performance of the Group;
• developing the Group’s objectives and strategy and following Board approval, the successful
execution of strategy;
• effective and ongoing communication with stakeholders; and
• chairing the Executive Committee.
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 30 to 31 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, convene 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 and experience
We are committed to a Board comprised of directors from
different backgrounds with diverse and relevant experience,
perspectives, skills and knowledge. We believe that diversity,
including gender diversity, amongst directors contributes
towards a high performing and effective Board and business,
so we strive to maintain the optimal balance. We endorse
both a meritocratic Board appointment process and
balanced gender representation on the Board.
At 31 December 2017, 38% of Board members were female
and following the appointment of Lorna Tilbian, that
proportion has risen to 44% of Board members. Following
the retirement of Ashley Martin in May the proportion of
female Board members will rise to 50%. We remain
committed to recruiting the best people and appropriate
talent for the business whilst seeking to maintain as near
50:50 gender balance on the Board as possible.
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Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Governance | Corporate governance report continued
The range of skills and experience the Board considers
necessary to deliver Rightmove’s business strategy, and
which were identified in the Board Strategy Review, includes:
• Finance and governance
• Voice of the customer and property market
• Technology and innovation
• Voice of the consumer and retail
• Digital marketing and online media, and
• Corporate transactions.
Board independence
The Code provides that the Board should identify in the
Annual Report each non-executive director that it considers
to be independent. That is, to determine whether the
director is independent in character and judgement and
whether there are relationships or circumstances
which are likely to affect, or could appear to affect,
the director’s judgement.
The Board reviews non-executive director independence
on an annual basis taking into account such factors as their
contribution to unbiased and independent debate during
meetings. The Board considers that there is an appropriate
balance between the executive and non-executive directors
and that all non-executive directors are fully independent of
management and independent in character and judgement.
Ashley Martin will have completed nine years’ service as a
non-executive director in June 2018 and will retire from the
Board following the 2018 AGM. The Nomination Committee
carefully considered the independence of Lorna Tilbian
before her appointment to the Board and details of that
process is set out in the Nomination Committee report
on page 45.
To safeguard their independence, a director is not entitled to
vote on any matter in which they may be conflicted or have a
personal interest. Where necessary, directors are required to
absent themselves from a meeting of the Board while such
matters are being discussed. In cases of doubt, the
Chairman of the Board is responsible for determining
whether a conflict of interest exists.
The Chairman is also the Chairman of two other publically
listed companies. The executive directors do not hold any
other non-executive directorships or commitments
requiring disclosure under the Code.
Board tenure
as at 31 December 2017
Balance of directors
as at 31 December 2017
1
2
2
3
2
1
5
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 2018 AGM with the exception of Ashley Martin, who
will retire from the Board on that date.
Board and Committee membership and attendance
The membership of the Committees of the Board and
attendance at Board and Committee meetings for the
year under review are set out in the table below:
Remuneration
Committee
Audit
Committee
Nomination
Committee
Board
Total meetings
Scott Forbes
Peter Brooks-Johnson
Robyn Perriss
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
7
7
7
7
7
7
7
7
Andrew Findlay
5(4)
6
–
–
–
–
6
6
3(3)
–
5
–
–
–
5
5
4(1)
–
3(4)
3
3
–
–
3
3
3(2)
2(2)
2(4)
(1) Rakhi Goss-Custard was a member of the Audit Committee until 9 May 2017
and attended two further meetings as a guest.
(2) Rakhi Goss-Custard and Jacqueline de Rojas joined the Nomination Committee
on 9 May 2017 and attended all meetings after that date. Rakhi attended one
meeting before that date as a guest.
(3) Jacqueline de Rojas joined the Remuneration Committee on 9 May 2017 and
attended all meetings after that date.
(4) Andrew Findlay joined the Board, Audit and Nomination Committees on
1 June 2017 and attended all meetings after that date.
36
rightmove.co.uk
In addition to the above meetings, the Chairman conducts
meetings with the non-executive directors without the
executive directors being present when required.
Peter Williams, the Senior Independent Director, chaired a
meeting in December 2017 of the non-executive directors
at which the performance of the Chairman was also
reviewed, without the presence of the Chairman.
Shareholders are also kept up to date with the Group’s
activities through the half year results statement and
Annual Report and the investor relations section of its
website, at plc.rightmove.co.uk, which provides details of
all the directors, the financial calendar, latest news including
financial results, investor presentations and Stock Exchange
announcements.
Annual General Meeting
The AGM provides an opportunity for shareholders to
vote on aspects of the Company’s business, meet the
directors and ask them questions. The AGM will be held
on 4 May 2018 at the offices of UBS Limited at 5 Broadgate,
London EC2M 2QS.
The Company will arrange for the Annual Report and related
papers to be available on the Company’s corporate website
at plc.rightmove.co.uk or posted to shareholders (where
requested) at least 20 working days before the AGM.
The Company continues to comply with the Code, with
the separation of all resolutions put to shareholders.
The Company proactively encourages shareholders to
vote at general meetings by providing electronic voting for
shareholders who wish to vote online and personalised proxy
cards to shareholders electing to receive them ensuring that
all votes are clearly identifiable. The Company presently
takes votes at general meetings on a show of hands on the
grounds of practicality, owing to the limited number of
shareholders in attendance. All proxy votes are counted and
the level of proxy votes, including votes witheld 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 and open dialogue with
shareholders through ongoing meetings with institutional
investors and research firms to discuss strategy and
operational and financial performance. Contact in the UK is
principally with the Chief Executive Officer and the Finance
Director. The Chairman attends selected investor meetings
in the UK and the USA. The Senior Independent Director is
also available to shareholders if they wish to supplement
their communication, or if contact through the normal
channels is inappropriate.
The Remuneration Committee proactively engaged with
the Company’s top shareholders ahead of setting the
Remuneration Policy, which was approved at the 2017 AGM
and again in late 2017 when setting executive director base
salary levels for 2018.
The Board is kept informed of the views and opinions of
those with an interest in the Company’s shares through
reports from the Chief Executive Officer and the Finance
Director, as well as reports from the Company’s brokers,
UBS and Numis.
37
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Governance | Corporate governance report continued
Audit Committee report
Ashley Martin
Chairman of the Audit Committee
Dear Shareholder
I am pleased to present the 2017 report of the Audit
Committee (the Committee).
This report provides an overview of the principal activities
of the Committee and details how it has discharged its
responsibilities during the year.
The Committee is an essential part of Rightmove’s
governance framework to which the Board has delegated
oversight of the accounting, financial reporting and internal
control processes, the outsourced internal audit function
and the relationship with the external auditors. The key
responsibilities are set out on page 34 of the Corporate
Governance Report.
The Committee has overseen a detailed programme of work
in 2017 in relation to its remit, including agreeing the scope
of work delivered by the PricewaterhouseCoopers LLP
(PwC) outsourced internal audit function, known as
Rightmove Assurance. The role of Rightmove Assurance has
become well established throughout the organisation and
continues to provide insight and value in both core financial
control areas and the broader business operations.
The Committee has given particular focus this year to the
readiness of the Group to meet the requirements of the
forthcoming General Data Protection Regulation (GDPR),
which becomes effective in May 2018. The business
has established a comprehensive GDPR programme,
coordinated by a full-time project manager, and is on
track to be substantially compliant by May 2018. There has
also been continued focus on the progress of the Disaster
Recovery and Business Continuity Plans, including a planned
closure of the Milton Keynes office which took place during
December 2017. The oversight of financial controls
continues to be a key area of work of the Committee.
As a result of the breadth of the reviews this year, the
Committee has had the benefit of exposure to the broader
organisation, which has brought added insight to the topics
under discussion.
Looking forward to the next 12 months, the Committee will
continue to focus on the audit, assurance and risk processes
within the Group, including a review of the control
effectiveness of key billing processes, a counter fraud
workshop and an update on the progress towards GDPR
compliance.
I have greatly enjoyed my time as Chairman of the Audit
Committee over the last nine years, and thank my fellow
Committee members for their wisdom and support over
this period. Andrew Findlay will succeed me as Chairman
of the Audit Committee at the end of the 2018 Annual
General Meeting.
I will be available at the AGM to answer any questions about
the work of the Committee.
Written terms of reference that outline the Committee’s
authority and responsibilities are published on the investor
relations section of the Group’s website at plc.rightmove.
co.uk and are available in hard copy form from the
Company Secretary.
Ashley Martin
Chairman of the Audit Committee
38
rightmove.co.uk Committee membership and meetings
All the members of the Audit Committee are Independent
Non-Executive Directors in accordance with provision C3.1
of the UK Corporate Governance Code (the Code) and the
Board has determined that both Andrew Findlay and
Ashley Martin have recent and relevant financial experience
as required by the Code. Ashley Martin is a qualified
accountant and was formerly Global Chief Financial Officer
of Engine Holding LLC and Group Finance Director of
Rok plc. Andrew Findlay and Peter Williams are also
qualified accountants and Andrew Findlay is currently
Chief Financial Officer of easyJet plc. Andrew Findlay will
succeed Ashley Martin as Chair of the Audit Committee
at the end of the 2018 Annual General Meeting. As a whole,
the Committee has competence relevant to the sector in
which the Group operates through the digital experience
of Andrew Findlay and Peter Williams, and the media
experience of Ashley Martin.
Biographies of the members of the Committee are set out
on pages 30 to 31.
Committee members
Eligible to attend
Attended
Number of meetings
Ashley Martin (Chairman)
Peter Williams
Andrew Findlay(1)
Rakhi Goss-Custard(2)
5
5
3
2
5
5
3
4
(1) Andrew Findlay was appointed to the Committee on 1 June 2017.
(2) Rakhi Goss-Custard retired from the Committee on 9 May 2017 and attended
two further meetings as a guest.
The Committee met five times in 2017 and attendance of
the members is shown above. In order to maintain effective
communication between all relevant parties, the Committee
invited the Finance Director and Head of Finance, together
with appropriate members of the management team, and
the external and internal auditors, to meetings as necessary.
The Committee sets aside time periodically to seek the
views of the external auditor, in the absence of management.
The external auditor has direct access to the Chairman to
raise any concerns outside formal Committee meetings.
The Committee also meets separately with the internal
auditor during the year, and in between meetings the
Chairman keeps in touch with the Finance Director and
external audit partner as well as other members of the
management team.
After each meeting, the Chairman reports to the Board on
the main issues discussed by the Committee and minutes
of the Committee meetings are circulated to the Board
once approved.
Audit Committee effectiveness
The effectiveness of the operation of the Committee was
reviewed in December 2017 through a questionnaire
completed by all members of the Committee, which focused
on areas such as the appropriateness of the focus of the
Committee, how it operates and professional development
of the members. This was supplemented with responses
from the effectiveness review of the Board and its
committees where each Board member responded to key
questions on Board performance and commented generally
on the performance of Board Committees. The feedback
on the Committee was positive and confirmed that the
Committee is effective and provides appropriate challenge.
Financial reporting
The Committee is responsible for reviewing the
appropriateness of the Group’s half-year reporting and
annual financial statements. The Committee does this by
considering, among other things, the accounting policies
and practices adopted by the Group; the correct application
of applicable reporting standards and compliance with
broader governance requirements; the approach taken by
management to the key judgemental areas of reporting and
the comments of the external auditor on management’s
chosen approach.
Significant issues
The key significant issue in the context of the 2017
Consolidated Financial Statements is revenue recognition.
The Committee considers this area to be significant taking
into account the level of materiality and degree of focus
given by management, and discussed the issue in detail to
ensure that the approach taken was appropriate. In relation
to the Company Financial Statements, the key significant
issue is the recoverability of the investment by the Company
in Rightmove Group Limited, due to its materiality in the
context of the total assets of the Company.
39
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Governance | Corporate governance report continued
Issue
Committee review
During the year, management performed data analytics procedures on the amounts billed
to the two largest customer groups (Agency and New Homes, together 92% of revenue).
This included investigating anomalies and outliers identified and reporting to the Committee
in this regard.
Revenue is a prime area of audit focus and KPMG evolved their approach in this area this year
as a result of management performing the revenue data analytics procedures that had
previously been part of the audit approach. KPMG designed and performed new data
analytics procedures which covered all revenue streams matching customer billings to cash,
and results of this work were reported to the Committee.
The Committee discussed any anomalies with management and with KPMG in relation to
the data analytics work they performed. The Committee was satisfied with the explanations
provided and conclusions reached.
The approach to data analytics performed by KPMG expands their audit coverage to 100%
of revenue, which together with the data analytics performed by management has led to
increased overall assurance in this area.
The data analytics work above is supplemented by a detailed analytical review by
management of margins, and ARPA together with a comprehensive analysis on the
treatment of discounted and free member offers.
The Committee reviewed the assumptions made by management, including the strong
track record of profitable growth and cash generation by RMGL. Furthermore, the
Rightmove plc share price has increased significantly since 2008, resulting in a current
market value of c.£4 billion, significantly in excess of the investment carrying value of
£0.5 billion. As RMGL is the main trading entity of Rightmove plc, we therefore see no
evidence of impairment. The Committee was satisfied with the assumptions made.
Revenue
As more fully described on page 17
and 93 the majority of the Group’s
revenue is derived from subscriptions
for core listing fees and advertising
products on Rightmove’s platforms.
The Group recognises this revenue
over the period of the contract or the
point at which advertising products
are used.
Investment by Rightmove plc in
Rightmove Group Limited (RMGL)
The investment by the Company
in RMGL is carried at cost, adjusted for
subsequent additions to the
investment. Cost was initially assessed
as at 28 January 2008 being the date
that Rightmove plc became the parent
company of RMGL. Share-based
payment awards to RMGL employees
are accounted for as a deemed capital
contribution by Rightmove plc to
RMGL of the value of the share-based
payment charge for those awards,
increasing the value of the investment.
Further details are provided in
note 15 to the financial statements.
The investment is not considered at
risk of material misstatement or
subject to significant judgement,
however it is considered a significant
risk due to its size in relation to the
Company balance sheet.
The Committee also reviewed and considered the following
areas due to their materiality and the application of
judgement. However, it considered them to be stable in
nature and therefore did not classify them as significant
issues in the context of the 2017 financial statements.
Issue
Committee review
Share-based payment charges and
related deferred tax asset
Going concern and viability
statements
The Committee reviewed the judgements, assumptions and estimates made by management
as part of the review of the financial statements to ensure that they were appropriate.
The Committee also obtained the external auditors’ assessment of the calculations.
The results of this review were that the Committee was satisfied with the calculations made.
In assessing the validity of the statements detailed on pages 24 and 89, the Committee
reviewed the work undertaken by management to assess the Group’s resilience to the
Principal Risks under various scenarios. The Committee gained appropriate assurance that
sufficient rigour was built into the process to assess going concern and viability over the
designated periods.
40
rightmove.co.uk Fair balanced and understandable
One of the key governance requirements is for the Annual
Report and the financial statements, taken as a whole, to be
fair, balanced and understandable and provide the information
necessary for shareholders to assess the Group’s position
and performance, business model and strategy.
The Committee was provided with an early draft of the
Annual Report in order to assess the strategic direction
and key messages being communicated. Feedback was
provided by the Committee in advance of the February
Board meeting, highlighting any areas where the
Committee believed further clarity was required. The draft
report was then amended to incorporate this feedback
prior to being tabled at the Board meeting for final
comment and approval.
When forming its opinion, the Committee reflected on the information it had received and its discussions throughout the year.
In particular, the Committee considered:
Is the report fair?
• Is the whole story presented and has any sensitive material been omitted that should
have been included?
• Are key messages in the narrative aligned with the KPIs and are they reflected in the
financial reporting?
• Are the KPIs being reported consistently from year to year?
• Is the reporting on the business areas in the narrative reporting consistent with the
financial reporting in the financial statements?
Is the report balanced?
• Do you get the same messages when reading the front end and back end of the
Is the report understandable?
Annual Report independently?
• Are threats identified and appropriately highlighted?
• Are the alternative performance measures explained clearly with appropriate prominence?
• Are the key judgements referred to in the narrative reporting and significant issues
reported in this Committee Report consistent with disclosures of key estimation
uncertainties and critical judgements set out in the financial statements?
• How do these judgements compare with the risks that KPMG are planning to include
in their Auditors’ Report?
• Is there a clear and cohesive framework for the Annual Report?
• Are the important messages highlighted appropriately throughout the Annual Report?
• Is the Annual Report written in easy to understand language and are the key messages
clearly drawn out?
• Is the Annual Report free of unnecessary clutter?
Following its review, the Committee is of the opinion that the
2017 Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position, performance,
business model and strategy.
External audit
The Committee has primary responsibility for overseeing the
relationship with, and performance of, the external auditor.
The Committee approves the terms of engagement and fees
of the external auditor, ensuring they have appropriate audit
plans in place and that an appropriate relationship is
maintained between the Group and the external auditor.
The Committee is responsible for making recommendations
to the Board in relation to the appointment of the external
auditor. KPMG LLP was re-appointed as the Group’s auditor
in 2013 following an audit tender, and in accordance with the
EU Audit Directive implemented in 2016, the Group will be
required to put the external audit contract out to tender by
2023. The external auditor is required to rotate the audit
partner responsible for the Group audit every five years in
order to ensure independence. The lead audit partner,
Karen Wightman, has been in place for five years, and
therefore in accordance with the FRC’s Ethical Standard 3
(Revised), Anna Jones will take over from Karen Wightman
for the financial year ending 31 December 2018.
The Committee approved the fees of KPMG for the year as
set out in Note 6 of the financial statements.
Independence and non-audit services
The Committee has policies and procedures in place in
relation to the provision of non-audit services by the external
auditor and the non-audit fee policy was reviewed by the
Committee during the year. The non-audit fee policy ensures
that the Group benefits in a cost-effective manner from the
cumulative knowledge and experience of its auditor, whilst
also ensuring that the auditor maintains the necessary degree
of independence and objectivity.
41
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Governance | Corporate governance report continued
Non-audit service
Policy
Assurance-related services directly related to the audit for
example, review of the half-year financial statements.
The half year review is approved by the Committee as part of the
annual Audit Plan. Management is given the authority to incur
additional non-audit services of up to £15,000 in any financial
year without prior approval of the Committee.
Permitted non-audit services
Including but not limited to: accounting advice, work related to
mergers, acquisitions, disposals, joint ventures or circulars; and
corporate governance advice.
Thereafter all additional fees are to be referred to the Audit
Committee in advance, subject to a cap on permitted non-audit
fees of 70% of the average audit fees over the three preceding
financial years.
Prohibited services
In line with the EU Audit Reform, these are services where the
auditor’s objectivity and independence may be compromised.
Prohibited services are detailed in the FRC Revised Ethical
Standard 2016 and include tax services, accounting services,
internal audit services and valuation services.
The level of non-audit fees as a proportion of the audit
fee has typically been low at Rightmove. During the year,
KPMG charged the Group £30,000 for non-audit services,
representing less than 21% of the 2017 audit fee. Of this,
£18,000 relates to the half-year review, and £10,000 for a
review of the Group’s gender pay gap calculations and
methodology. Further details of these services can be
found in Note 6 to the financial statements.
Effectiveness and reappointment
The Committee considered the quality and effectiveness of
the external audit process, in light of the FRC’s Practice Aid
for Audit Committees (May 2015). The effectiveness of the
external audit process is dependent on a number of factors.
These include the quality, continuity, experience and training
of audit personnel, business understanding, technical
knowledge and the degree of rigour applied in the review
processes of the work undertaken, communication of key
accounting and audit judgements, together with appropriate
audit risk identification at the start of the audit cycle.
The Committee reviewed the report of the FRC’s Audit
Quality Review team relating to KPMG as a firm and
discussed the actions taken by KPMG in light of the
recommendations, including in relation to the firm’s
approach to the audit of revenue.
The Committee evaluated the effectiveness of the audit
process together with input from management. Areas the
Committee considered in this review included the quality
of audit planning and execution, engagement with the
Committee and management, quality of reporting, and
capability and experience of the audit team. For the 2017
financial year, the Committee was satisfied that there had
been appropriate focus and challenge on the primary areas
of audit risk and concluded that the performance of KPMG
remained efficient and effective.
Prohibited, in accordance with the EU Audit Reform.
Internal audit
The Group has an Internal Audit function, known as
Rightmove Assurance, which is fully outsourced to PwC.
The aim of Rightmove Assurance is to provide independent
and objective assurance on the adequacy and effectiveness
of internal control, risk management and governance
processes. This includes assurance that underlying financial
controls and processes are working effectively, as well as
specialist operational and compliance reviews that focus on
emerging risks in new and evolving areas of the business.
The Rightmove Assurance plan for 2017 was approved by
the Audit Committee and covered a broad range of core
financial and operational processes and controls, focusing
on specific risk areas. Specialist reviews were undertaken in
the following areas:
• Data privacy, including a readiness assessment in relation
to GDPR;
• Cyber maturity assessment, covering technical, process
and people controls. The review also included particular
focus on data loss management, Bring Your Own Device
(BYOD) and end point management, corporate network
management and identity and access management;
• Employment taxes;
• Procure to pay cycle and cash management;
• Pre-implementation review of a new HR system; and a
• Payroll controls review.
Reports setting out the principal findings of the Rightmove
Assurance reviews and agreed management actions were
discussed by the Committee. The Committee also reviewed
open actions from previous reviews, together with
monitoring the progress by management in completing
these actions.
42
rightmove.co.uk Effectiveness of the internal audit process
The work of Rightmove Assurance provides a key additional
source of assurance and support to management and the
Audit Committee on the effectiveness of internal controls as
well as providing guidance and recommendations to further
enhance the internal control environment, and provide
specialist insight into areas of change in the business.
During the year, the Audit Committee undertook a review
of the effectiveness of the Rightmove Assurance function.
The evaluation was led by the Committee Chairman and
involved issuing tailored evaluation questionnaires which
were completed by Rightmove management, the external
auditors, KPMG, the Committee and PwC themselves.
The evaluation concluded that the Rightmove Assurance
function had an appreciation of the key issues facing the
business, was realistic and robust with audit suggestions
and added value to the business. It included a number of
recommendations which were incorporated into the 2017
Rightmove Assurance plan.
Whistleblowing
The Group has a whistleblowing process which enables
employees of the Group to raise concerns on an entirely
confidential basis. The Committee receives reports on the
communication within the business of the whistleblowing
policy and external confidential reporting arrangements,
and the use of the service including any whistleblowing
incidents and their outcomes.
Internal controls
The Board has overall responsibility for the Group’s system
of internal controls and has established a framework of
financial and other controls, which is periodically reviewed
in accordance with the FRC Internal Control: Guidance to
Directors publication for its effectiveness.
The Board has taken, and will continue to take, appropriate
measures to ensure that the chances of financial
irregularities occurring are reduced as far as reasonably
possible by improving the quality of information at all levels in
the Group, fostering an open environment and ensuring that
the financial analysis is rigorously applied. Any system of
internal control is designed to manage rather than eliminate
the risk of failure to achieve business objectives and can only
provide reasonable and not absolute assurance against
material misstatement or loss.
The Group’s management have established the procedures
necessary to ensure that there is an ongoing process for
identifying, assessing and managing the significant risks to
the Group. These procedures have been in place for the
whole of the financial year ended 31 December 2017 and
up to the date of the approval of these financial statements,
and they are reviewed regularly.
Rightmove has an internal audit function, known as Rightmove
Assurance, which is fully outsourced to PwC. Rightmove
Assurance provides the Group with additional independent
assurance on the effectiveness of internal controls.
The key elements of the system of internal control are:
• Major commercial, strategic, competitive and financial risks
are formally identified, quantified and assessed, discussed
with the Executive Committee, after which they are
considered by the Board;
• A comprehensive system of planning, budgeting and
monitoring Group results. This includes monthly
management reporting and monitoring of performance
against both budgets and forecasts with explanations for
all significant variances;
• Clearly defined policies for capital expenditure and
investment exist, including appropriate authorisation
evels, with larger capital projects, acquisitions and
disposals requiring Board approval;
• A treasury function which manages cash flow forecasts
and cash on deposit (including counterparty risk);
• An organisational structure with clearly defined lines of
responsibility and delegation of authority, and an
embedded culture of openness where business decisions
and their associated risks and benefits are discussed and
challenged;
• A comprehensive disaster recovery plan and business
continuity plan based upon:
- co-hosting of the Rightmove platforms across three
separate locations, which is regularly tested and reviewed;
- the ability of the business to maintain business critical
activities in the event of an incident;
- the capability for employees to work remotely from home
or a third party location in the event of a loss of one of our
premises. This was tested for the Milton Keynes office
during the year through a planned full office closure.
• Regular testing of the security of the IT systems and
platforms, regular backups of key data and ongoing threat
monitoring to protect against the risk of cyber-attack; and
• Whistleblowing and bribery policies of which all employees
are made aware, to enable concerns to be raised either with
line management or, if appropriate, confidentially outside
the line management.
Through the procedures outlined above, the Board, with
advice from the Audit Committee, has considered all
significant aspects of internal control for the year and up
to the date of this Annual Report. No significant failings or
weaknesses were identified during this review. However,
had there been any such failings or weaknesses, the Board
confirms that necessary actions would have been taken to
remedy them.
43
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Governance | Corporate governance report continued
Nomination Committee report
Scott Forbes
Chairman of the Nomination Committee
Dear shareholder
I am pleased to present the report of the Nomination
Committee (the Committee) for 2017.
The Committee’s role is to keep the structure, size and
composition of the Board under review with the objective of
matching the skills, knowledge and experience of directors to
business requirements. Our priority is to optimise the Board’s
performance to enable the Group to prosper, compete
effectively and manage risk in an evolving market.
A copy of the terms of reference of the Committee can be found
on the Company’s website at: plc.rightmove.co.uk. These were
reviewed and updated with minor changes during the year.
The Committee fulfilled its terms of reference during 2017 by:
• reviewing the Group organisation and succession plans;
• recommending the appointment of new non-executive
directors; and
• conducting internal Board and Committee evaluations. Further
details of the Board evaluation can be found on page 45.
The Committee continued to review Board succession and
Andrew Findlay was appointed as a non-executive director on
1 June 2017, following an external search by Korn Ferry
International (Korn Ferry). Andrew will succeed Ashley Martin
as our Audit Committee Chairman following the 2018 AGM.
Lorna Tilbian joined the Board on 1 February 2018, following
her retirement from Numis Corporation PLC.
The Board currently consists of nine directors including seven
non-executive directors, six of which are considered to be
independent. Following the retirement of Ashley Martin (non-
executive director) at the 2018 AGM, the Board will comprise
eight directors (two executive and six non-executive directors)
and equal representation of men and women directors at both
executive and non-executive levels.
I will be available at the AGM to answer any questions about the
work of the Committee.
Composition and attendance at meetings
The Chairman and all the non-executive directors are
members of the Committee. Peter Brooks-Johnson and
Robyn Perriss attended meetings by invitation.
The Committee met three times during the year and
attendance at the meetings is shown on page 36.
Membership
The Committee is comprised entirely of non-executive
directors, whose biographical details can be found on pages
30 to 31. As at 31 December 2017, all the non-executive
directors (five out of six members of the Committee) were
considered by the Board to be independent. The quorum for
meetings of the Committee is two members. At the request
of the Committee Chairman, the Chief Executive Officer is
normally invited to attend the meeting to discuss the annual
organisation and succession plan.
The Chairman of the Company may not chair the Committee
in connection with any discussion about the appointment of
his successor. In these circumstances, the Senior
Independent Director will take the chair.
Appointments are for a period of up to three years, extendable
by no more than two additional three-year periods, so long as
Committee members continue to be independent.
Principal activities of the Committee during 2017
During the year the Committee has:
• reviewed the composition and diversity of the Board;
• reviewed the Board committees’ composition;
• approved the plans for the organisation and succession of
the executive directors and senior management;
• recommended the implementation of the Board succession
plan and the appointment of Peter Brooks-Johnson as Chief
Executive Officer following the retirement of Nick McKittrick;
• recommended the appointment of two non-executive
directors including consideration of independence in relation
to the Code;
Scott Forbes
Chairman of the Nomination Committee
44
rightmove.co.uk
• agreed the process for and considered actions based upon
the findings of the Board evaluation;
• considered potential conflicts of interest for non-executive
directors appointed to other boards;
• reviewed and considered actions to address the Group’s
gender pay gap; and
• conducted an annual review of its terms of reference.
Board induction and training
All new non-executive directors joining the Board undertake a
tailored induction including meetings with key members of the
management team. Directors are also encouraged to spend a
day on the road with a sales director meeting our customers.
New directors receive a comprehensive induction pack of
corporate information and a briefing from the Company
Secretary covering corporate governance, Group policies
and relevant regulations.
Individual Board members have access to training and can
seek advice from independent professional advisers, at the
Group’s expense, where specific expertise or training is
required in furtherance of their duties.
Board succession and independence
At the end of 2016, the Committee confirmed the candidate
profile identified through the Board Strategy review process
and initiated the search for a non-executive director with
suitable skills and experience to replace Ashley Martin,
when he retires from the Board and as Audit Committee
Chairman in May 2018. Following an external search,
facilitated by Korn Ferry, the Committee recommended
the appointment of Andrew Findlay as an experienced
Finance Director with suitable financial skills and experience
to Chair the Audit Committee.
With due consideration to the conclusions of the Board
Strategy Review (externally facilitated by Korn Ferry in 2015),
the current Board composition and the Group’s strategic plan,
the Committee agreed that a director with a broader media
industry background would benefit the business. Following
a process including Korn Ferry, the Board recruited and
then agreed to appoint Lorna Tilbian as an independent
non-executive director, following her retirement from
Numis Corporation PLC (Numis) in December 2017.
As Numis is Rightmove’s joint corporate broker together with
UBS, the Board is aware that there may be a perception that
a material relationship could exist or continue to exist that
might impair Lorna’s independence. Therefore, Rightmove
not only conducted a rigorous review to evaluate Lorna’s
independence, as it does for every director, but the Board also
sought independent legal advice to ensure compliance with
Code requirements. The Committee concluded that no
material relationship existed with Numis over the past three
years, no material ongoing relationship exists and that Lorna is
independent in character and judgment. In addition to Lorna’s
media sector experience, her capital markets experience will
be a great asset to Rightmove and the Board.
The Board considered the primary tests under the Code:
whether there is a material financial relationship between
Numis and Rightmove and whether that relationship would
influence Lorna’s judgement. Numis Securities receives a
standard commission from Rightmove for the share buyback
programme and there is no retainer or special fees agreement
in relation to brokerage or research; the commission
payments of c£100,000 per annum are immaterial to
Rightmove. Lorna retired from the Numis Board in
September 2017. The Board carefully considered Lorna’s
prior dealings with the Rightmove management team,
which were meetings in the ordinary course of business with
our former Chief Executive Officer. The Board therefore
determined that Lorna is independent in character and
judgement and there are no other factors that are likely to
impair her judgement or prevent her from fulfilling her duties
and responsibilities as a non-executive director effectively.
Board effectiveness and evaluation
The Board is committed to undertaking annual reviews of its
own performance and also the performance of its Committees
and individual directors.
The Board again completed an internal self-assessment
during 2017. Directors were invited to provide feedback via
the Company Secretary on Board and Committee performance
and answer key questions relating to the Board’s strengths,
improvements during the year and which business risks and
development opportunities should receive more focus.
The whole Board discussed the feedback at the Committee
meeting in December 2017 and concluded that the Board and
its Committees continue to operate effectively, with an open
and effective Board dynamic resulting in effective challenge
and collaboration between non-executive and executive
directors. The Board also agreed initiatives to further improve
Board effectiveness including a greater variety of business
presentations from senior management covering a wide
range of Company business operations.
An externally facilitated review of the performance of the
Board and its Committees will be conducted in 2018.
45
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 Governance | Directors’ report
The directors submit their report together with the audited
financial statements for the Company and its subsidiary
companies (the Group) for the year ended 31 December 2017.
Pages 46 to 48, comprise the Directors’ Report, which has been
drawn up and presented in accordance with English company
law and the liabilities of the directors in connection with the
report shall be subject to the limitations and restrictions
provided by such law.
Rightmove plc (the Company) is incorporated as a public
limited company registered in England number 6426485 with a
registered office at Turnberry House, 30 Caldecotte Lake Drive,
Caldecotte, Milton Keynes MK7 8LE.
Strategic Report
The Strategic Report can be found on pages 1 to 29. This report
sets out the development and performance of the Group’s
business during the financial year, the position of the Group at
the end of the year and a description of the principal risks and
uncertainties facing the Group.
Dividend
An interim dividend of 22.0p (2016: 19.0p) per ordinary share
was paid in respect of the half year period on 3 November 2017,
to shareholders on the register of members at the close of
business on 6 October 2017. The directors are recommending
a final dividend for the year of 36.0p (2016: 32.0p) per ordinary
share, which together with the interim dividend, makes a total
for the year of 58.0p (2016: 51.0p), amounting to £32,758,000
(2016: £29,696,000). Subject to shareholders’ approval at
the Annual General Meeting (AGM) on 4 May 2018, the final
dividend will be paid on 1 June 2018 to shareholders on the
register of members at the close of business on 4 May 2018.
Share capital
The shares in issue, including 1,892,456 shares held in treasury
(2016: 2,271,725) at the year-end amounted to 93,266,207
(2016: 95,490,266) ordinary shares of £0.01, with a nominal
value of £932,662 (2016: £954,902). The holders of ordinary
shares are entitled to receive dividends as declared from time to
time, and are entitled to one vote per share at general meetings
of the Company. Movements in the Company’s share capital
and reserves in the year are shown in Note 22 and Note 23 to
the financial statements. Information on the Group’s share-
based incentive schemes is set out in Note 24 to the financial
statements. Details of the share-based incentive schemes for
directors are set out in the Directors’ Remuneration Report on
pages 50 to 76.
Share buyback
The Company’s share buyback programme continued during
2017. Of the 10% authority given by shareholders at the 2017
AGM, a total of 2,224,059 (2016: 2,251,711) ordinary shares of
£0.01 each were purchased in the year to 31 December 2017,
being 2.4% (2016: 2.4%) of the shares in issue (excluding
shares held in treasury) at the time the authority was granted.
The average price paid per share was £40.83 (2016: £39.12)
with a total consideration paid (excluding all costs) of
£90,809,000 (2016: £88,083,000). Since the introduction
of the new parent company in January 2008, a total of
38,639,201 shares had been purchased as at 31 December 2017
of which 1,892,456 are held in treasury with the remainder
having been cancelled. A resolution seeking to renew this
authority will be put to shareholders at the AGM on 4 May 2018.
Shares held in trust
As at 31 December 2017, 263,767 (2016: 343,275)
ordinary shares of £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 2017 of £2,638 (2016: £3,433) and a market
value of £11,870,000 (2016: £13,398,000). The shares held by
the EBT may be used to satisfy share-based incentives for
the Group’s employee share plans. During the year, 77,008
(2016: 50,082) shares were transferred to Group employees
following the exercise of share-based incentives. Additionally,
17,500 shares were purchased by the EBT for transfer to the
Rightmove Share Incentive Plan Trust (SIP). The terms of the
EBT provide that dividends payable on the shares held by the
EBT are waived.
As at 31 December 2017, 67,700 (2016: 50,150) ordinary shares
of £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 2017 of £677 (2016: £502) and a market value of
£3,047,000 (2016: £1,957,000). The shares held by the SIP are
awarded as free shares to eligible employees in January of each
year and are held in trust for a period of three years before an
employee is entitled to take ownership of the shares. During the
year, 2,450 (2016: 600) shares were released early from the SIP
in relation to good leavers and retirees under the SIP rules.
46
rightmove.co.uk Substantial shareholdings
As at the date of this report, the following beneficial interests
in 3% or more of the Company’s issued ordinary share
capital (excluding shares held in treasury) on behalf of the
organisations shown in the table below, had been notified to
the Company pursuant to Rule 5.1 of the Disclosure Guidance
and Transparency Rules. The information provided below was
correct as at the date of notification, where indicated this was
not in the 2017 financial year. It should be noted that these
holdings are likely to have changed since notified to the
Company. However, notification of any change is not
required until the next applicable threshold is crossed.
Shareholder
BlackRock Inc(3)
Nature of holding
Total voting
rights
% (1)
Indirect
Contracts for difference (CFD)
Stock Lending
5,068,243
1,668,080
1,025,280
5.57%
1.83%
1.13%
Marathon Asset
Management LLP(2)
Baillie Gifford & Co(2)
Caledonia (Private)
Investments Pty
Limited(3)
Generation
Investment
Management LLP
Indirect
5,930,755
6.52%
Indirect 5,873,614 6.45%
Direct
4,561,397
5.01%
Indirect
4,583,127
5.04%
Axa Investment
Managers SA
Indirect
Contracts for difference (CFD)
4,441,378
37,662
4.88%
0.04%
Standard Life
Investments
UBS Investment Bank
UBS Group AG(3)
Indirect
Stock Lending
4,356,376
362,089
4.79%
0.40%
Indirect
Equity Swaps
Stock Lending
2,572,737
2,916,519
1,021
2.83%
3.21%
0.00%
(1) The above percentages are based upon the voting rights share capital (being the
shares in issue less shares held in treasury) of 90,995,551 as at 22 February 2018.
(2) Date of notification preceded the 2017 financial year.
(3) Date of notification followed the 2017 financial year end.
Directors
The directors of the Company as at the date of this report are
named on pages 30 to 31 together with their profiles.
The Articles of Association of the Company require directors to
submit themselves for re-appointment where they have been
a director at each of the preceding two AGMs and were not
appointed or re-appointed by the Company at, or since, either
such meeting. Following the provisions of the UK Corporate
Governance Code, all directors who have served during the
year and remain a director as at 31 December 2017 will retire
and offer themselves for re-election at the forthcoming AGM
with the exception of Ashley Martin, who has notified the
Company of his retirement from the Board as at this date.
Andrew Findlay and Lorna Tilbian will offer themselves for
election, this being the directors’ first AGM following their
appointments to the Board as non-executive directors on
1 June 2017 and 1 February 2018 respectively.
The Board is satisfied that the directors retiring and
standing for re-election are qualified for re-appointment by
virtue of their skills, experience and contribution to the Board.
The executive directors have service contracts with the
Company which can be terminated on 12 months’ notice.
The appointments for the non-executive directors can be
terminated on three months’ notice.
The interests of the directors in the share capital of the
Company as at the date of this report, the directors’ total
remuneration for the year and details of their service contracts
and Letters of Appointment are set out in the Directors’
Remuneration Report on pages 50 to 76. At the date of this
report, the executive directors were deemed to have a
non-beneficial interest in 245,441 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 91.
47
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017
Governance | Directors’ report continued
Political donations
During the year the Group did not make any donations to any
political party or other political organisation and did not incur
any political expenditure within the meanings of sections 362
to 379 of the Companies Act 2006.
Annual General Meeting
The AGM of the Company will be held at the offices of UBS
Limited at 5 Broadgate, London, EC2M 2QS on 4 May 2018 at
10am. The Notice of Annual General Meeting will be published
in March 2017.
The resolutions being proposed at the 2018 AGM are general in
nature, including the renewal for a further year of the limited
authority of the directors to allot the unissued share capital of
the Company and to issue shares for cash other than to existing
shareholders (in line with the Pre-Emption Group’s Statement
of Principles). A resolution will also be proposed to renew the
directors’ authority to purchase a proportion of the Company’s
own shares. The Company will again seek shareholder approval
to hold general meetings (other than AGMs) at 14 days’ notice.
Resolutions will be proposed to renew these authorities, which
would otherwise expire at the 2018 AGM.
Auditor
KPMG LLP has confirmed its willingness to continue in office
as auditor of the Group. In accordance with section 489 of
the Companies Act 2006, separate resolutions for the
re-appointment of KPMG LLP as auditor of the Group
and for the Audit Committee to determine the auditor’s
remuneration will be proposed at the 2018 AGM.
Audit information
So far as the directors in office at the date of signing of the
report are aware, there is no relevant audit information of
which the auditor is unaware and each such director has taken
all reasonable steps to make themselves aware of any relevant
audit information and to establish that the auditor is aware of
that information.
Greenhouse gas emissions
Our report of greenhouse gas emissions in line with
UK mandatory reporting regulation is provided in the
Corporate Responsibility section of the Strategic Report
on pages 25 to 29.
Fair, balanced and understandable
The Board has concluded that the 2017 Annual Report is fair,
balanced and understandable and provides the necessary
information for shareholders and other readers of the accounts
to assess the Group’s position and performance, business
model and strategy.
Responsibility statement of the directors in respect of
the annual financial report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
• the management report required by DTR 4.1.8R (contained
in the Strategic Report and the Directors’ Report) includes
a fair review of the development and performance of the
business and the position of the Company and the
undertakings included in the Group taken as a whole,
together with a description of the principal risks and
uncertainties they face.
We consider the annual report and accounts, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
Signed on behalf of the Board:
Peter Brooks-Johnson
Chief Executive Officer
Robyn Perriss
Finance Director
23 February 2018
48
rightmove.co.uk
Governance | Statement of directors’ responsibilities
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
parent Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They are
responsible for such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate
Governance Statement that complies with that law and
those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
The directors are responsible for preparing the Annual Report
and the Group and parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and
parent Company financial statements for each financial year.
Under that law they are required to prepare the Group financial
statements in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as
adopted by the EU) and applicable law and have elected to
prepare the parent company financial statements on the
same basis.
Under company law the directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and parent
Company and of their profit or loss for that period. In preparing
each of the Group and parent Company financial statements,
the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable,
relevant and reliable;
• state whether they have been prepared in accordance
with IFRSs as adopted by the EU;
• assess the Group and parent Company’s ability to continue
as a going concern disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
49
Strategic reportGovernanceFinancial statementsRightmove plc annual report 2017 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 2017.
The report is divided into two sections, the Remuneration
Policy Report and the Annual Report on Remuneration, both
of which are summarised in ‘Remuneration at a glance’ on
page 52. We do not propose any changes to the Directors’
Remuneration Policy, which received overwhelming support
from our shareholders at our 2017 AGM.
Performance and reward
The Committee considers that it is vital for the executive
directors’ remuneration to fairly reflect the overall
performance of the Group. As described in the Strategic
Report, Rightmove’s 2017 results again show healthy growth
in revenue and underlying operating profit(1), demonstrating
the strength of the Rightmove business model and the
effectiveness of our management team.
In accordance with the Remuneration Policy, the Committee
has reviewed achievement against the bonus plan objectives
for 2017 and recommended an annual bonus payment of
60%. This reflects the growth in revenue and underlying
operating profit(1) of 11% and continued employee
engagement with 90% of Rightmovers(2) thinking that
Rightmove is a great place to work. Our audience growth,
measured on a time basis in absolute terms, did not outstrip
the total of Rightmove’s closest competitors and other
revenue from non-core businesses was not sufficiently
strong to merit a bonus payout. Achievement against
these performance targets is set out on page 70 and
reflected in the lower bonus payout for 2017, relative to
2016. Overall, performance for the year outperformed
the baseline business plan and the Committee was
therefore satisfied that it was appropriate to pay 60%
of the maximum bonus.
The Group’s longer-term performance reflects strong
organic growth over the last three financial years. The 2015
Performance Share Plan awards (measuring performance
from 1 January 2015 to 31 December 2017) will vest in
full in March 2018 as a result of delivering underlying basic
EPS(3) growth of 63% and TSR growth of 109% over the
performance period, which exceeded the respective growth
targets set of 60% and FTSE 250 Index +25% over the
three-year period. The Committee tested the performance
conditions, which were set at the beginning of the
performance period, and determined that the Group had
outperformed the maximum targets and was therefore
satisfied that the awards should vest in full.
Chief Executive Officer retirement
Following the AGM on 9 May 2017, Nick McKittrick retired
as Chief Executive Officer (CEO) and as a director of
Rightmove. He was succeeded by Peter Brooks-Johnson,
former Chief Operating Officer and a Board director since
2011, who has had a successful year in his new role as
CEO and delivered a strong set of financial results in 2017.
A summary of the remuneration arrangements relating to
Nick’s retirement and Peter’s promotion were announced in
May 2017 and are detailed on pages 71 and 72 of the Annual
Report on Remuneration.
(1) Before share-based payments and NI on share-based incentives.
(2) Percentage of employees responding to the annual employee survey.
(3) Before share-based payments and NI on share-based incentives with no related adjustment for tax.
50
rightmove.co.uk Remuneration Policy
In 2017, following consultation with Rightmove’s major
investors, the Committee proposed the Remuneration
Policy, set out in the Remuneration Policy Report on pages
53 to 62. The Policy was approved with overwhelming
support from our shareholders.
The Policy addresses the significant shortfall in executive
directors’ base salaries compared with the Committee’s
assessment of an appropriate salary for each role and the
performance of the current directors. Increases of 3% in
excess of the average workforce rise have been awarded
to the CEO and Finance Director from January 2018,
recognising the size and complexity of each role and the
present incumbents’ experience and capabilities.
The Committee’s objective is to retain a remuneration
framework that rewards and incentivises our management
team to deliver Rightmove’s longer-term strategy with a
clear emphasis on performance-related pay to reflect the
culture of the Group. The Remuneration Policy continues
to provide below market levels of fixed pay with above
market levels of variable pay opportunity, subject to the
achievement of challenging performance measures linked
to the Group KPIs. Variable pay is geared towards long-term
sustainable performance, with a high level of annual bonus
deferral into shares, long-term incentive awards and
appropriate share ownership guidelines.
We are committed to maintaining an open and transparent
dialogue with shareholders. We have valued the engagement
with and support of our shareholders and we remain focused
on disclosing clearly how much our executive directors earn
and how this links to the Group’s performance.
Peter Williams
Chairman of the Remuneration Committee
51
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements 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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16
16
Dec 13
Dec 13
Dec 14
Dec 14
Dec 15
Dec 15
Dec 16
Dec 16
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
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.
Underlying basic EPS(2)
Underlying basic EPS(2)
Total Shareholder Return
Total Shareholder Return
+48%
+48%
+23%
+23%
+19%
+19%
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100.3
100.3
Governance | Remuneration at a glance
81.0
81.0
90
90
121.4
121.4
142.8
142.8
150
150
120
120
60
60
30
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2013
2013
2014
2014
2015
2015
2016
2016
2017 Financial Performance
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%
Revenue
Underlying operating profit(1)
Dec 13
Dec 13
Rightmove
Rightmove
FTSE 250
FTSE 250
FTSE 350
FTSE 350
+11%
+11%
+48%
+48%
+23%
+23%
+19%
+19%
Dec 14
Dec 14
Dec 15
Dec 15
Dec 16
Dec 16
s
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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.
Returns to shareholders
£140.4m
Long-term incentive plan – outcome against maximum targets: 100%
Underlying basic EPS(2)
Underlying basic EPS(2)
Total Shareholder Return
Total Shareholder Return
i
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150
150
120
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90
90
60
60
30
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142.8
142.8
121.4
121.4
163.3
163.3
100.3
100.3
2014
2014
2015
2015
2016
2016
2017
2017
75% of 2015 Performance Share Plan (PSP) awards vest on
75% of 2015 Performance Share Plan (PSP) awards vest on
achievement of three-year EPS growth of 63%.
achievement of three-year EPS growth of 63%.
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Rightmove
Rightmove
FTSE 250
FTSE 250
FTSE 350
FTSE 350
s
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Dec 14
Dec 15
Dec 15
Dec 16
Dec 16
Dec 17
Dec 17
This graph shows the value, by 31 December 2017, of £100 invested
This graph shows the value, by 31 December 2017, of £100 invested
in Rightmove on 31 December 2014 compared with the value of £100
in Rightmove on 31 December 2014 compared with the value of £100
invested in the FTSE 250 Index and FTSE 350 Index.
invested in the FTSE 250 Index and FTSE 350 Index.
25% of 2015 PSP awards vest in line with upper quartile relative
25% of 2015 PSP awards vest in line with upper quartile relative
TSR performance.
TSR performance.
Annual bonus plan – outcome against maximum targets: 60%
Underlying operating
profit before tax(1)
Threshold target:
£175.2m
£184.4m
Actual:
Growth in absolute time on
site in minutes relative to
our nearest competitors
Threshold target: same absolute
growth in time on site in minutes
as our nearest competitors
Actual: Lower growth in time on
site in minutes year on year than
our nearest competitors
Pay and performance for 2017
Salary
Benefits
Cash Bonus
Deferred Share Bonus
Peter
Nick McKittrick Brooks-Johnson
Robyn
Perriss
£159,120
£420,103
£320,000
£666
£1,852
£1,406
£126,031
£96,000
£189,046
£144,000
Growth in Other revenue(3)
Threshold target:
16% growth
4% growth
Actual:
Shareholder alignment
Shareholding guidelines:
Employee survey respondents
who think ‘Rightmove is a great
place to work’
Threshold target:
90%
90%
Actual:
200%
of salary for all executive directors
Proportion of variable awards received in shares:
Long-term incentives
£1,063,657
£1,155,196
£925,763
Total remuneration
£1,223,443
£1,892,228
£1,487,169
85%
of performance-related pay is
awarded in Rightmove shares
Remuneration Policy key elements
Fixed pay below comparative market median and variable incentive opportunity above median
Base salaries executive directors receive inflationary adjustments to salaries capped at 3% above wider workforce increases
Pension contributions up to 6% of base salary in line with the wider workforce
Annual bonus maximum 125% of salary, with 40% cash and 60% deferred into Company shares for two years
Performance Share Plan awards granted at 200% of salary. No post-vesting holding period for current executive directors
Clawback applies to deferred annual bonus awards and Performance Share Plan awards
(1) Before share-based payments and NI on share-based incentives.
(2) Before share-based payments and NI on share-based incentives with no related adjustment for tax.
(3) Other revenue is all revenue excluding Agency and New Homes.
52
rightmove.co.uk
Remuneration Policy Report (unaudited)
Introduction
This report sets out the Company’s Policy on directors’
remuneration for the forthcoming year and for subsequent
years, as well as information on remuneration paid to
directors for the financial year ended 31 December 2017.
The report has been prepared in accordance with the
Companies Act 2006, the Large and Medium-sized
Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (together the Act)
and the UK Corporate Governance Code (the Code).
In accordance with the Act this report comprises a
Policy Report and an Annual Report on Remuneration.
The Remuneration Policy was approved by shareholders
at the 2017 AGM with 95.8% voting for the new Policy.
The Annual Report on Remuneration will be subject to an
advisory vote at the 2018 AGM. The parts of the report
which have been audited have been highlighted.
Remuneration Policy Report (the Policy Report)
This part of the Directors’ Remuneration Report sets out
the Remuneration Policy for the Company and has been
prepared in accordance with the Act.
The Policy was developed in line with Rightmove’s approach,
that our executive directors should be rewarded with
demonstrably lower than market base salaries and benefits
and higher than market equity rewards subject to the
achievement of challenging performance targets. This
approach accords with the views of our major shareholders
and with ‘best practice’ principles set out in the Code.
The key principles of the Committee’s Policy are that
executive remuneration should:
• allow the Company to attract and retain talented individuals
who are critical to the success of the business;
• be simple to explain, understand and administer;
• be regarded as fair by both other employees and
shareholders;
• be below market levels for base salary with minimal benefits
(which are made available on the same basis to all
Rightmove employees) and above market levels of variable
pay potential;
• provide directors with the opportunity to receive a share
in the future growth and development of the Group;
• align the interests of the executive directors with the
interests of shareholders and reflect the dynamic,
performance-driven culture of the Group;
• principally reward individuals for the overall success of the
business, measuring and incentivising directors against key
short-term and medium to long-term goals;
• not enable executive directors to gain significantly from
short-term successes, which subsequently prove not to be
consistent with growing the overall value of the business.
Hence the majority of any bonus payable in relation to
short-term strategic goals in relation to the Deferred Share
Bonus Plan is required to be taken in the form of shares in
the Company which are deferred for a further two years
after the bonus target has been achieved; and
• normally be reviewed against the market every three years,
with intervening pay reviews for executive directors directly
linked to the policies applied to all employees, specifically
with regard to cost of living rises in base salary and changes
in benefits.
The following table provides an overview of the Committee’s
Remuneration Policy, which has been designed to reflect the
principles described above:
53
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
Remuneration Policy
Element of
remuneration
Purpose and
link to strategy
Operation
Maximum
opportunity
Performance
criteria
Directors’ current salaries are
set out on page 64.
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
54
rightmove.co.uk
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) 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 64 to 65 and 70 to 71.
25% of the awards vest for
achieving the threshold
performance target. Bonus is
earned on a linear basis from
threshold to maximum
performance levels.
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Governance | Directors’ remuneration report continued
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
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
executive
directors and
shareholders.
56
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.
rightmove.co.uk
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 65.
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
57
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Governance | Directors’ remuneration report continued
that the conditions achieve their original purpose and are
not materially less difficult to satisfy.
Any use of the above discretions would, where relevant,
be detailed in the Annual Report on Remuneration and if
appropriate, the subject of prior communication with the
Company’s major shareholders.
For the avoidance of doubt, all previous commitments or
entitlements agreed prior to the approval of this Policy or
appointment to the Board will be permitted to payout on
their original terms or in line with the Policy in force at the
time they were agreed.
Selection of performance measures and how
targets are set
The performance metrics that are used for annual bonus
and long-term incentive plans are a subset of the Group’s
key performance indicators.
For the annual bonus, underlying operating profit is the
primary performance metric used as it is aligned to the
Group’s strategy of delivering profitable growth and is a key
financial performance indicator used within the business.
Consistent with previous years, operating profit is measured
on an underlying basis, to exclude any volatility in relation to
the Company’s share price in connection with the IFRS 2
valuation and National Insurance charge on share-based
incentives granted. The underlying operating profit target
is set on a sliding scale based around the business plan for
the year, with 25% payable for threshold performance.
The annual bonus also considers performance against other
operational metrics, including a traffic market share target,
growth in Other revenue and an employee engagement
target, for a minority of the bonus, with a sliding scale used
to determine performance against each measure.
Market share is a measure of the size and engagement of
our audience and the value which Rightmove brings to our
customers and therefore a challenging target to increase
Rightmove’s share of this audience is considered
appropriate by the Committee.
The Other revenue target measures growth in revenue
from businesses other than Agency and New Homes.
Since some of these businesses will be at an early stage of
development, we consider growth in revenue rather than
in operating profit to be the appropriate measure and note
that this element of the bonus is only a small proportion of
the total bonus opportunity.
For the PSP, awards are subject to a combination of
underlying basic earnings per share (EPS) and relative
TSR performance conditions. EPS is considered the most
appropriate financial metric for Rightmove at this stage in
its development (since it is the measure of profitability that
is most closely aligned with shareholders’ interests and
monitored on an ongoing basis within the business).
The Policy also recognises that relative TSR should also
be a performance measure in order for there to be a clear
alignment of executive directors’ and shareholder interests.
EPS targets are set based on sliding scales that take account
of internal financial planning and external analyst forecasts.
Only 25% of the EPS element will payout for threshold
performance levels, with the maximum award requiring
substantial out-performance. For TSR, the range of targets
measure how successful the Company is in out-performing
the FTSE 350 Index with 25% of this part of the award
vesting at the threshold performance level, through to full
vesting for 25% out-performance of the Index over the
three-year performance period. For historic PSP awards,
performance against the FTSE 250 Index was the selected
measure, however, the Company has resided in the top
quartile of the FTSE 250 for some time and the wider index is
now considered more appropriate for comparison purposes.
Performance targets do not apply to Sharesave or SIP
awards since these awards are structured to encourage
employees to become share-owners and to maintain
tax-favoured status the awards must operate on a
consistent basis for all employees.
The Company does not at the present time take account
of the ratio of CEO to employee pay but will keep this under
review as market and best practice develops and as
regulations evolve.
How the views of employees are taken into account
The Company has not to date felt it necessary to consult
directly with employees on executive remuneration matters.
However, the Committee is kept aware of pay and
employment conditions within the wider workforce when
setting executive directors’ remuneration Policy.
Remuneration Policy for executive directors compared
to other employees
The Committee will consider the proposed salary budget
for the whole Group when it is deciding on salary increases
for executive directors specifically.
In line with the Company’s strategy to keep remuneration
simple and consistent, benefits and pension arrangements
provided to executive directors are the same as those
offered to all Group employees.
58
rightmove.co.uk The extent to which annual bonuses are offered varies by
level of employee within the Group, with the quantum and
performance metrics used determined by the nature of the
role and responsibilities and market rates at that level.
Long-term incentive awards such as the DSP, are only
offered to senior management as those awards are more
heavily weighted towards performance-related pay and have
a stronger visibility on the value created for shareholders and
the reward for participants.
Shareholders’ views
The Committee considers it vitally important to maintain
open and transparent communication with the Company’s
shareholders. The Committee consulted major shareholders
representing over 50% of the Company’s share ownership
on proposed changes and continued suitability of the
Remuneration Policy. The shareholders who were consulted
were overwhelmingly supportive of the Policy proposals and
commented constructively in relation to several areas,
including future rises in basic salary and post-vesting holding
periods for long-term incentives. Shareholder feedback was
considered by the Committee and contributed to the
development of the overall Remuneration Policy.
Most recently, in late 2017, the Committee engaged with
shareholders regarding the salary increases awarded to the
executive directors in 2018.
Reward scenarios
The Company’s Remuneration Policy (as previously outlined) is illustrated below using three different performance scenarios:
minimum, on-target and maximum:
2500
2000
1500
0
0
0
£
1000
500
0
£474
100%
Minimum
£2,009
47%
29%
£1,389
43%
23%
34%
24%
£341
100%
£1,443
47%
29%
24%
£998
43%
23%
34%
Target
Peter Brooks-Johnson
Chief Executive Officer
Maximum
Minimum
Target
Maximum
Robyn Perriss
Finance Director
Fixed pay
Bonus
LTIP
Assumptions:
1. Minimum = fixed pay only (salary + benefits + pension).
2. On-target = 55% payable of the 2018 annual bonus and 62.5% vesting of the 2018 PSP awards being the midpoint
between threshold vesting of 25% and maximum vesting of 100%.
3. Maximum = 100% payable of the 2018 annual bonus and 100% vesting of the 2018 PSP awards.
Base salary is as set at 1 January 2018. The value of taxable benefits is based on the cost of supplying those benefits
(using the cost as disclosed on page 68) for the year ended 31 December 2017. The executive directors have elected not
to participate in the Company’s pension arrangements.
The executive directors can participate in the Sharesave Plan and SIP on the same basis as other employees. The value that
may be received under these schemes is subject to tax approved limits. For simplicity, the value that may be received from
participating in these schemes has been excluded from the above charts.
As required by the regulations no assumption is made as to future share price growth for reward elements (deferred bonus
and long-term incentives) that are delivered in shares.
Amounts have been rounded to the nearest £1,000.
59
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
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 executive directors
(as described above and in the Annual Report on Remuneration), although it would be pro-rated to
reflect the employment period during the bonus year. Flexibility will be retained to set equivalent
objectives for any new executive joining part way through a year.
The maximum bonus potential would not exceed 125% of base salary.
It would be expected that the bonus for a new appointment would be assessed on the same
performance metrics as that for the current executive directors on an ongoing basis. However,
depending on the timing and nature of appointment it may be necessary to set tailored performance
criteria for their first bonus plan.
Long-term incentives
A new appointment will be eligible to receive PSP awards as outlined in the Policy table.
Share awards may be granted shortly after an appointment (subject to the Company not being in
a closed period) and would be measured against the same performance criteria as the current
executives. However, any award granted outside the normal award and performance cycle may be
pro-rated at the Committee’s discretion. The Committee may introduce post-vesting holding periods
under the PSP for new executives if it considers this an appropriate commitment in conjunction with
the shareholding guidelines.
The ongoing maximum award would not exceed 200% of base salary.
For an internal hire, existing awards would continue over their original vesting period and remain
subject to their terms as at the date of grant.
The new appointment would be eligible to participate in the Sharesave Plan and the SIP under the
same terms as all other employees.
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.
Buy-out awards
60
rightmove.co.uk 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.
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.
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.
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.
Peter Brooks-Johnson and Robyn Perriss are entitled to
a payment in lieu of notice, restricted to base salary and
benefits. In good leaver circumstances a bonus may be
paid at the normal time subject to achievement of the
performance conditions and pro-rating for the period
worked in the year.
For awards granted under the PSP ‘good leaver’ status may
be determined, in certain prescribed circumstances, such
as death, ill health, disability, redundancy, transfer or sale
of the employing company, or other circumstances at the
discretion of the Committee. If defined as a ‘good leaver’,
awards will remain subject to performance conditions, which
will be measured over the performance period from grant to
the original vesting date, unless the Committee determine
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:
61
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements Governance | Directors’ remuneration report continued
Executive directors
Peter Brooks-Johnson(1)
Robyn Perriss(2)
Non-executive directors
Scott Forbes (Chairman)(3)
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
Andrew Findlay
Lorna Tilbian
Date of appointment
Date of contract/
Letter of Appointment
Notice
(months)
Length of service at
23 February 2018
10 January 2011
22 February 2011
30 April 2013
1 May 2013
12
12
7 years 1 month
4 years 10 months
13 July 2005
21 February 2006
11 June 2009
9 June 2009
3 February 2014
3 February 2014
28 July 2014
28 July 2014
30 December 2016
10 October 2016
1 June 2017
11 May 2017
1 February 2018
19 January 2018
3
3
3
3
3
3
3
12 years 7 months
8 years 8 months
4 years 1 month
3 years 7 months
1 year 2 months
9 months
1 month
(1) Peter Brooks-Johnson joined the Group on 9 January 2006 and was appointed to the Board on 10 January 2011. His service with the Group at the date of this
report is 12 years and 1 month.
(2) Robyn Perriss joined the Group on 1 July 2007 and was appointed to the Board on 30 April 2013. Her service to the Group at the date of this report is 10 years
and 8 months.
(3) The Chairman’s letter of appointment was transferred from Rightmove Group Limited to Rightmove plc with effect from 28 January 2008 on completion of
a Scheme of Arrangement.
External appointments
With the approval of the Board in each case, executive directors may accept one external appointment as a non-executive
director of another listed or similar company and retain any fees received. Neither of the executive directors currently hold
any outside directorships.
62
rightmove.co.uk
Annual Report on Remuneration
Remuneration Committee role and membership
Terms of reference
The primary role of the Committee is to make
recommendations to the Board as to the Company’s overall
policy and framework for the remuneration of the executive
directors and the Chairman of the Board. The remuneration
and terms of appointment of the non-executive directors
are determined by the Board as a whole.
In accordance with the Code, the Committee also
recommends the structure and monitors the level of
remuneration for the first layer of management below Board
level. The Committee is also aware of, and advises on, the
employee benefit structures throughout the Group and
ensures that it is kept aware of any potential business risks
arising from those remuneration arrangements.
The Committee has formal terms of reference which are
reviewed annually and updated as required. These are
available on the Company’s website at plc.rightmove.co.uk
or on request from the Company Secretary.
Membership
The following independent non-executive directors were
members of the Committee during 2017:
Peter Williams (Chairman of the Committee)
Rakhi Goss-Custard
Jacqueline de Rojas (from 9 May 2017)
Colin Kemp (to 9 May 2017)
During the year the Committee met six times and
attendance at the meetings is shown in the Corporate
Governance Report on page 36.
The quorum for meetings of the Committee is two members.
The Committee will meet at such times as may be necessary
but will normally meet at least five times a year. The Company
Secretary acts as Secretary to the Committee.
Only members of the Committee have the right to attend
Committee meetings. The Chairman of the Committee
has requested that the Chairman of the Board attend the
meetings except during discussions relating to his own
remuneration. The Chief Executive Officer may also be
invited to meetings and the Committee takes into
consideration his recommendations regarding the
remuneration of executive colleagues and management
below Board level. No executive director is involved in
deciding their own remuneration.
External advisors
New Bridge Street (NBS), a trading name of Aon Hewitt (part of
Aon plc), which is a member of the Remuneration Consultants
Group and has signed up to its Code of Conduct, has been
retained as the Committee’s remuneration advisor since
2011. The terms of engagement between the Company and
NBS are available from the Company Secretary on request.
The total fees paid to NBS in respect of services to the
Committee during the year were £31,000.
During 2017 NBS also provided services to the Company
in connection with the valuation of share-based incentives
(as required by IFRS 2) and confirmed that, in its view, these
services did not present a conflict of interest with the other
services provided to the Committee. The Committee reviews
its relationship with external advisors on a regular basis and
continues to believe that there are no conflicts of interest.
What has the Committee done during the year?
The Committee met six times during the year to consider
and, where appropriate, approve key remuneration items
including:
Pay and incentive plan reviews
• annual review and approval of executive directors’ base
salaries and benefits;
• approval of remuneration arrangements for Nick McKittrick
on his retirement as Chief Executive Officer;
• approval of a salary increase and additional award under the
Rightmove Performance Share Plan (PSP) for Peter Brooks-
Johnson on his promotion to Chief Executive Officer;
• review of 2017 business performance against relevant
performance targets to determine annual bonus payouts
and vesting of long-term incentives;
• review and approval of appropriate benchmarks and
performance measures for the annual performance-
related bonus and 2018 PSP awards to ensure
measures are aligned with strategy and that targets
are appropriately stretching;
• approval of share awards granted in March 2017 under
the Deferred Share Bonus Plan (DSP) and the PSP; and
• ongoing monitoring of senior management remuneration.
Governance and strategy
• review and approval of the Directors’ Remuneration Report;
• submitting the Remuneration Policy for executive directors
for shareholder approval at the 2017 AGM;
• review of the 2017 AGM voting and feedback from
institutional investors;
• evaluation of the Committee’s performance during
the year; and
• review of the Committee’s terms of reference.
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Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
Application of Policy for year ending
31 December 2018
Salaries
The executive directors’ salaries for the 2018 financial year
are set out in the table below:
Salary
1 January 31 December
2017
2018
Salary Workforce
increase
Executive directors
Peter Brooks-Johnson £472,268 £445,536(1)
Robyn Perriss
£339,200 £320,000
plus Change
3%
3%
6%
6%
(1) On 9 May 2017, Nick McKittrick stepped down from the Board as
Chief Executive Officer and retired from Rightmove on 30 June 2017.
No payment was made in lieu of any unexpired period of notice. The Board
approved the promotion of Peter Brooks-Johnson to Chief Executive Officer
and the Committee approved an increase in his base salary from £373,136
to £445,536, in line with his predecessor and our 2017 Remuneration Policy,
with effect from 9 May 2017.
Annual bonus
The annual bonus for the 2018 financial year will be
consistent with the policy detailed on page 55 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
The 6% increase in base salaries for the executive directors
represents an increase of 3% above the average workforce
rise of 3% for 2018, primarily to recognise the scale and
complexity of those roles and to address the relatively low
pay of these executives compared with market norms.
The salaries remain well below the market median for
executives in comparable companies.
Financial targets
Underlying operating profit(1)
Strategic targets
Traffic market share(2)
Other revenue(3)
Employee engagement(4)
65%
15%
15%
5%
Pension and other benefits
The Group operates a stakeholder pension plan for all
employees under which the employer contributes 6% of
base salary, subject to the employee contributing a minimum
of 3% of base salary. Peter Brooks-Johnson and Robyn
Perriss elected not to participate in the pension plan during
the year. The Company does not contribute to any personal
pension arrangements.
The executive directors are enrolled in the Group’s private
medical insurance scheme and receive life assurance cover
equal to four times base salary. Additionally, the executive
directors are members of the Group’s medical cash plan.
(1) Operating profit before share-based payments and NI on
share-based incentives.
(2) Measured on a time on site basis by reference to comScore.
(3) Revenue excluding Agency and New Homes.
(4) Based on the results of the annual employee survey.
In relation to the financial target a challenging sliding scale
will operate with 25% of the maximum bonus opportunity
payable at the threshold underlying operating profit target
relative to the 2018 business plan through to 100%
becoming payable for significant outperformance relative
to the plan. A greater proportion of the award will be paid
for exceeding threshold performance.
The weighting of all performance measures are unchanged
from 2017.
64
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The targets themselves, as they relate to the 2018 financial
year, are deemed to be commercially sensitive. However,
retrospective disclosure of the targets and performance
against them will be provided in next year’s Annual Report
on Remuneration to the extent that they do not remain
commercially sensitive at that time.
Long-term incentives
The award levels under the PSP, approved in 2017, remain
at 200% of base salary for both executive directors.
Consistent with current market practice and previous years,
awards to the executive directors under the PSP in 2018 will
be subject to a mixture of EPS (75% of awards) and relative
TSR (25% of the awards) performance conditions. The 2018
targets are as follows:
EPS performance condition
The Group’s EPS growth will be measured over the period of
three financial years (2018 to 2020). The EPS figure used will
be equivalent to the Group’s basic underlying EPS (before
share-based payments, National Insurance on share-based
incentives and no related adjustment for tax). With a view to
ensuring appropriately stretching but achievable targets
are set, in light of market expectations for the Group, the
following range of targets will apply to the 2018 awards:
Underlying basic EPS growth
from 2018 to 2020(1)
Less than 20%
20%
50%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 20% and 50%
Straight-line vesting
(1) The benchmark underlying basic EPS for the financial year 2017 from which
these targets will be measured is 163.3p.
As in prior years, the targets that are intended to operate
for the 2018 PSP awards were set to be appropriately
demanding in light of the Group’s internal planning, external
market expectations for future growth and the current
trading environment, the targets are considered to provide a
realistic incentive at the lower end of the performance range
but require exceptional performance to achieve full vesting.
On this basis, the Committee is satisfied that the range of
targets are appropriately demanding, and no less challenging
than the range of targets set for the 2017 awards.
Relative TSR performance condition
The vesting schedule for the relative TSR element of
executive directors’ 2018 PSP awards is set out below.
Relative TSR will be assessed against the FTSE 350 Index,
reflecting the Company’s size in terms of market
capitalisation. Performance will be measured over three
financial years.
TSR performance of the Company
relative to the FTSE 350 Index(1)
% of award vesting
(maximum 25%)
Less than the Index
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.
Chairman and non-executive directors’ fees
The Chairman and non-executive directors’ fees were
last reviewed in a market context in 2015 and increased to
current levels. In line with our Policy they are benchmarked
and reviewed periodically, usually every three years.
The next review is scheduled for 2018 with any increase
taking effect in 2019.
The basic non-executive fee is £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:
Scott Forbes (Chairman)
£170,000
£170,000
Annual fee
Annual fee
1 January 2018 31 December 2017
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
Andrew Findlay
£60,000
£65,000
£50,000
£50,000
£50,000
£60,000
£65,000
£50,000
£50,000
£29,166(1)
(1) Fee for seven months, from 1 June 2017.
65
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
Statement of shareholder voting at AGM
At the AGM on 9 May 2017, shareholders overwhelmingly
voted in favour of the Directors’ Remuneration Report and
the new Directors’ Remuneration Policy. The Committee
believes this illustrates the strong level of shareholder
support for the remuneration framework. The table below
shows full details of the voting outcomes for the Directors’
Remuneration Report and the Policy:
Review of past performance
Share price performance
In 2017, the Company’s share price ended the year at £45.00
up 15% year on year (the FTSE 250 Index was up 18% and
the FTSE 350 Index was up 13%). On a three-year basis the
share price has increased by 100% and has continued to
outperform both the FTSE 250 and FTSE 350 Indices over
that period as shown in the graphs below.
Votes
for
% Votes Votes
for
against
% Votes Votes
against withheld(1)
Directors’
Remuneration 72,340,405 98.54
Report
Directors’
Remuneration 70,332,275 95.83
Policy
1,075,197 1.46
17,491
3,064,143 4.17
36,674
(1) A vote withheld is not a vote in law and is not counted in the calculation of the
proportion of votes cast ‘For’ and ‘Against’ a resolution.
In line with the Company’s commitment to ongoing dialogue
with its shareholders, the Committee corresponds with
major shareholders and meetings are offered, where
appropriate, to understand the reasons for any potential or
actual opposition to the Company’s Remuneration Policy.
Changes are made to our Policy where it is considered
appropriate to do so.
Total shareholder return (TSR)
The first graph below compares the TSR of Rightmove’s
shares against the FTSE 250 Index and the FTSE 350
Index for the three-year period from 1 January 2015 to
31 December 2017. TSR is the product of movements in
the share price plus dividends reinvested on the ex-dividend
date. TSR provides a useful, widely used benchmark to
illustrate the Company’s performance over the last three
years. Specifically, it illustrates the value of £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. Since 2016, as Rightmove continues to be
ranked towards the top of the FTSE 250 Index in terms of
market capitalisation, the FTSE 350 Index is felt to be more
appropriate for the purpose of comparing TSR performance
and therefore this will be used as the criteria applied to 25%
of the PSP awards to be granted in February 2018.
The graphs below illustrate, for statutory purposes, the
TSR of Rightmove’s shares against the FTSE 250 Index
and the FTSE 350 Index for the three and nine years to
31 December 2017.
TSR Graph – three years
Total Shareholder Return
TSR Graph – nine years
Total Shareholder Return
)
£
(
e
u
a
V
l
250
200
150
100
50
0
+108%
+40%
+33%
)
£
(
e
u
a
V
l
3000
2500
2000
1500
1000
500
4
1
c
e
D
5
1
c
e
D
6
1
c
e
D
7
1
c
e
D
0
8
0
c
e
D
9
0
c
e
D
0
1
c
e
D
1
1
c
e
D
2
1
c
e
D
3
1
c
e
D
4
1
c
e
D
5
1
c
e
D
+2819%
+317%
+160%
6
1
c
e
D
7
1
c
e
D
Rightmove
FTSE 250
FTSE 350
Source: Thomson Reuters
Rightmove
FTSE 250
FTSE 350
Source: Thomson Reuters
This graph shows the value by 31 December 2017 of £100 invested in Rightmove on
31 December 2014 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 2017, 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.
66
rightmove.co.uk
Total remuneration for the Chief Executive Officer
The table below shows the total remuneration figure for the Chief Executive Officer over a nine-year performance period.
The total remuneration figure includes the annual bonus and long-term incentive awards that vested based on performance
in those years.
Year
2017
2016
2015
2014
2013
2012
2011
2010
2009
Executive
Peter Brooks-Johnson(1)
Nick McKittrick(1)
Nick McKittrick
Nick McKittrick
Nick McKittrick
Nick McKittrick
Ed Williams(2)
Ed Williams
Ed Williams
Ed Williams
Ed Williams
Total single figure
£
Annual
bonus outturn
(% of maximum)
Long-term
incentive outturn
(% of maximum)
504,557
1,223,443
2,126,923
2,300,349
1,599,610
531,371
1,531,515
2,219,882
4,934,942
652,800
627,641
60%
n/a
92%
100%
70%
85%
n/a
90%
100%
100%
100%
100%
100%
100%
100%
92%
100%
100%
100%
100%
–(3)
–(3)
(1) Nick McKittrick was Chief Executive Officer and a director until 9 May 2017 and retired from Rightmove on 30 June 2017. Peter Brooks-Johnson was appointed
Chief Executive Officer on 9 May 2017.
(2) Ed Williams was Chief Executive Officer until his retirement on 30 April 2013. Nick McKittrick was appointed Chief Executive Officer at this time.
(3) The table above includes share-based incentive awards in the period that the associated performance conditions, excluding service conditions are satisfied.
Certain pre-float share option awards prior to 2006, which had only service conditions and no performance conditions would have been included in the single
figure remuneration table in the year of grant in accordance with Schedule 8 of the Act. The table above therefore excludes £4,151,532 and £2,026,674 of
awards with no performance conditions, which vested in 2010 and 2009 respectively.
67
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Governance | Directors’ remuneration report continued
Directors’ remuneration (audited)
The information included below up to and including page 75 is audited.
The remuneration of the directors of the Company during 2017 for time served as a director is as follows:
Fixed pay
Performance-related pay
Salary/Fee
£
Benefits(1)
£
Fixed pay
subtotal
£
Annual Long-term
incentives(3)
bonus(2)
£
£
Performance-
Total
related pay remuneration
in 2017
£
subtotal
£
Executive directors
Nick McKittrick(4)
Peter Brooks-Johnson(5)
Robyn Perriss
Non-executive directors
Scott Forbes
Colin Kemp
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
Andrew Findlay(6)
159,120
420,103
320,000
170,000
18,012
60,000
65,000
50,000
50,000
29,166
666
159,786
– 1,063,657 1,063,657 1,223,443
1,852
421,955
315,077 1,155,196 1,470,273 1,892,228
1,406
321,406
240,000
925,763 1,165,763 1,487,169
–
–
–
–
–
–
–
170,000
18,012
60,000
65,000
50,000
50,000
29,166
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
170,000
18,012
60,000
65,000
50,000
50,000
29,166
(1) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in respect of the full year results for the year ended 31 December 2017 including the deferred element
(60% of annual bonus).
(3) The value of the long-term incentives includes:
• nil cost PSPs where vesting is calculated by taking the number of nil cost options expected to vest in March 2018 (including dividend roll up), which are dependent
on the three-year performance period ended 31 December 2017 and multiplying by the year end closing share price of £45.00; and
• the notional capital gain on Sharesave options exercisable on 1 November 2017 which reflects the difference between the option grant price of £19.72 and
£41.39, being the market value of shares on the date they vested.
(4) Reflects base salary through to resignation as Chief Executive Officer and director on 9 May 2017 together with pro rata vesting of PSPs awarded in March 2015.
(5) Reflects base salary of £373,136 as Chief Operating Officer to 9 May 2017 and increased annual salary of £445,536 as Chief Executive Officer from 10 May 2017.
(6) Fee for seven months from 1 June 2017 to 31 December 2017.
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rightmove.co.uk
The remuneration of the directors of the Company during 2016 was:
Fixed pay
Performance-related pay
Salary/Fee
£
Benefits(1)
£
Pension
£
Fixed pay
subtotal
£
Annual Long-term
bonus(2)
incentives(3)
£
£
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.
Defined contribution pension
The Group operates a stakeholder pension plan for employees under which the employer contributes 6% of base salary,
subject to the employee contributing a minimum of 3% of base salary. None of the directors elected to participate in the
pension plan during 2017. The Company does not contribute to any personal pension arrangements.
69
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
How was pay linked to performance in 2017?
Annual bonus plan
The incentive for the financial year ended 31 December 2017 was in the form of a cash bonus of up to 50% of salary and a
DSP bonus of up to 75% of salary (i.e. 125% in total). The bonus (both cash and DSP elements) was determined by a mixture
of underlying operating profit performance (65%) and key performance indicators (35%) relating to underlying drivers of
long-term revenue growth.
When comparing performance against the 2017 bonus targets set, the Committee determined that 60% of the maximum
achievable cash and DSP bonus should be paid to the executive directors. Accordingly, a cash bonus of 30% of base salary will
be paid to the executives and 45% of base salary will be granted to the executive directors under the DSP, which will be
deferred until March 2020. More details are provided in the table below:
Measure
Hurdle
Financial targets
Underlying
operating profit(1)
Strategic targets
Traffic market
share
Targets:
• £175.2m: 25% payout
• £185.7m: 100% payout
Growth in time in minutes spent on
Rightmove platforms as measured
by comScore relative to nearest
competitors
• Same absolute growth: 25% payout
• 50% higher absolute growth: 100% payout
Other revenue(2)
• Growth of 16%: 25% payout
• Growth of 24%: 100% payout
Employee
engagement(3)
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:
59%
£184.4m
The 2017 underlying operating profit
represented growth of 11% on 2016
15% There was a lower growth in time in
minutes spent on Rightmove
platforms year on year than our
nearest competitors
0%
15% Revenue increased from £17.8m to
0%
£18.6m, an increase below the
minimum threshold
5% 90% of respondents say ‘Rightmove is
1%
a great place to work’
Total
100%
60%
(1) Operating profit before share-based payments and NI on share-based incentives.
(2) The targets relate to all revenue streams except Agency and New Homes.
(3) Based on the results of the annual employee survey.
Long-term incentives vesting during the year
The PSP awards granted in March 2015 were subject to EPS (75% of the awards) and relative TSR (25% of the awards)
performance conditions that related to the three-year period ended 31 December 2017.
The vesting schedule for the relative TSR element of executive directors’ 2015 PSP awards is set out below:
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
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rightmove.co.uk
At the end of the performance period, Rightmove’s TSR was 109.2% compared to 39.2% for the FTSE 250 Index. As this level
of outperformance is 70% higher than the Index, these options will vest in full on 2 March 2018.
Rightmove’s EPS growth is measured over a period of three financial years (2015 to 2017). The EPS figure used is equivalent
to Rightmove’s reported underlying basic EPS (before share-based payments, NI on share-based incentives and no related
adjustment for tax) and the vesting schedule is set out below:
Underlying basic EPS growth
from 2015 to 2017
Less than 30%
30%
60%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 30% and 60%
Straight-line vesting
At the end of the performance period, underlying basic EPS was 163.3p which from an underlying basic EPS base of 100.3p
results in growth of 63%, exceeding the maximum 60% EPS growth target and will result in full vesting of this part of the award
(maximum of 75%) from 2 March 2018.
Share awards granted during the year
On 1 March 2017 Peter Brooks-Johnson and Robyn Perriss were awarded shares under the PSP, which vest in March 2020,
and are subject to a mixture of EPS (75% of the awards) and TSR relative to the FTSE 350 Index (25% of the awards)
performance with the greater weighting on EPS to reflect its particular relevance to the performance of the business.
Executive director
Peter Brooks-Johnson
Robyn Perriss
Basis of grant
Number of shares
Face value of award(1)
200% of base salary
200% of base salary
18,691
16,029
746,273
640,000
(1) Based on the average mid-market share price for the three consecutive days prior to grant, taken from the Daily Official List, of £39.93.
On 9 May 2017, the Committee approved a top-up award
of performance shares for Peter Brooks-Johnson,
following his promotion to CEO. The award was over 3,457
ordinary shares of 1p each, reflecting the increase in his
base salary from £373,136 to £445,536. The performance
shares are exercisable for a period of two years from 9 May
2020 and are subject to the same performance criteria as
the original award granted on 1 March 2017. The number
of additional shares was based on the average mid-market
share price for the three consecutive days prior to grant,
taken from the Daily Official List, of £41.90.
The vesting schedule for the relative TSR element of
executive directors’ 2017 PSP awards is set out below.
It is consistent with the TSR condition used for previous
grants under the share option scheme. Performance
will be measured over three financial years.
Rightmove’s EPS growth will be measured over a period of
three financial years (2017-2019). The EPS figure used will
be equivalent to the Group’s underlying basic EPS (before
share-based payments, NI on share-based incentives and
no related adjustments for tax).
The following vesting schedule will apply for executive
directors’ awards granted in 2017:
Underlying basic EPS growth
from 2017 to 2019
Less than 20%
20%
50%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 20% and 50%
Straight-line vesting
Relative TSR condition
Less than the Index
Equal to the Index
25% higher than the Index
% of award vesting
(maximum 25%)
The benchmark underlying basic EPS for the financial year
2016 from which these targets will be measured is 142.8p.
0%
6.25%
25%
Intermediate performance
Straight-line vesting
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Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
Retirement arrangements for Nick McKittrick
Nick McKittrick retired as a director and Chief Executive Officer following the AGM on 9 May 2017. His employment with the
Group ended on 30 June 2017.
The Committee determined that he should continue to be paid his salary and normal package of benefits up to 30 June 2017
and receive a bonus in respect of the 2016 financial year as detailed below. In line with the Remuneration Policy, 40% of the
2016 bonus was paid in cash with the balance deferred in shares for a period of two years. Nick did not receive a bonus for the
six months to 30 June 2017 and was not awarded performance shares under the PSP in March 2017.
The Committee also determined that Nick would be treated as a good leaver in relation to his outstanding PSP and DSP
awards, with these awards vesting in line with the relevant plan rules and the Remuneration Policy set out on pages 54 to 57.
Outstanding PSP awards would also be subject to the achievement of performance conditions and vest pro-rata in
accordance with the plan rules.
Full details of the remuneration arrangements were published on the Company’s website in accordance with Section 430(2B)
of the Companies Act following the AGM and details of share awards are set out below.
Rightmove Performance Share Plan
In accordance with our Policy, unvested PSP awards were pro-rated to 30 June 2017 and vest on the original vesting dates,
subject to the achievement of TSR and EPS performance criteria. These awards will be exercisable for 12 months from the
original vesting dates. PSP awards which have already vested but remain unexercised will be exercisable until 30 June 2018,
being 12 months from Nick’s leaving date.
Details of unexercised PSP awards as at the date of Nick’s retirement (based on the maximum possible vesting if EPS and TSR
performance conditions are fully met) are set out in the table below:
Award Date
Performance
Period
8 March 2013
1 January 2013 to 31 December 2015
3 March 2014
1 January 2014 to 31 December 2016
2 March 2015
1 January 2015 to 31 December 2017
1 March 2016
1 January 2016 to 31 December 2018
Normal
Vesting Date
8 March 2016
3 March 2017
2 March 2018
1 March 2019
Award
(number of shares)
Pro-rated award
(number of shares)
33,465(1)
31,070(2)
29,321
21,912
33,465(1)
31,070(2)
22,805(3)
9,739(3)
(1) No pro-rating applies; includes rolled up dividend of 1,186 shares.
(2) No pro-rating applies; includes rolled up dividend of 1,052 shares.
(3) Pro-rated to 30 June 2017 and subject to TSR and EPS related performance conditions.
Rightmove Deferred Share Bonus Plan
In accordance with our Policy, DSP awards granted in respect of prior years’ performance remain capable of vesting in full:
• vested but unexercised DSP awards may be exercisable for 12 months from 30 June 2017; and
• unvested DSP awards will vest on the original vesting dates and be exercisable for 12 months from vesting
Award Date
2 March 2015
1 March 2016
1 March 2017
Performance
Period
1 January 2014 to 31 December 2014
1 January 2015 to 31 December 2015
1 January 2016 to 31 December 2016
Normal
Vesting Date
2 March 2017
1 March 2018
1 March 2019
Award
(number of shares)
7,546
7,901
7,333
Rightmove Sharesave Plan (SAYE)
Nick held options over 760 shares in total under the all-employee SAYE, which lapsed following his retirement in accordance
with the SAYE rules.
72
rightmove.co.uk
Share-based incentives held by the directors and not exercised as at 31 December 2017 continued
Share-based Granted
in year/
incentives held
dividend
1 January
roll-up
2017
Date
granted
Exercise
price
Exercised
in year
Average
share
Share-based
price at incentives held at
31 December
date of
2017
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
75,000(8) £41.03
– 15/3/2011 9/10/2017
£2.24
£6.66
–
–
–
–
139,286 5/3/2012 4/3/2019
52,553 5/3/2013
4/3/2020
24,210
889
£0.00
25,099(1) £41.03
– 8/3/2016 7/3/2018
25,140
–
£0.00
–
–
25,140 3/3/2017 2/3/2019
£19.72
456(10) £40.15
– 1/11/2017 30/4/2018
£0.00
6,320(7) £41.20
– 2/3/2017 1/3/2018
8/3/2013
(PSP)
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)
1/3/2017
(DSP)
1/3/2017
(PSP)
9/5/2017
(PSP)
1/10/2017
(Sharesave)
456(6)
6,320
24,556
304
6,617
–
–
–
–
–
£0.00
£29.60
£0.00
18,351
–
£0.00
–
6,141(3)
£0.00
– 18,691(4)
£0.00
–
–
3,457(5)
£0.00
273(9) £32.89
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
6,141 1/3/2019 29/2/2020
18,691 1/3/2020 28/2/2022
3,457 9/5/2020 8/5/2022
273 1/11/2020 30/4/2021
Total
372,793 29,451
106,875
295,369
73
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
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
2017
Date
granted
Exercise
price
Exercised
in year
Average
share
Share-based
price at incentives held at
31 December
date of
2017
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)
1/3/2017
(DSP)
1/3/2017
(PSP)
1/10/2017
(Sharesave)
912
4,999
19,425
5,234
14,516
–
–
–
–
–
£0.00
£0.00
£0.00
–
4,858(3)
£0.00
– 16,029(4)
£0.00
–
547(9) £32.89
14,928
548
£0.00
15,476(1) £40.62
– 8/3/2016 7/3/2018
4,353
–
£0.00
4,353(2) £40.61
– 3/3/2016 2/3/2017
19,887
697
£0.00
20,584(6) £43.26
– 3/3/2017 2/3/2019
£19.72
912(10) £40.15
– 1/11/2017 30/4/2018
£0.00
4,999(7) £43.12
– 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
4,858 1/3/2019 29/2/2020
16,029 1/3/2020 28/2/2022
547 1/11/2020 30/4/2021
Total
84,254 22,679
46,324
60,609
(1) On 8 March 2013, the executive directors were awarded nil cost options under the PSP which vested in 2016 subject to EPS and relative TSR performance measures,
which were met in full.
Robyn Perriss exercised the nil cost option over 15,476 shares (which included a dividend roll-up of 548 shares) on 27 February 2017, sold 11,375 upon exercise at an
average market price of £40.62 and retained the balance of 4,101 shares.
Peter Brooks-Johnson exercised the nil cost option over 25,099 shares (which included a dividend roll-up of 889 shares) on 31 October 2017 and sold all the shares at
an average market price of £41.03 per share.
(2) The nil cost deferred shares granted under the DSP on 3 March 2014, were exercisable from 3 March 2016 subject to annual bonus targets which were met in full.
Robyn Perriss exercised the nil cost option over 4,353 shares on 27 February 2017 and sold 3,199 shares at an average market price of £40.61 per share to satisfy the
resulting tax liability and retained the balance of 1,154 shares.
(3) On 1 March 2017, the executive directors were awarded nil cost options under the DSP, which vest in March 2019. The average mid-market share price for the three
consecutive preceding days, used to calculate the number of shares awarded, was £39.93.
(4) On 1 March 2017, the executive directors were awarded nil cost shares under the PSP, which vest in March 2020. Further details are set out on page 71.
(5) On 9 May 2017, a top-up award of nil cost shares under the PSP was made to Peter Brooks-Johnson, which vest in May 2020. Further details are set out on page 71.
(6) On 3 March 2014, the executive directors were awarded nil cost options under the PSP which vested in 2017 subject to EPS and relative TSR performance measures,
which were met in full. Robyn Perriss exercised the nil cost option over 20,584 shares (which included a dividend roll-up of 697 shares) on 31 May 2017, sold 15,129
upon exercise at an average market price of £43.26 and retained the balance of 5,455 shares.
(7) The nil cost deferred share awards granted under the DSP on 2 March 2015, were exercisable from 2 March 2017 subject to annual bonus targets which were met in full.
Robyn Perriss exercised the nil cost option over 4,999 shares on 31 May 2017 and sold 3,674 shares at an average market price of £43.12 per share and retained the
balance of 1,325 shares.
Peter Brooks-Johnson exercised the nil cost option over 6,320 shares on 3 October 2017 and sold all the shares at an average market price of £41.20 per share.
(8) Peter Brooks-Johnson was granted an unapproved option over 75,000 shares at an exercise price of £5.22 which vested in 2011. On 3 October 2017, he exercised the
option, which the Company net settled, he sold 30,907 shares at an average market price of £41.03 per share to satisfy the resulting tax liability and retained the
balance of 34,574 shares.
(9) On 29 September 2017, Peter Brooks-Johnson and Robyn Perriss were granted Sharesave options over 273 and 547 shares respectively at an exercise price of £32.89.
The options will be exercisable from November 2020.
(10) In October 2014, Peter Brooks-Johnson and Robyn Perriss were granted Sharesave options over 456 and 912 shares respectively, which vested in November 2017
at an exercise price of £19.72. On 28 November 2017, both directors exercised their options in full and retained the shares.
74
rightmove.co.uk
Dilution
All existing executive share-based incentives can be satisfied from shares held in the Rightmove Employees’ Share Trust
(EBT) and shares held in treasury. It is intended that the 2017 share-based incentive awards will also be settled from shares
currently held in the EBT or from shares held in treasury without any requirement to issue further shares.
During 2017, treasury shares were used to satisfy vested PSP awards and unapproved options over 379,269 shares,
representing 0.42% of issued share capital (less treasury shares) as at 31 December 2017.
Directors’ interests in shares
The interests (both beneficial and family interests) of the directors in office at the date of this report in the share capital
of the Company were as follows:
Interests in
ordinary shares of £0.01
Interests in
share-based incentives
Executive directors
Peter Brooks-Johnson
Robyn Perriss
Non-executive directors
Scott Forbes
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
Andrew Findlay
Total
At
31 December 2017
At
1 January 2017
PSP & DSP
awards
(unvested)
90,716
18,780
55,146
5,833
77,813
60,062
219,300
319,300
2,060
3,728
544
188
–
2,060
3,728
544
188
–
–
–
–
–
–
–
PSP & DSP
awards
(vested but
unexercised)
25,140
–
–
–
–
–
–
–
Options
(unvested)
Options
(vested but
unexercised)
577
547
–
–
–
–
–
–
191,839
–
–
–
–
–
–
–
335,316
386,799
137,875
25,140
1,124
191,839
• The Company’s shares in issue (including 1,892,456 shares held in treasury) as at 31 December 2017 comprised 93,266,207 (2016: 95,490,266) ordinary shares of
£0.01 each.
• The closing share price of the Company was £45.00 as at 29 December 2017 (the last day of trading in 2017). The lowest and highest share prices during the year were
£38.89 and £45.25 respectively.
• The executive directors are regarded as being interested, for the purposes of the Companies Act 2006, in 263,767 (2016: 343,275) ordinary shares of £0.01 each in
the Company currently held by the EBT at 31 December 2017 as they are, together with other employees, potential beneficiaries of the EBT.
• The directors’ beneficial holdings represent 0.4% of the Company’s shares in issue as at 31 December 2017 (2016: 0.6%) (excluding shares held in treasury).
• There have been no changes to the above interests between the year end and the date of this report.
Executive director share ownership guidelines are set out in the Remuneration Policy Report on page 56. The interests of
the executive directors in office at 31 December 2017 in the share capital of the Company as a percentage of base salary
were as follows:
Executive directors
Peter Brooks-Johnson
Robyn Perriss
Number of
shares held at
1 January 2018 31 December 2017
Base salary
Value of shares at
31 December 2017
Value of
shares as a %
of base salary
£472,268
£339,200
90,176
18,780
£4,057,920
£845,100
860%
250%
75
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Governance | Directors’ remuneration report continued
Percentage increase in the remuneration of the Chief Executive Officer
The table below shows the movement in the salary, benefits and annual bonus for the Chief Executive Officer (CEO)
between the current and previous financial year compared to that of the total amounts for all employees of the Group for
each of these elements of pay.
The CEO’s base salary increased by 5%, in line with the approved Remuneration Policy of awarding 3% above the average
workforce inflationary increase for 2017. The annual bonus of the CEO decreased by 32% as a result of 60% of the
maximum bonus being achieved in relation to the 2017 bonus targets, compared with a payout of 92% for 2016.
The average salary for all employees increased by 2% due to a universal cost of living increase in January 2017.
Chief Executive Officer
Salary(1)
Benefits
Annual bonus(1)
Average of all employees(2)
Salary
Benefits
Annual bonus
2017
£
2016
£
% change
445,536
424,320
1,852
1,973
334,152
487,968
45,995
770
1,571
45,148
834
2,394
5%
(6)%
(32)%
2%
(8)%
(34)%
Ratio of CEO to average employee pay(3)
16x
19x
(16)%
(1) 2017 pro-forma salary and bonus cost (based on 60% achievement) is for comparison purposes based on the full year salary payable to the CEO. The actual salaries
earned by Nick McKittrick and Peter Brooks-Johnson in 2017 were pro-rated and are set out in the Directors’ remuneration table on page 68.
(2) Based on 477 (2016: 466) employees, which excludes the executive directors.
(3) The multiple of the CEO remuneration compared to the average employee’s remuneration.
Relative importance of the spend on pay
The table below shows the total pay for all Rightmove’s employees compared to other key financial indicators. Additional
information on the number of employees, total revenue and underlying operating profit has been provided for context.
Employee costs (refer Note 7)
Dividends paid to shareholders (refer Note 12)
Purchase of own shares (refer Note 22)
Income tax (refer Note 10)
Average number of employees (refer Note 7)(2)
Revenue
Underlying operating profit(1)
(1) Before share-based payments and NI on share-based incentives.
(2) Average number of employees includes executive directors.
Year ended
Year ended
31 December 2017 31 December 2016
% change
£28,338,000
£27,423,000
£49,611,000
£43,206,000
£90,809,000
£88,083,000
£34,120,000
£32,005,000
479
469
£243,273,000 £219,993,000
£184,365,000 £166,240,000
3%
15%
3%
7%
2%
11%
11%
76
rightmove.co.uk
Governance | Independent auditor’s report to the members of Rightmove plc
1. Our opinion is unmodified
We have audited the financial statements of Rightmove plc
(“the Company”) for the year ended 31 December 2017
which comprise the Consolidated statement of
comprehensive income, Consolidated statement of
financial position, Company statement of financial position,
Consolidated statement of cash flows, Company statement
of cash flows, Consolidated statement of changes in
shareholders’ equity, Company statement of changes in
shareholders’ equity, and the related notes, including the
accounting policies in note 1.
In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and of the parent Company’s affairs
as at 31 December 2017 and of the Group’s profit for the
year then ended;
• the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards as adopted by the European Union
(IFRSs as adopted by the EU);
• the parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted by
the EU and as applied in accordance with the provisions of
the Companies Act 2006; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We believe that
the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is
consistent with our report to the audit committee.
We were appointed as auditor by the directors to the Group’s
previous holding company, prior to it becoming a public
interest entity, for the financial period ended 31 December
2000. The period of total uninterrupted engagement as
auditor is for the 12 financial years ended 31 December 2017
as a public-interest entity and 18 years in total.
We have fulfilled our ethical responsibilities under, and we
remain independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical Standard
as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
Overview
Materiality:
Group financial
statements as a whole
Coverage
Risks of material misstatement
Recurring risks
£7.5m (2016:£7.0m)
4.2% (2016: 4.3%)
of profit before tax
100% (2016: 100%) of
Group profit before tax
vs 2016
Agency, New Homes
and Overseas revenue
recognition
Recoverability of
parent Company’s
investment in
subsidiaries
2. Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the
financial statements and include the most significant
assessed risks of material misstatement (whether or not
due to fraud) identified by us, including those which had the
greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. We summarise below the key audit
matters (unchanged from 2016), in decreasing order of audit
significance, in arriving at our audit opinion above, together
with our key audit procedures to address those matters
and our findings from those procedures in order that the
Company’s members as a body may better understand the
process by which we arrived at our audit opinion. These
matters were addressed, and our findings are based on
procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole,
and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate
opinion on these matters.
77
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Governance | Independent auditor’s report to the members of Rightmove plc only continued
The risk:
Our response:
Revenue recognition Processing error:
Our audit procedures included:
£243.3m
(2016: £220.0m)
Risk vs 2016:
Unchanged
Refer to page 40
(Audit Committee
Report), page 93
(accounting policy)
and page 98 (financial
disclosures).
Recoverability of
parent Company’s
investment in
subsidiaries
£548.7m
(2016: £546.2m)
Risk vs 2016:
Unchanged
Refer to page 40
(Audit Committee
Report), page 91
(accounting policy)
and page 106
(financial disclosures)
The key revenue streams,
being Agency, New Homes
and Overseas, consist of
subscription fees and customer
spend on additional advertising
products in respect of
properties listed on Rightmove
platforms. There is a variety of
packages and membership
offers available and customers
are able to tailor the
combination of products they
receive. The resulting large
volume of non-homogenous
transactions creates a risk of
processing error. In addition
revenue is the most material
figure in the financial
statements and is considered
to be a main driver of results,
and as such had the greatest
effect on our allocation of
resources in planning and
completing the audit.
Control operation: Testing the design, implementation and operating
effectiveness of the Group’s controls over the review of monthly revenue
recognised compared to the Group’s expectation and controls over the review
and monitoring of membership offers that impact revenue recognition;
Data comparison: Agreeing billings by individual invoice, for the entire
population, to cash receipts;
Tests of details: For a sample of the highest revenue generating
customers we inspected contracts signed in the year, to assess whether
revenue has been recognised in accordance with the specific contract
terms and conditions;
Re-performance: For membership offers operated during the year, we
selected a sample of customers from each offer, inspected the underlying
contract and reperformed the revenue recognition calculations;
Tests of details: We assessed the appropriateness of deferred revenue at
the period end with reference to subscription fee billings in December, and
specific product deferrals where amounts are billed in advance but revenue
recognition deferred until the services are provided;
Test of details: Inspecting a sample of credit notes raised post year end to
determine whether they related to revenue recognised in the year;
Tests of details: We obtained 100% of the journals posted in respect
of revenue and, using computer assisted audit techniques, analysed
these to identify and investigate any entries which appeared unusual
based upon the specific characteristics of the journal, considering in
particular whether the debit side of the journal entry was as expected,
based on our business understanding.
Our findings:
We found no errors in the Group’s calculation of the revenue recognised.
Low risk, high value:
Our audit procedures included:
Comparing valuations: comparing the carrying amount of the investment
to the market capitalisation of the Group, as Rightmove Group Limited
contains all of the Group’s trading operations.
Our findings:
We found no indicators of impairment.
The carrying amount of the
parent Company’s
investments in the subsidiary
company Rightmove Group
Limited represents 99%
(2016: 99%) of the Company’s
total assets. Its recoverability is
not at a high risk of significant
misstatement or subject to
significant judgement.
However, due to its materiality
in the context of the parent
Company financial statements,
this is considered to be the
area that had the greatest
effect on our overall parent
Company audit.
78
rightmove.co.uk 3. Our application of materiality and an overview
of the scope of our audit
Materiality for the Group financial statements as a whole was
set at £7.5m (2016: £7.0m), determined with reference to a
benchmark of Group profit before tax of £178.2m, of which
it represents 4.2% (2016: 4.3%).
Materiality for the parent Company financial statements as
a whole was set at £6.0m (2016: £5.6m), determined with
reference to a benchmark of Company net assets, of which
it represents 1.1% (2016: 1.1%).
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £0.37m
(2016: £0.35m), in addition to other identified
misstatements that warranted reporting on qualitative
grounds.
Of the Group’s three (2016: three) reporting components,
which includes the parent Company, we subjected two
(2016: three) to full scope audits for Group purposes.
The components within the scope of our work accounted
for 100% of total Group revenue, 100% of Group profit
before tax and 99.8% of total Group assets.
The remaining 0.2% of total Group assets is represented by
one reporting component, which individually is not
significant to the Group.
The work on the two reporting components (2016: three
components) was performed by the Group team, which
includes the audit of the parent Company, with materiality
for the components set at £6.0m (2016: £5.6m-£25,000).
Profit before tax
£178.2m
(2016: £161.5m)
Profit before tax
Group Materiality
Materiality
£7.5m (2016: £7.0m)
£7.5m
Whole financialstatements
materiality (2016: £7.0m)
£6.0m
Materiality at 2 components
(£6.0m) (2016: £5.6m - £25,000,
3 components)
£0.37m
Misstatements reported to the
Audit Committee (2016: £0.35m)
Group profit before tax
Group revenue
100%
100
100
Group total assets
0.2
99%
100
99.8
100%
100
100
Full scope for Group audit
purposes 2017
Full scope for Group audit
purposes 2016
Residual components
79
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements 4. We have nothing to report on going concern
We are required to report to you if:
• we have anything material to add or draw attention to in
relation to the directors’ statement in note 1 to the financial
statements on the use of the going concern basis of
accounting with no material uncertainties that may cast
significant doubt over the Group and Company’s use of
that basis for a period of at least twelve months from the
date of approval of the financial statements; or
• the related statement under the Listing Rules set out on
page 89 is materially inconsistent with our audit knowledge.
We have nothing to report in these respects.
5. We have nothing to report on the other
information in the Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated below,
any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or
our audit knowledge. Based solely on that work we have not
identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the
strategic report and the directors’ report;
• in our opinion the information given in those reports for the
financial year is consistent with the financial statements;
and
• in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ remuneration report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:
• the directors’ confirmation within the Viability statement on
page 24 that they have carried out a robust assessment of
the Principal Risks facing the Group, including those that
would threaten its business model, future performance,
solvency and liquidity;
• the principal risks and uncertainties disclosures describing
these risks and explaining how they are being managed and
mitigated; and
• the directors’ explanation in the Viability statement of how
they have assessed the prospects of the Group, over what
period they have done so and why they considered that
period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
Under the Listing Rules we are required to review the Viability
statement. We have nothing to report in this respect.
Corporate governance disclosures
We are required to report to you if:
• we have identified material inconsistencies between the
knowledge we acquired during our financial statements
audit and the directors’ statement that they consider that
the annual report and financial statements taken as a whole
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Group’s position and performance, business model and
strategy; or
• the section of the annual report describing the work of the
Audit Committee does not appropriately address matters
communicated by us to the Audit Committee; or
• a corporate governance statement has not been prepared
by the Company.
We are required to report to you if the Corporate governance
report does not properly disclose a departure from the
eleven provisions of the UK Corporate Governance Code
specified by the Listing Rules for our review.
We have nothing to report in these respects.
Based solely on our work on the other information
described above:
• with respect to the Corporate Governance Statement
disclosures about internal control and risk management
systems in relation to financial reporting processes and
about share capital structures:
- we have not identified material misstatements therein;
and
- the information therein is consistent with the financial
statements; and
• in our opinion, the Corporate Governance Statement has
been prepared in accordance with relevant rules of the
Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority.
80
rightmove.co.uk 6. We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to report
to you if, in our opinion:
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent Company financial statements and the part of
the Directors’ Remuneration Report to be audited are not
in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
49, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give
a true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error; assessing the Group and parent Company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the
going concern basis of accounting unless they either intend
to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other
irregularities (see below), or error, and to issue our opinion in
an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise
from fraud, other irregularities or error and are considered
material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users
taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
Irregularities – ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our sector experience, through
discussion with the directors and other management (as
required by auditing standards).
We had regard to laws and regulations in areas that directly
affect the financial statements including financial reporting
(including related company legislation) and taxation
legislation. We considered the extent of compliance with
those laws and regulations as part of our procedures on the
related financial statements items.
We communicated identified laws and regulations
throughout our team and remained alert to any indications
of non-compliance throughout the audit.
8. The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006 and the terms of our engagement by
the Company. Our audit work has been undertaken so that
we might state to the Company’s members those matters
we are required to state to them in an auditor’s report, and
the further matters we are required to state to them in
accordance with the terms agreed with the Company,
and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members,
as a body, for our audit work, for this report, or for the
opinions we have formed.
Karen Wightman (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
23 February 2018
81
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements Consolidated statement of comprehensive income for the year ended 31 December 2017
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
2017
£000
243,273
(64,972)
184,365
(4,836)
(1,228)
2016
£000
219,993
(58,346)
166,240
(4,142)
(451)
178,301
161,647
129
(214)
(85)
109
(209)
(100)
178,216
(34,120)
161,547
(32,005)
144,096
129,542
144,096
129,542
156.75
155.15
54.00
49,611
137.87
136.41
46.00
43,206
82
rightmove.co.uk
Consolidated statement of financial position as at 31 December 2017
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
2017
£000
2,709
3,290
5,745
2016
£000
2,288
3,525
6,942
11,744
12,755
35,094
4,045
20,930
29,924
4,026
13,749
60,069
47,699
71,813
60,454
(38,888)
(14,693)
(755)
(35,796)
(16,256)
(185)
(54,336)
(52,237)
(294)
(294)
(175)
(175)
(54,630)
(52,412)
17,183
8,042
933
499
15,751
17,183
955
477
6,610
8,042
The financial statements were approved by the Board of directors on 23 February 2018 and were signed on its behalf by:
Peter Brooks-Johnson
Director
Robyn Perriss
Director
83
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Company statement of financial position as at 31 December 2017
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
2017
£000
2016
£000
548,827
2,490
546,202
3,757
551,317
549,959
551,317
549,959
19
(23,410)
(30,152)
(23,410)
(30,152)
527,907
519,807
22
23
933
115,698
411,276
955
113,051
405,801
Total equity attributable to the equity holders of the parent
527,907
519,807
The financial statements were approved by the Board of directors on 23 February 2018 and were signed on its behalf by:
Peter Brooks-Johnson
Director
Robyn Perriss
Director
84
rightmove.co.uk
Consolidated statement of cash flows for the year ended 31 December 2017
Note
2017
£000
2016
£000
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation charges
Amortisation charges
Financial income
Financial expenses
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
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/(used in) investing activities
Interest received on cash and cash equivalents
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Acquisition of subsidiary (net of cash acquired)
Net cash used in investing activities
Cash flows from/(used in) 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 in cash and cash equivalents
Cash and cash equivalents at 1 January
13
14
8
9
13
14
24
27
10
21
13
13
14
27
12
22
23
22
144,096
129,542
1,311
473
(129)
214
20
203
4,836
–
34,120
1,241
378
(109)
209
–
–
4,142
42
32,005
185,144
167,450
(5,154)
3,212
689
(2,237)
3,913
124
183,891
169,250
(214)
(33,187)
(209)
(27,807)
150,490
141,234
94
(1,755)
3
(441)
–
108
(1,281)
–
(478)
(2,088)
(2,099)
(3,739)
(49,611)
(90,809)
(761)
(757)
728
(43,206)
(88,083)
(751)
(497)
373
(141,210)
(132,164)
7,181
13,749
5,331
8,418
Cash and cash equivalents at 31 December
18
20,930
13,749
85
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Company statement of cash flows for the year ended 31 December 2017
Cash flows from operating activities
Profit for the year
Adjustments for:
Dividend 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
2017
£000
2016
£000
144,476
136,648
(149,551)
330
2,211
(1,136)
(141,563)
527
2,404
(1,074)
(3,670)
(3,058)
3,670
3,058
–
–
–
–
–
–
–
–
86
rightmove.co.uk
Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2017
Own
Share
capital shares held
£000
£000
Note
Reverse
Other acquisition
reserve
£000
reserves
£000
Retained
earnings
£000
Total
equity
£000
At 1 January 2016
977
(14,062)
317
138
19,267
6,637
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 2016
At 1 January 2017
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
–
–
–
–
–
–
(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)
955
(14,447)
339
138
21,057
8,042
955
(14,447)
339
138
21,057
8,042
–
–
–
–
–
–
(22)
–
–
–
–
–
2,213
(761)
–
–
–
–
–
–
–
–
22
–
– 144,096 144,096
–
–
–
–
–
–
–
4,836
4,836
1,299
(49,611)
(1,485)
–
(90,809)
(637)
1,299
(49,611)
728
(761)
(90,809)
(637)
24
10
12
23
23
22
22
24
10
12
23
23
22
22
At 31 December 2017
933
(12,995)
361
138
28,746
17,183
87
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Company statement of changes in shareholders’ equity for the year ended 31 December 2017
Own
Share
capital shares held
£000
£000
Note
Reverse
Other acquisition
reserve
£000
reserves
£000
Retained
earnings
£000
Total
equity
£000
At 1 January 2016
977
(11,897)
7,771 103,520 411,045 511,416
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 2016
At 1 January 2017
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
–
–
–
–
–
–
–
(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)
955
(12,156)
9,531 103,520 417,957 519,807
955
(12,156)
9,531 103,520 417,957 519,807
–
–
–
–
–
–
–
(22)
–
–
–
–
–
–
(741)
1,880
–
–
–
–
–
2,625
–
–
–
22
–
– 144,476 144,476
–
–
–
–
–
–
–
–
2,211
2,211
586
–
(49,611)
–
(1,880)
(90,809)
(637)
586
2,625
(49,611)
(741)
–
(90,809)
(637)
24
10
23
12
22
22
24
10
23
12
22
22
At 31 December 2017
933
(11,017)
12,178 103,520 422,293 527,907
88
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 2017 comprise the Company
and its interest in its subsidiaries (together referred to as the Group).
The consolidated financial statements of the Group as at and for the year ended 31 December 2017 are available upon request
to the Company Secretary from the Company’s registered office at Turnberry House, 30 Caldecotte Lake Drive, Caldecotte,
Milton Keynes, MK7 8LE or are available on the corporate website at plc.rightmove.co.uk.
Statement of compliance
The Group and Company financial statements have been prepared and approved by the Board of directors in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union (Adopted IFRSs).
The consolidated financial statements were authorised for issue by the Board of directors on 23 February 2018.
Basis of preparation
On publishing the Company financial statements here together with the Group financial statements, the Company is taking
advantage of the exemption in s408 of the Companies Act 2006 not to present its individual statement of comprehensive
income and related notes that form a part of these approved financial statements.
The accounting policies set out below have been consistently applied to both years presented, unless otherwise stated.
The financial statements have been prepared on an historical cost basis.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has existing rights that give it the ability to
direct the relevant activities of an entity and has the ability to affect the returns the Group will receive as a result of its
involvement with the entity. In assessing control, potential voting rights that are currently exercisable or convertible are taken
into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
On 31 May 2016 the Group acquired The Outside View Analytics Ltd (“Outside View”) from which date the results of Outside View
have been consolidated. Details of the acquisition are set out in Note 27.
Changes in accounting policies
The accounting policies applied by the Group in these consolidated financial statements are in accordance with Adopted
IFRSs and are the same as those applied by the Group in its consolidated financial statements as at and for the year ended
31 December 2016.
There have been no significant changes to accounting under IFRS which have affected the Group’s results for the current
financial year. The only changes to the IFRS that are effective for the first time in this financial year, and are applicable for
the Group, are the Annual Improvements to IFRSs: 2014-2016 cycle. These have not had a material impact on the Group.
Going concern
Throughout 2017, the Group was debt free and has continued to generate significant cash and has an overall positive net asset
position. The Group had cash balances of £20,930,000 at 31 December 2017 (2016: £13,749,000). The Group also had
£4,045,000 of money market deposits (2016: £4,026,000).
During the year £140,420,000 (2016: £131,289,000) of cash was returned to shareholders via dividends and discretionary share
buybacks.
The Group agreed to extend a 12 month agreement with Barclays Bank plc for a £10,000,000 committed revolving loan facility.
This agreement will expire on 12 February 2019.
The Board of directors is confident that with the existing cash resources and banking facilities in place, coupled with the strength
of the underlying business model, the Group and the Company will remain cash positive and will have adequate resources to
continue in operational existence for a period of 12 months from the date of signing these accounts.
89
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements Notes continued
1 General information continued
Further information regarding the Group’s business activities, together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report on pages 1 to 29. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described on pages 17 to 19. In addition Note 4 to the financial statements includes
the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its
financial instruments and its exposures to credit risk and liquidity risk.
Capital structure
The Company was incorporated and registered in England and Wales on 14 November 2007 under the Companies Act 1985
as a private company limited by shares with the name Rightmove Group Limited, registered no. 6426485. The Company was
re-registered as a public limited company under the name Rightmove Group plc on 29 November 2007. On 28 January 2008
the Company became the holding company of Rightmove Group Limited (formerly Rightmove plc, Company no. 3997679)
and its subsidiaries pursuant to a Scheme of Arrangement under s425 of the Companies Act 1985. The shares in the Company
were admitted to trading on the Official List of the London Stock Exchange on 28 January 2008 and the Company immediately
changed its name to Rightmove plc. Details of the share capital of the Company are disclosed in Note 22.
Judgements and estimates
The preparation of the consolidated and Company financial statements in conformity with Adopted IFRSs requires management
to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods, if applicable.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in the consolidated and Company financial statements are
included in the following notes:
Notes 16 and 24
The choice of valuation methodology and the inputs and assumptions used to calculate the initial fair value
for new share-based incentives granted and the rate at which the related deferred tax asset is measured.
The key estimates used in calculating the fair value of the options are the fair value of the Company’s shares
at the grant date, expected share price volatility, risk-free interest rate, expected dividends, and weighted
average expected life of the instrument. In respect of share-based incentives granted to employees, the
number of share-based incentives that are expected to vest is based upon estimates of the number of
employees that will forfeit their awards through leaving the Group and the likelihood of any non-market
performance conditions being satisfied. Management regularly performs a true-up of the estimate of the
number of shares that are expected to vest; this is dependent on the anticipated number of leavers.
Non-GAAP (Generally Accepted Accounting Principles) performance measures
In the analysis of the Group’s financial performance certain information disclosed in the financial statements may be prepared on
a non-GAAP basis or has been derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted
GAAP measure. These measures are reported in line with how financial information is analysed by management. The key
non-GAAP measures presented by the Group are:
• Underlying operating profit – which is defined as operating profit before share-based payments and National Insurance on
share-based incentives; and
• Underlying basic earnings per share (EPS) – which is defined as profit for the year before share-based payments and National
Insurance on share-based incentives, with no related adjustment for tax, divided by the weighted average number of shares in
issue for the year.
90
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 are a significant non-cash charge and are driven by a valuation model, and NI on share-based
incentives is driven by reference to the Rightmove plc share price and so subject to volatility, rather than reflecting operational
activity. The directors therefore consider underlying operating profit to be the most appropriate indicator of the performance of
the business and year-on-year trends. For simplicity no adjustment for tax is made within the calculation of underlying basic EPS.
The non-GAAP measures are designed to increase comparability of the Group’s financial performance year-on-year.
2 Significant accounting policies
(a) Investments
Investments in subsidiaries are held at cost less any provision for impairment in the parent Company financial statements.
(b) Intangible assets
(i) Goodwill
Goodwill arising on a business combination represents the difference between the fair value of the consideration paid and the
fair value of the net identifiable assets acquired and is included in intangible assets.
In respect of acquisitions prior to 1 January 2004, goodwill is included on the basis of its deemed cost, which represents the
amount previously recorded under UK GAAP. The classification and accounting treatment of business that occurred prior to
1 January 2004 was not reconsidered in preparing the Group’s opening IFRS statement of financial position at 1 January 2004.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is tested annually for impairment. This applies to
all goodwill arising both before and after 1 January 2004.
(ii) Research and development
The Group undertakes research and development expenditure in view of developing new products and improving the existing
property platforms. Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and
understanding, is recognised in profit or loss as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of a new
product or substantially enhanced website, is capitalised if the new product or the enhanced website is technically and
commercially feasible, the Group has sufficient resources to complete development, future economic benefits are probable
and the Group can measure reliably the expenditure attributable to the intangible asset during its development. Capitalised
costs are held as an asset in progress until such point that the asset is brought into use, at which point it is transferred to the
appropriate intangible asset category and amortisation is charged.
The expenditure capitalised includes subcontractors and direct labour. Capitalised development expenditure is stated at cost
less accumulated amortisation and accumulated impairment losses. Subsequent expenditure on capitalised intangible assets
is capitalised only when it increases the economic benefits embodied in the specific asset to which it relates. All other
expenditure is expensed when incurred.
(iii) Computer software and licences
Computer software and externally acquired software licences are capitalised and stated at cost less accumulated
amortisation and impairment losses. Amortisation is charged from the date the asset is available for use. Amortisation
is provided to write off the cost less the estimated residual value of the computer software or licence by equal annual
instalments over its estimated useful economic life as follows:
Computer software
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
91
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
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. Capitalised costs are held
as an asset in progress until such point that the asset is brought into use, at which point it is transferred to the appropriate property,
plant and equipment category and depreciation is charged. Depreciation is provided to write off the cost less the estimated residual
value of property, plant and equipment by equal annual instalments over their estimated useful economic lives as follows:
Office equipment, fixtures and fittings
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.
92
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 location or branch equivalent for Agency and per
development for New Homes. They vary in length from one month to five years, but are typically for periods of six to 12 months.
Revenue is recognised over the period of the contract or as advertising products are used. Membership offers take place from time
to time and may include discounted products and free periods. These are recognised on a monthly basis over the contract term.
Agency, Overseas and Commercial services are typically billed in advance with revenue deferred until the service commencement
date. New Homes developers are billed monthly in arrears. Where invoices are raised on other than a monthly basis, the amounts
are recognised as deferred or accrued revenue and released to the profit or loss on a monthly basis in line with the provision of
services as stipulated in the contract terms.
Data Services revenue relates to fees generated for data and valuation services under a variety of contractual arrangements.
Revenue is recognised when the service has been provided. Third party advertising revenue represents amounts paid in respect of
non-property advertising on the Rightmove platforms and is recognised in the month in which the service is provided. Consumer
Services revenue principally relates to payment for leads and is recognised when the lead is generated. Data Services, third party
advertising and Consumer Services revenue is typically billed in arrears.
93
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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. The value of any lease
incentive received, for example a rent-free period, is deferred and released on a straight-line basis over the lease term.
(m) Financial income and expenses
Financial income comprises interest receivable on cash balances and money market deposits and dividend income. Interest
income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the
Company’s right to receive payment is established.
Financial expenses comprise banking facility fees and bank charges and the unwinding of the discount on provisions.
(n) Taxation
Income tax on the results for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to
the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period net of any charge or credit posted directly to
equity, using tax rates enacted or substantially enacted at the reporting date and any adjustment to tax payable in respect of
previous periods.
Deferred tax is provided in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the
initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and the differences relating to investments in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised.
In accordance with IAS 12, the Group policy in relation to the recognition of deferred tax on share-based incentives is to include
the income tax effect of the tax deduction in profit or loss to the value of the income tax charge on the cumulative IFRS 2 charge.
The remainder of the income tax effect of the tax deduction is recognised in equity.
(o) Dividends
Dividends unpaid at the reporting date are only recognised as a liability (and deduction to equity) at that date to the extent that
they are appropriately authorised and are no longer at the discretion of the Company. Unpaid dividends that do not meet these
criteria are disclosed in the notes to the financial statements.
(p) Earnings per share (EPS)
The Group presents basic, diluted and underlying basic and diluted EPS data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to equity holders of the Company by the weighted average number of ordinary shares
outstanding during the year, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the
effects of all potential dilutive instruments, which comprise share-based incentives granted to employees. The calculation of
underlying basic and diluted EPS is disclosed in Note 11.
94
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 2017 and have not been applied in preparing these consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers was issued in 2014 and was endorsed by the EU in 2016. IFRS 15 establishes
a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue
recognition guidance, including IAS 18 Revenue. IFRS 15 is effective for annual periods beginning on or after 1 January 2018, with
early adoption permitted. The Group plans to adopt IFRS 15 in its financial statements for the year ending 31 December 2018
and to use the practical expedients for completed contracts.
At present revenue is recognised either over time where there is continuing service provided by Rightmove to the customer or
at the point in time when the risks and rewards of ownership transfer to the customer. Under IFRS 15 revenue will be recognised
when performance obligations are satisfied. For the Group the transfer of control under IFRS 15 and satisfaction of performance
obligations is over time. We have undertaken a detailed analysis of the impact of IFRS 15 on the Group which has shown that the
recognition of revenue will be consistent with the transfer of risks and rewards to the customer under IAS 18. We have concluded
following this assessment that the implementation of IFRS 15 will not have a significant impact on the Group’s consolidated
financial statements.
IFRS 16 Leases
IFRS 16 Leases was issued in January 2016, and was endorsed by the EU in 2017. IFRS 16 introduces a single on-balance sheet
lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset
and a corresponding lease liability representing its obligation to make lease payments. There are optional exemptions for short-
term leases and leases of low value items.
IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a
Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form
of a Lease. The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for
entities that apply IFRS 15 Revenue from Contracts with Customers at or before the date of initial application of IFRS 16.
The Group has completed a detailed assessment to quantify the impact on its reported assets and liabilities of adoption of IFRS
16. The Group will transition to IFRS 16 using the modified retrospective application approach with no restatement of prior year
comparatives. On 1 January 2018 the Group expects to recognise new right-of-use assets of £10,730,000 and lease liabilities of
£10,824,000 for its operating leases in respect of office premises and company cars. The nature of expenses related to those
leases will also change as the straight-line operating lease expense will be replaced with a depreciation charge for right-of-use
assets and interest expense on lease liabilities, in the first year of adoption these are expected to be approximately £1,775,000
and £301,000 respectively. The Group plans to adopt IFRS 16 in its financial statements for the year ending 31 December 2018.
IFRS 9 Financial Instruments
IFRS 9 Financial Instruments was issued in July 2014 and was endorsed by the EU in 2016. It replaces existing financial
instruments guidance, including IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 is effective for annual
periods beginning on or after 1 January 2018 and the Group plans to adopt IFRS 9 in its financial statements for the year
ending 31 December 2018. IFRS 9 will simplify the classification of financial assets for measurement purposes, but is not
anticipated to have a significant impact on the financial statements.
Other amendments
There are no other new or amended standards expected to have a significant impact on the Group’s consolidated financial statements.
4 Risk and capital management
Overview
The Group has exposure to the following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market risk
This note presents information about the Group and Company’s exposure to each of the above risks, the Group’s objectives,
policies and processes for measuring and managing risk and the Group’s management of capital. Further quantitative disclosures
are included throughout these consolidated financial statements.
95
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements Notes continued
4 Risk and capital management continued
The Board of directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The primary method by which risks are monitored and managed by the Group is through the monthly Executive Management
Committee, where any significant new risks or change in status to existing risks will be discussed and actions taken as appropriate.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and
obligations.
The Audit Committee oversees how management monitors compliance with the Group’s internal controls and reviews the
adequacy of the risk management framework in relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or banking institution fails to meet its contractual obligations.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group provides
credit to customers in the normal course of business. The Group provides its services to a wide range of customers in the UK and
overseas and therefore believes it has no material concentration of credit risk.
More than 88.0% (2016: 90.0%) of the Group’s Agency and New Homes customers pay via monthly direct debit, minimising the
risk of non-payment. The Group establishes an allowance for impairment that represents its estimate of incurred losses in
respect of trade and other receivables based on individually identified loss exposures.
The Group’s treasury policy is to monitor cash and deposit balances on a daily basis to ensure that no more than £30 million 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 107
days (2016: 95 days).
The Group agreed to extend a 12 month agreement with Barclays Bank plc for a £10,000,000 committed revolving loan facility.
This agreement will expire on 12 February 2019.
Market risk
Market risk is the risk that changes in market prices such as foreign exchange and interest rates will affect the Group’s income.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return on risk.
(i) Currency risk
All of the Group’s sales and more than 95.0% (2016: 97.0%) of the Group’s purchases are Sterling denominated, accordingly it
has no significant currency risk.
(ii) Interest rate risk
The Group and Company have no interest bearing financial liabilities. The Group is exposed to interest rate risk on cash and
money market deposit balances.
96
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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 £411,276,000 (2016: £405,801,000) as set out in the Company statement
of changes in shareholders’ equity on page 88. The Group has cash and money market deposits at 31 December 2017 of
£24,975,000 (2016: £17,775,000), the majority of which are held by the principal operating subsidiary Rightmove Group
Limited. The Group is well positioned to fund its future dividends given the strong cash generative nature of the business
and in 2017 cash generated from operating activities was £183,891,000 (2016: £169,250,000) representing an operating
cash conversion in excess of 100%.
(ii) Share buybacks
The Company purchases its own shares in the market; the timing of these purchases depends on available free cash flow
and market conditions. In 2017, 2,224,059 (2016: 2,251,711) shares were bought back and were cancelled at an average
price of £40.83 (2016: £39.12).
There were no changes in the Group’s approach to capital management during the year. Neither the Company nor any of its
subsidiaries are subject to externally imposed capital requirements.
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.
97
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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 revenue in
both years is derived from third parties and there is no inter-segment revenue.
Operating costs, financial income, financial expenses and income taxes in relation to the Agency, New Homes and the Other
segment are managed on a centralised basis at a Rightmove Group Limited level and as there are no internal measures of
individual segment profitability, relevant disclosures have been shown under the heading of Central in the table below.
The Company has no reportable segments.
Year ended 31 December 2017
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 2016
Revenue
Operating profit(1)
Depreciation and amortisation
Financial income
Financial expenses
Trade receivables(3)
Other segment assets
Segment liabilities
Capital expenditure
Agency
£000
185,217
–
–
–
–
21,282
–
–
–
168,311
–
–
–
–
19,040
–
–
–
New
Homes
£000
39,478
–
–
–
–
6,610
–
–
–
33,893
–
–
–
–
5,266
–
–
–
Subtotal
£000
Other
£000
Central Adjustments
£000
£000
Total
£000
224,695
–
–
–
–
27,892
–
–
–
202,204
–
–
–
–
24,306
–
–
–
18,578
–
–
–
–
2,283
–
–
–
17,789
–
–
–
–
2,188
–
–
–
–
184,365(2)
(1,784)
129
(214)
–
41,501
(54,493)
2,196
–
166,240(2)
(1,619)
109
(209)
–
33,753
(52,205)
1,759
–
(6,064)(2)
–
–
–
118(4)
19(4)
(137)(4)
–
–
(4,593)(2)
–
–
–
139(4)
68(4)
(207)(4)
–
243,273
178,301
(1,784)
129
(214)
30,293
41,520
(54,630)
2,196
219,993
161,647
(1,619)
109
(209)
26,633
33,821
(52,412)
1,759
(1) Operating profit is stated after the charge for depreciation and amortisation.
(2) Central operating profit does not include share-based payments charge of £4,836,000 (2016: £4,142,000) and NI on share-based incentives charge of £1,228,000
(2016: £451,000).
(3) The only segment assets that are separately monitored by the Chief Operating Decision Maker relate to trade receivables net of any associated provision for
impairment. All other segment assets are reported on a centralised basis.
(4) The adjustments column reflects the reclassification of credit balances in accounts receivable and debit balances in accounts payable made on consolidation for
statutory accounts purposes.
98
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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
236,718
6,555
243,273
2017
Trade receivables
£000
29,885
408
30,293
Revenue
£000
214,536
5,457
219,993
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
2017
£000
28,338
1,311
473
466
1,361
547
2017
£000
19
122
141
18
–
12
30
2016
Trade receivables
£000
26,124
509
26,633
2016
£000
27,423
1,241
378
437
898
549
2016
£000
18
131
149
18
1
2
21
99
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
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
2017
Number of
employees
2016
Number of
employees
449
30
479
2017
£000
24,249
3,168
921
440
29
469
2016
£000
23,760
2,793
870
28,338
27,423
Social security costs do not include a charge of £1,228,000 (2016: £451,000) 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 cash equivalents
Interest income on money market deposits
9 Financial expenses
Financial expenses
2017
£000
110
19
129
2017
£000
214
2016
£000
83
26
109
2016
£000
209
100
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
2017
£000
34,582
(292)
34,290
(170)
(170)
2016
£000
33,048
(407)
32,641
(636)
(636)
Total income tax expense
34,120
32,005
Income tax credit recognised directly in equity
Current tax
Share-based incentives
Deferred tax
Share-based incentives (refer Note 16)
Total income tax credit recognised directly in equity
2017
£000
(2,666)
1,367
(1,299)
2016
£000
(441)
436
(5)
Total income tax recognised directly in equity in respect of the Company was a credit of £586,000 (2016: £24,000 credit).
Reconciliation of effective tax rate
The Group’s income tax expense for the year is lower in both years than the standard rate of corporation tax in the UK of 19.3%
(2016: 20.0%). The differences are explained below:
Profit before tax
Current tax at 19.3% (2016: 20.0%)
Non-deductible expenses
Share-based incentives
Adjustment to current tax charge in respect of prior years
2017
£000
2016
£000
178,216
161,547
34,307
103
2
(292)
32,309
70
33
(407)
(34,120)
32,005
The Group’s consolidated effective tax rate on the profit of £178,216,000 for the year ended 31 December 2017 is 19.1%
(2016: 19.8%).
The difference between the standard rate and effective rate at 31 December 2017 of 0.2% (2016: 0.2%) is primarily attributable
to an adjustment in respect of prior periods for research and development tax relief.
101
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Notes continued
11 Earnings per share (EPS)
Year ended 31 December 2017
Earnings
Underlying earnings
Year ended 31 December 2016
Earnings
Underlying earnings
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
£000
Basic
Diluted
Pence per share
144,096
150,160
156.75
163.34
129,542
134,135
137.87
142.76
155.15
161.67
136.41
141.24
2016
Number of shares Number of shares
2017
95,096,841
(2,271,725)
(1,034,015)
139,011
(911)
97,318,120
(2,322,314)
(1,069,275)
34,560
(738)
Issued ordinary shares at 31 December less ordinary shares held by the EBT and SIP Trust
91,929,201
93,960,353
Weighted average number of ordinary shares (diluted)
For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially
dilutive shares. The Group’s potential dilutive instruments are in respect of share-based incentives granted to employees,
which will be settled by ordinary shares held by the EBT, the SIP and shares held in treasury.
Weighted average number of ordinary shares (basic)
Dilutive impact of share-based incentives outstanding
2016
Number of shares Number of shares
2017
91,929,201
948,184
93,960,353
1,007,190
92,877,385
94,967,543
The average market value of the Group’s shares for the purposes of calculating the dilutive effect of share-based incentives was
based on quoted market prices for the period during which the share-based incentives were outstanding.
102
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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:
2015 final dividend paid
2016 interim dividend paid
2016 final dividend paid
2017 interim dividend paid
2017
£000
144,096
4,836
1,228
2016
£000
129,542
4,142
451
150,160
134,135
Pence per share
£000 Pence per share
2017
2016
–
–
32.0
22.0
–
–
29,507
20,104
54.0
49,611
27.0
19.0
–
–
46.0
£000
25,442
17,764
–
–
43,206
After the reporting date a final dividend of 36.0p (2016: 32.0p) per qualifying ordinary share being £32,758,000 (2016: £29,696,000)
was proposed by the Board of directors.
The 2016 final dividend paid on 2 June 2017 was £29,507,000 being £189,000 lower than that reported in the 2016 Annual
Report, which was due to a decrease in the ordinary shares entitled to a dividend between 31 December 2016 and the final
dividend record date of 5 May 2017.
The 2017 interim dividend paid on 3 November 2017 was £20,104,000 being £115,000 lower than that reported in the 2017
Half Year Report, which was due to a decrease in the ordinary shares entitled to a dividend between 30 June 2017 and the
interim dividend record date of 6 October 2017.
The terms of the EBT provide that dividends payable on the ordinary shares held by the EBT are waived. No provision was made
for the final dividend in either year and there are no income tax consequences.
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Notes continued
13 Property, plant and equipment
Group
Cost
At 1 January 2017
Additions
Disposals
.
At 31 December 2017
Depreciation
At 1 January 2017
Charge for year
Disposals
At 31 December 2017
Net book value
At 31 December 2017
At 1 January 2017
Office equipment,
fixtures & fittings
£000
Computer
equipment
£000
Leasehold
improvements
£000
Assets
in progress
£000
829
232
(204)
7,053
906
(135)
857
7,824
(678)
(88)
199
(567)
290
151
(5,101)
(1,159)
117
(6,143)
1,681
1,952
451
430
(47)
834
(266)
(64)
47
(283)
551
185
–
187
–
187
–
–
–
–
187
–
Total
£000
8,333
1,755
(386)
9,702
(6,045)
(1,311)
363
(6,993)
2,709
2,288
The assets in progress consist of capitalised costs relating to the leasehold improvements for the London office that are yet to be
brought into use.
Leasehold improvements include capitalised costs relating to the renovation of leased properties. Full details are disclosed in Note 2.
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
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
2,288
2,239
The Company had no property, plant or equipment in either year.
104
rightmove.co.uk
14 Intangible assets
Group
Cost
At 1 January 2017
Additions
Disposals
Goodwill
£000
Computer
software
£000
Asset in
progress
£000
2,465
–
–
4,639
441
–
203
–
(203)
At 31 December 2017
2,465
5,080
Market
appraisal
algorithm
£000
309
–
–
309
Total
£000
7,616
441
(203)
7,854
(60)
(103)
(4,091)
(473)
(163)
(4,564)
146
249
Market
appraisal
algorithm
£000
–
–
–
309
309
–
(60)
(60)
249
–
3,290
3,525
Total
£000
5,096
275
203
2,042
7,616
(3,713)
(378)
(4,091)
3,525
1,383
–
–
–
(4,031)
(370)
(4,401)
2,465
2,465
679
608
–
–
–
–
–
203
Goodwill
£000
Computer
software
£000
Asset in
progress
£000
732
–
–
1,733
4,364
275
–
–
2,465
4,639
–
–
–
(3,713)
(318)
(4,031)
2,465
732
608
651
–
–
203
–
203
–
–
–
203
–
Amortisation
At 1 January 2017
Charge for year
At 31 December 2017
Net book value
At 31 December 2017
At 1 January 2017
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 acquired in 2016 of £1,733,000 relates to the goodwill recognised on the acquisition of The Outside View Analytics Ltd
(‘Outside View’), being intangible assets that were not separately identifiable under IFRS 3. The market appraisal algorithm relates
to the intangible asset recognised on the acquisition of Outside View.
The Company had no intangible assets in either year.
105
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
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 2017 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
2017
£000
2016
£000
546,202
2,625
544,464
1,738
548,827
546,202
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 £2,625,000 (2016: £1,738,000)
being recognised in the Company accounts as a capital contribution to its subsidiary.
106
rightmove.co.uk
16 Deferred tax asset
Deferred tax is presented net on the balance sheet in so far as a right of offset exists. The net deferred tax asset is attributable to
the following:
Share-
based
incentives
£000
6,604
(15)
(1,367)
5,222
6,509
–
531
(436)
6,604
Property,
plant and
equipment
£000
Group
Provisions
£000
Market
appraisal
algorithm
£000
252
63
–
315
179
–
73
–
252
125
106
–
231
103
–
22
–
125
(39)
16
–
(23)
–
(49)
10
–
(39)
Company
Share-
based
incentives
£000
3,757
(142)
(1,125)
Total
£000
6,942
170
(1,367)
5,745
2,490
6,791
(49)
636
(436)
3,581
–
346
(170)
6,942
3,757
At 1 January 2017
Recognised in income
Recognised directly in equity
At 31 December 2017
At 1 January 2016
Arising on business combination
Recognised in income
Recognised directly in equity
At 31 December 2016
The decrease in the deferred tax asset relating to share-based incentives at 31 December 2017 is due to increased exercises of
shares options in 2017 which has outweighed the number of new share scheme awards and the increase in the Company’s share
price from £39.03 at 31 December 2016 to £45.00 at 31 December 2017.
A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) was
substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted
on 6 September 2016. This will reduce the Group’s future tax charge accordingly. The deferred tax asset at 31 December 2017 has
been calculated at the rate of 19% which represents the average expected rate at which the net deferred tax asset will reverse in
the future.
17 Trade and other receivables
Group
Trade receivables
Less provision for impairment of trade receivables
Net trade receivables
Prepayments
Accrued income
Interest receivable
Other debtors
2017
£000
30,756
(463)
30,293
4,545
166
16
74
2016
£000
27,061
(428)
26,633
2,826
338
–
127
35,094
29,924
Exposure to credit and currency risks and impairment losses relating to trade and other receivables are disclosed in Note 26.
The Company has no trade and other receivables in either year.
107
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Notes continued
Notes continued
18 Cash and deposits
Group
Cash and cash equivalents
Money market deposits
2017
£000
20,930
4,045
2016
£000
13,749
4,026
24,975
17,775
Cash balances with an original maturity of less than three months were held in current accounts during the year and attracted
interest at a weighted average rate of 0.3% (2016: 0.4%).
The cash at bank balance includes £1,803,000 (2016: £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 1.1% (2016: 0.7%).
19 Trade and other payables
Trade payables
Trade accruals
Other creditors
Other taxation and social security
Deferred revenue
Inter-group payables
Group
Company
2017
£000
1,424
6,867
99
11,105
19,393
–
2016
£000
1,266
7,644
46
9,172
17,668
–
2017
£000
–
3,393
–
–
–
20,017
2016
£000
–
4,835
–
–
–
25,317
38,888
35,796
23,410
30,152
Exposure to currency and liquidity risk relating to trade and other payables is disclosed in Note 26.
20 Loans and borrowings
The Group agreed to extend a 12 month agreement with Barclays Bank plc for a £10,000,000 committed revolving loan facility.
This agreement will expire on 12 February 2019.
The Company had no loans and borrowings in either year.
108
rightmove.co.uk
21 Provisions
At 1 January
Charged in the year
At 31 December
Current
Non-current
Dilapidations
provision
£000
2017
Employee
provisions
£000
272
109
381
87
294
88
580
668
668
–
Total
£000
360
689
1,049
755
294
Dilapidations
provision
£000
236
36
272
185
87
2016
Other
£000
–
88
88
–
88
Total
£000
236
124
360
185
175
The dilapidations provision is in respect of a number of the Group’s leased properties where the Group has obligations to make
good dilapidations. The non-current liabilities are estimated to be payable over periods from one to ten years. Where appropriate
the provision may form part of the cost of the asset.
During the year we have accrued amounts in relation to a number of employee related provisions principally holiday pay.
The provisions are based on the estimated future payroll cost to the Group and have not been discounted as the time value
of money is not significant.
The Company had no provisions in either year.
22 Share capital
In issue ordinary shares of £0.01 each
At 1 January
Purchase and cancellation of own shares
2017
2016
Amount
£000
Number
of shares
Amount
£000
Number
of shares
955
(22)
95,490,266
(2,224,059)
977
(22)
97,741,977
(2,251,711)
At 31 December
933
93,266,207
955
95,490,266
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 2017 was 2,224,059 (2016: 2,251,711) representing 2.4% (2016: 2.4%) of the ordinary shares in issue
(excluding shares held in treasury). All of the shares bought back in both years were cancelled. The shares were acquired on the
open market at a total consideration (excluding costs) of £90,809,000 (2016: £88,083,000). The maximum and minimum prices
paid were £44.50 (2016: £42.50) and £38.48 (2016: £33.11) per share respectively. Share-related expenses in relation to stamp
duty charges and broker expenses were £637,000 (2016: £617,000).
Included within shares in issue at 31 December 2017 are 263,767 (2016: 343,275) shares held by the EBT, 67,700 (2016: 50,150)
shares held by the SIP and 1,892,456 (2016: 2,271,725) shares held in treasury.
109
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Notes continued
23 Reconciliation of movement in capital and reserves
Group
Own shares held – £000
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
EBT shares
reserve
£000
SIP shares
reserve
£000
(2,165)
(751)
517
108
–
(852)
–
(517)
–
17
Treasury
shares
£000
(11,045)
–
–
241
–
Total
£000
(14,062)
(751)
–
349
17
Own shares held as at 31 December 2016
(2,291)
(1,352)
(10,804)
(14,447)
Own shares held as at 1 January 2017
Shares purchased for SIP
Shares transferred to SIP
Share-based incentives exercised in the year
Reduction in shares released due to net settlement
SIP releases in the year
(2,291)
(761)
741
333
–
–
(1,352)
–
(741)
–
–
75
(10,804)
–
–
1,886
(81)
–
(14,447)
(761)
–
2,219
(81)
75
Shares held as at 31 December 2017
(1,978)
(2,018)
(8,999)
(12,995)
Own shares held – number of shares
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
Number of shares
EBT shares
reserve
SIP shares
reserve
386,057
20,250
(12,950)
(50,082)
–
37,800
–
12,950
–
(600)
Treasury
shares
2,322,314
–
–
(50,589)
–
Total
2,746,171
20,250
–
(100,671)
(600)
Own shares held as at 31 December 2016
343,275
50,150
2,271,725
2,665,150
Own shares held as at 1 January 2017
Shares purchased for SIP
Shares transferred to SIP
Share-based incentives exercised in the year
Reduction in shares released due to net settlement
SIP releases in the year
343,275
17,500
(20,000)
(77,008)
–
–
50,150
–
20,000
–
–
(2,450)
2,271,725
–
–
(396,192)
16,923
–
2,665,150
17,500
–
(473,200)
16,923
(2,450)
Shares held as at 31 December 2017
263,767
67,700
1,892,456
2,223,923
110
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.
At 31 December 2017, the EBT held 263,767 (2016: 343,275) ordinary shares in the Company of £0.01 each, representing 0.3%
(2016: 0.4%) of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held in the EBT at
31 December 2017 was £11,870,000 (2016: £13,398,000).
(b) SIP shares reserve (Group and Company)
In November 2014, the Company established the Rightmove Share Incentive Plan Trust (SIP). This reserve represents the cost
of acquiring shares less any exercises or releases of SIP awards. Employees of the Group were offered 50 free shares (2016: 50),
subject to a three year service period, with effect from 5 January 2018 (2016: 3 January 2017). 2,450 (2016: 600) shares were
released by the SIP during the year in relation to good leavers and retirees. 20,000 (2016: 12,950) shares were transferred to the
SIP reserve from the EBT.
At 31 December 2017 the SIP held 67,700 (2016: 50,150) ordinary shares in the Company of £0.01 each, representing 0.07%
(2016: 0.05%) of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held in the SIP
at 31 December 2017 was £3,047,000 (2016: £1,957,000).
(c) Treasury shares (Group and Company)
This represents the cost of acquiring shares held in treasury less any exercises of share-based incentives. These shares were
bought in 2008 at an average price of £4.76 and may be used to satisfy certain share-based incentive awards. An additional 6,277
shares were issued as a result of rolled up dividend payments in relation to performance shares.
Other reserves
This represents the Capital Redemption Reserve in respect of own shares bought back and cancelled. The movement of £22,000
(2016: £22,000) is the nominal value of ordinary shares cancelled during the year.
Retained earnings
The loss on the exercise of share-based incentives of £1,485,000 (2016: £7,000 gain) is the difference between the value that the
shares held by the EBT, SIP and treasury shares were originally acquired at and the exercise price at which share-based incentives
were exercised or released during the year. Details of share buybacks and cancellation of shares are included in Note 22.
Company
Reverse acquisition reserve
This reserve resulted from the acquisition of Rightmove Group Limited by the Company and represents the difference between
the value of the shares acquired at 28 January 2008 and the nominal value of the shares issued.
Other reserves
Awards relating to share-based incentives made to Rightmove Group Limited employees have been treated as a deemed capital
contribution. The principal movement in other reserves for the year comprises £2,625,000 (2016: £1,738,000) in respect of the
share-based incentives charge for employees of Rightmove Group Limited.
In addition, other reserves include £361,000 (2016: £339,000) of Capital Redemption Reserve. A movement of £22,000
(2016: £22,000) has been recorded in relation to the nominal value of ordinary shares cancelled during the year.
111
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements 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 £4,836,000 (2016: £4,142,000) with a Company
charge for the year of £2,211,000 (2016: £2,404,000), as set out below:
Sharesave Plan
Performance Share Plan (PSP)
Deferred Share Bonus Plan (DSP)
Share Incentive Plan (SIP)
Group
Company
2017
£000
310
2,297
1,441
788
2016
£000
204
2,755
884
299
2017
£000
–
1,544
667
–
2016
£000
4
1,879
521
–
Total share-based payments charge
4,836
4,142
2,211
2,404
NI on applicable share-based incentives at 13.8%
1,228
451
876
232
A 2% reduction or increase in the employee leaver assumption (excluding executive directors) for the DSP and the PSP would
have increased/decreased the share-based payments charge in the year by £34,000 (2016: £36,000).
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
2017
Weighted average
exercise price
(pence)
Number
2016
Weighted average
exercise price
(pence)
Number
546,527
(214,755)
307.42
328.07
546,527
–
307.42
–
Outstanding at 31 December
331,772
294.06
546,527
307.42
Exercisable at 31 December
331,772
294.06
546,527
307.42
The weighted average market value per ordinary share for options exercised in 2017 was £41.77 (2016: nil).
The options outstanding at 31 December 2017 have an exercise price in the range of £2.24 to £6.66 in both years and a weighted
average contractual life of 1.3 years (2016: 2.1 years).
112
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
2371.00
2144.00
3639.00
4293.00
4045.00
1896.00
1972.00
2960.00
3315.00
3289.00
27.3
25.3
24.7
27.8
30.1
3.0
3.0
3.0
3.0
3.0
0.7
1.0
0.8
0.4
0.1
1.1
1.4
1.0
1.1
1.3
659.00
25.0
430.00
25.0
933.00
25.0
25.0 1233.00
25.0 1195.00
Grant date
1 October 2013
1 October 2014
1 October 2015
1 October 2016
1 October 2017
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
2017
Weighted average
exercise price
(pence)
Number
116,933
36,939
(19,620)
(37,112)
2712.71
3289.00
2938.14
1961.61
2016
Weighted average
exercise price
(pence)
Number
104,019
43,451
(9,939)
(20,598)
2273.13
3315.00
2695.91
1809.87
Outstanding at 31 December
97,140
3182.54
116,933
2712.71
Exercisable at 31 December
3,299
1972.00
4,601
1896.00
The weighted average market value per ordinary share for Sharesave options exercised in 2017 was £41.36 (2016: £38.34).
The Sharesave options outstanding at 31 December 2017 have an exercise price in the range of £19.72 to £33.15 (2016: £18.96
to £33.15) and a weighted average contractual life of 2.4 years (2016: 2.3 years).
113
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
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.
34,720 PSP awards were made on 1 March 2017 (the Grant Date) subject to Earnings Per Share (EPS) and Total Shareholders
Return (TSR) performance. A further 3,457 awards were made to Peter Brooks-Johnson on 9 May 2017 to bring his 2017 PSP
award in line with his Chief Executive Officer salary. Performance for all 2017 awards will be measured over three financial years
(1 January 2017 – 31 December 2019). The vesting in March and May 2020 (Vesting Date) of 25% of the 2017 PSP award will
be dependent on a relative TSR performance condition measured over a three year performance period and the vesting of the
75% of the 2017 PSP award will be dependent on the satisfaction of an EPS growth target measured over a three year
performance period.
The PSP awards have been valued using the Monte Carlo model for the TSR element and the Black Scholes model for the EPS
element and the resulting share-based payments charge is being spread evenly over the three year period between Grant Date
and Vesting Date. PSP award holders are entitled to receive dividends accruing between the Grant Date and the Vesting Date and
this value will be delivered in shares. The assumptions used in the measurement of the fair value at grant date of the PSP awards
are as follows:
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
2688.00
2688.00
3044.00
3044.00
4069.00
4069.00
4065.00
4065.00
4244.00
4244.00
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
25.3
n/a
24.7
n/a
27.8
n/a
30.1
n/a
30.1
n/a
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
1.0
1.0
0.8
0.8
0.4
0.4
0.1
0.1
0.1
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.8 1219.00
4.8 2688.00
5.2 2258.00
5.2 3044.00
4.4
1985.00
4.4 4069.00
0.0 2111.00
0.0 4065.00
0.0 2111.00
0.0 4065.00
Grant date
3 March 2014 (TSR dependent)(1)
3 March 2014 (EPS dependent)(1)
2 March 2015 (TSR dependent)(1) (2)
2 March 2015 (EPS dependent)(1) (2)
1 March 2016 (TSR dependent)(1)
1 March 2016 (EPS dependent)(1)
1 March 2017 (TSR dependent)(2)
1 March 2017 (EPS dependent)(2)
9 May 2017 (TSR dependent)(2)
9 May 2017 (EPS dependent)(2)
(1) For details of TSR and EPS performance conditions refer to the Directors’ Remuneration Report on pages 63 to 76.
(2) Both the TSR and EPS performance conditions for PSPs with a grant date of 2 March 2015 have been met in full and 100% of the awards are expected to vest
in March 2018.
Expected volatility is estimated by considering historic average share price volatility at the grant date.
Group
Outstanding at 1 January
Granted
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2017
Number
402,952
38,177
(23,635)
(175,160)
2016
Number
388,002
89,041
(22,688)
(51,403)
242,334
402,952
25,140
82,467
The weighted average market value per ordinary share for options exercised in 2017 was £41.25 (2016: £38.86). The weighted
average exercise price was nil in both years.
The PSP awards outstanding at 31 December 2017 have a weighted average contractual life of 2.7 years (2016: 2.7 years).
114
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)
2 March 2015
1 March 2016
1 March 2017(1)
1 March 2018(2)
2688.00
3044.00
4069.00
4065.00
nil
nil
nil
nil
3.0
3.0
3.0
3.0
1.0
0.8
0.4
0.1
1.0
1.2
1.1
1.3
5.6 2605.00
6.0 2941.00
5.7 3942.00
10.0 3915.00
Grant date
3 March 2014
2 March 2015
1 March 2016
1 March 2017
(1) Following the achievement of 92% of the 2016 internal performance targets, 38,416 nil cost deferred shares were awarded to executives and senior management
on 1 March 2017 (the Award Date) with the right to the release of the shares deferred until March 2019.
(2) Based on the 2017 internal performance targets, the Remuneration Committee determined that 60% of the maximum award in respect of the year will be made in
March 2018. The number of shares to be awarded will be determined based on the share price at the Award Date in March 2018.
Group
Outstanding at 1 January
Awarded
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2017
Number
76,172
38,416
(3,579)
(39,896)
2016
Number
68,309
36,276
(1,677)
(26,736)
71,113
76,172
–
7,709
The weighted average market value per ordinary share for deferred shares exercised in 2017 was £41.07 (2016: £38.60).
The weighted average exercise price was nil in both years.
The DSP awards outstanding at 31 December 2017 have a weighted average contractual life of 1.7 years (2016: 1.5 years).
115
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
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 (2016: 50) as a
gift, subject to a three year service period (the Vesting Period). The SIP awards have been valued using the Black Scholes model
and the resulting share-based payments charge spread evenly over the Vesting Period of three years. The SIP shareholders are
entitled to dividends paid in cash over the Vesting Period. No performance criteria are applied to the exercise of SIP options.
The assumptions used in the measurement of the fair value at grant date of the SIP awards are as follows:
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
3945.00
nil
nil
nil
24.7
27.8
30.1
3.0
3.0
3.0
0.8
0.4
0.1
nil
nil
nil
33.0 2245.00
33.0 4093.00
33.0 3945.00
Grant date
1 January 2015
1 January 2016
1 January 2017
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
2017
Number
44,300
23,600
(6,250)
(2,450)
2016
Number
30,200
20,550
(5,850)
(600)
59,200
44,300
–
–
The weighted average market value per ordinary share for SIP awards released in 2017 was £41.66 (2016: £37.90). The weighted
average exercise price in both years was nil.
The SIP shares released relate to good leavers and retirements from the SIP, in accordance with the terms of the Trust.
The SIP options outstanding at 31 December 2017 have a weighted average contractual life of 0.9 years (2016: 1.4 years).
25 Operating lease commitments
Non-cancellable operating lease rentals are payable as follows:
Group
Less than one year
Between one and five years
More than five years
Plant &
machinery
£000
304
287
–
591
2017
Land &
buildings
£000
929
5,048
5,700
Total
£000
1,233
5,335
5,700
11,677
12,268
Plant &
machinery
£000
234
157
–
391
2016
Land &
buildings
£000
491
1,172
3
1,666
Total
£000
725
1,329
3
2,057
During 2017 the Group entered into three new operating lease arrangements for additional space at the London office.
These leases will be capitalised on transition to IFRS 16 on 1 January 2018. For further detail please see Note 3.
The Company had no operating lease commitments in either year.
116
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
2017
£000
30,293
16
74
20,930
4,045
2016
£000
26,633
–
127
13,749
4,026
55,358
44,535
The Company had no exposure to credit risk in either year.
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
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
2017
£000
29,885
408
2016
£000
26,124
509
30,293
26,633
2017
£000
29,020
1,273
2016
£000
25,361
1,272
30,293
26,633
The Group’s most significant customer accounts for £1,408,000 (2016: £1,589,000) of net trade receivables as at
31 December 2017.
Impairment losses
The ageing of trade receivables at the reporting date was:
Group
Not past due
Past due 0–30 days
Past due 30–0 days
Past due 60–90 days
Past due older
Gross
£000
26,725
2,750
659
336
286
2017
Impairment
£000
(4)
(68)
(30)
(75)
(286)
Gross
£000
24,010
1,876
880
58
237
30,756
(463)
27,061
2016
Impairment
£000
(7)
(70)
(56)
(58)
(237)
(428)
117
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
Notes continued
26 Financial instruments continued
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
2017
£000
428
466
(431)
463
2016
£000
446
437
(455)
428
The Group has identified specific balances for which it has provided an impairment allowance on a line by line basis across all
ledgers, in both years. No general impairment allowance has been provided in either year.
The allowance accounts in respect of trade receivables are used to record impairment losses unless the Group is satisfied that no
recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the financial
asset directly.
Liquidity risk
The contractual maturities of undiscounted financial liabilities, including undiscounted estimated interest payments, as at year
end were:
Group
At 31 December 2017
Trade payables being non-derivative financial liabilities
At 31 December 2016
Trade payables being non-derivative financial liabilities
Carrying
amount
£000
Contractual
cash flows
£000
6 months
or less
£000
1,424
(1,424)
(1,424)
1,266
(1,266)
(1,266)
The Company had no non-derivative financial liabilities in either year.
It is not expected that the cash flows included in the maturity analysis could occur earlier or at significantly different amounts and
all payables are due within six months of the balance sheet date.
Currency risk
During 2017 all the Group’s sales and more than 95.0% (2016: 97.0%) of the Group’s purchases were Sterling denominated and
accordingly it has no significant currency risk.
Interest rate risk
The Group has exposure to interest rate risk on its cash and money market deposit balances. As at 31 December 2017 the Group
had total cash of £20,930,000 (2016: £13,749,000) and money market deposits of £4,045,000 (2016: £4,026,000).
Fair values
The fair values of all financial instruments in both years are equal to the carrying values.
118
rightmove.co.uk
27 Acquisition of subsidiary
Acquisition in 2016
On 31 May 2016, Rightmove Group Limited acquired the entire ordinary share capital of The Outside View Analytics Ltd
(“Outside View”), a predictive analytics business. Full details of the acquisition are included in the Annual Report 2016. The total
cash consideration paid of £2,096,000 excludes acquisition costs of £42,000 which were recognised as an expense in 2016 in the
Consolidated Statement of Comprehensive Income.
The following table provides a reconciliation of the amounts included in the Consolidated Statement of Cash Flows:
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
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Non-current liabilities
Deferred tax liabilities
Fair value of net assets acquired
Cash consideration
Total consideration
Goodwill
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
119
Rightmove plc annual report 2017Strategic reportGovernanceFinancial statements
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 £330,000 (2016: £527,000) under this agreement and at 31 December 2017, the inter-group loan balance
was £20,017,000 (2016: £25,317,000) including capitalised interest (refer Note 19).
On 12 June 2017 Rightmove Group Limited declared an interim dividend of 55p per ordinary share to the Company.
Additionally, on 5 December 2017, Rightmove Group Limited declared a further interim dividend of 60p per ordinary share to
the Company. The dividends of £148,810,000 (2016: £141,046,000) were settled via a reduction in the inter-group loan balance
owed by Rightmove plc to Rightmove Group Limited. Rightmove Group Limited also declared a dividend in specie of £741,000
(2016: £517,000), representing the cost of the SIP shares transferred from the EBT to the SIP during the year.
Inter-group transactions between subsidiaries
Following its acquisition on 31 May 2016, The Outside View Analytics Ltd became a related party to the Company. During the
year, Rightmove Group Limited has settled liabilities on behalf of The Outside View Analytics Ltd and the balance owing under
an inter-group loan agreement dated 13 June 2016 was £25,000 (2016: £15,000) as at 31 December 2017.
Directors’ transactions
There were no transactions with directors in either year other than those disclosed in the Directors’ Remuneration Report.
Information on the emoluments of the directors who served during the year, together with information regarding the beneficial
interest of the directors in the ordinary shares of the Company is included in the Directors’ Remuneration Report on pages 63
to 76.
During the year, the directors in office in total had gains of £5,574,000 (2016: £1,566,000) arising on the exercise of share-based
incentive awards. The total share-based payments charge in relation to the directors in office was £2,211,000 (2016: £2,404,000).
Key management personnel
No other Rightmove employees are considered to meet the definition of key management personnel other than those disclosed
in the Directors’ Remuneration Report on pages 63 to 76.
29 Contingent liabilities
The Group and the Company had no contingent liabilities in either year.
30 Subsequent events
There have been no subsequent events having a material impact on the financial statements between 31 December 2017 and
the reporting date.
120
rightmove.co.uk
Rightmove plc | annual report 2017
Advisors and shareholder information
Making home moving easier
Rightmove is the UK’s largest property portal.
Our aim is to make home moving easier by
creating a simpler and more efficient property
market place.
Strategic report
Highlights
1
Our strategy
2
Chairman’s statement
3
Business model
5
Chief Executive’s review
8
Key performance indicators
14
17
Financial review
21 Risk management
22 Principal risks and uncertainties
24 The EU referendum
24 Viability statement
25
Corporate responsibility
Corporate governance report
Governance
30 Directors and officers
32
46 Directors’ report
49
50
77
Statement of directors’ responsibilities
Directors’ remuneration report
Auditors’ report
Financial statements
82
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
83
84
85
86
87
88
89
121
Contacts
Chief Executive Officer:
Finance Director:
Company Secretary:
Website:
Peter Brooks-Johnson
Robyn Perriss
Sandra Odell
www.rightmove.co.uk
Registered office
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in
England no. 6426485
Financial calendar 2018
2017 full year results
Final dividend record date
Annual General Meeting
Final dividend payment
Half year results
Interim dividend
23 February 2018
4 May 2018
4 May 2018
1 June 2018
27 July 2018
2 November 2018
Corporate advisers
Financial adviser
UBS Investment Bank
Joint brokers
UBS Limited
Numis Securities Limited
Auditor
KPMG LLP
Bankers
Barclays Bank Plc
Santander UK Plc
Solicitors
EMW LLP
Slaughter and May
Pinsent Masons
Registrar
Link Asset Services*
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*Shareholder enquiries
The Company’s registrar is Link Asset Services (formerly Capita Asset Services). They will be pleased to deal with any questions
regarding your shareholding or dividends. Please notify them of your change of address or other personal information.
Their address details are:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Link Asset Services is a trading name of Link Market Services Limited.
Shareholder helpline: 0371 664 0300 (calls cost 10p per minute plus network extras) (Overseas: +44 20 8639 3399)
Email: enquiries@linkgroup.co.uk
Share portal: www.signalshares.com
Through the website of our registrar, Link Asset Services, shareholders are able to manage their shareholding online and facilities
include electronic communications, account enquiries, amendment of address and dividend mandate instructions.
Designed and produced by The Team www.theteam.co.uk
Rightmove plc annual report 2017 121
Rightmove plc
Turnberry House
30 Caldecotte Lake Drive
Caldecotte, Milton Keynes
MK7 8LE
Registered in England no 6426485
Rightmove plc | annual report 2017
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