Rightmove plc
2 Caldecotte Lake
Business Park
Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in England no 6426485
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Rightmove plc Annual Report 2018
making
home
moving
easier
Rightmove plc | Annual Report 2018
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.
Contents
Strategic report
1
Highlights
2 Chairman’s statement
4 Our strategy
5 Chief Executive’s review
14 Business model
16
19
24 Risk management
Principal risks and
25
uncertainties
28 The EU referendum
28 Viability statement
29
Corporate responsibility
Key performance indicators
Financial review
Corporate governance report
Governance
36 Directors and officers
38
44 Audit Committee report
51 Nomination Committee report
54 Directors’ report
57
Directors’ responsibilities
statement
Directors’ remuneration
report
Auditor’s report
58
85
Financial statements
90
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
91
92
93
94
95
96
Company statement of
changes in shareholders’ equity
Notes forming part of the
financial statements
136 Advisers and shareholder
97
information
Designed and produced by The Team www.theteam.co.uk
Strategic report | Highlights
Financial highlights
Revenue
Underlying operating profit
Underlying basic earnings per share
+10%
Revenue up 10% year on year to £267.8m
(2017: £243.3m) with growth driven by
our Agency and New Homes businesses
+10%
Underlying operating profit(1) up
10% to £203.3m (2017: £184.4m)
+12%
Underlying basic earnings per share(2)
up 12% to 18.3p (2017: 16.3p(3))
Total dividend
+12%
Final dividend of 4.0p (2017: 3.6p(3)) per
ordinary share making a total dividend of
6.5p for the year (2017: 5.8p(3)), up 12%
Operating profit
+11%
Operating profit up 11%
to £198.6m (2017: £178.3m)
Basic earnings per share
+13%
Basic earnings per share up
14% to 17.8p (2017: 15.7p(3))
(1) Before share-based payments and NI on share-based incentives.
(2) Before share-based payments, NI on share-based incentives and no related adjustment for tax.
(3) 2017 comparatives have been restated for ease of comparability to reflect the 10:1 share subdivision effective 31 August 2018.
Operational highlights
Customer numbers
Properties advertised
Traffic: visits
20,454
Stable membership with Agency and
New Homes customers up slightly to
20,454 (2017: 20,427)
1 million
UK residential properties advertised
on Rightmove, which is more than
any other UK portal
+4%
Visits up over 4% averaging nearly
132 million visits per month(4)
Traffic: time on site
Average Revenue Per Advertiser
Employee engagement
1 billion
Time on site up 5% at over
1 billion minutes per month(4)
£1,005
Average Revenue Per Advertiser (5)
up £83 to £1,005 per month (2017: £922)
91%
91% of employee respondents think
Rightmove is a great place to work
(4) Source: Google Analytics.
(5) Revenue from Agency and New Homes advertisers in a given month divided by the total number of advertisers during the month,
measured as a monthly average over the year.
“2018 was another strong year for
Rightmove. We extended our market
leadership and reinforced our position as
the place consumers turn to first when
thinking about moving home. In doing so,
we demonstrated that Rightmove is a
business which can continue to grow
strongly even in uncertain times. We
focus relentlessly on creating a more
efficient marketplace, constantly
innovating to provide deeper insights
to our agent and developer customers,
and an even simpler, more intuitive user
experience for home hunters.
Visits and time spent on site both
continued to grow, with over 1.5 billion
visits from consumers over the year.
The resilience of our customer base is
shown by our stable membership
numbers, with particularly notable
growth coming from New Homes
developments. I’m excited by our
plans for 2019 as we continue to
focus on innovation to make home
moving easier.”
Peter Brooks-Johnson
Chief Executive Officer
Rightmove plc annual report 2018
1
Strategic reportGovernanceFinancial statements Strategic report | Chairman’s statement
Scott Forbes
Chairman
I am pleased to present Rightmove plc’s results for the year
ended 31 December 2018.
Having completed our thirteenth year as a listed company,
our founding principles remain the same despite the pace
of innovation and technological change.
We remain easy to use and free to home hunters. Our leading
online brand entertains, informs and helps a consistently
growing and industry leading audience across every local
housing market in Great Britain.
We are advocates for the professional estate agency and
new home developer sectors; which the public rely on for
local knowledge and quality service. Our value proposition is
clear as in addition to delivering an unrivalled and relevant
audience every year, crucially, we invest and provide digital
innovations to our customers that enable them to compete
for transactions and operate more efficiently.
As the marketplace for UK property, our customers are
assured that our aim is to support them. Our business model
is robust because the majority of our revenue comes from
the subscriptions our customers pay to be part of that
marketplace. As such, we are not directly linked to housing
transaction volumes and neither participate in the upside
nor downside of all but the most extreme events of the
cyclical home sales market.
Our ambition to remain a sustainable growth company
for the benefit of all stakeholders is undeterred as we
continually evolve our value proposition for the benefit of
our customers, consumers and shareholders. Our model
and approach has historically worked well and we believe
it will continue to underpin our future success.
Highlighting one example that underscores Rightmove’s
vision and ethos, an increased propensity to rent in the UK
is leading the industry to increase its focus on the lettings
market. This industry shift increases the demand for digital
tools focused on improving the lettings experience for a
large addressable market of renters, landlords and estate
agents. After thoughtful research and development
throughout 2018, Rightmove launched a Tenant Passport
proposition designed to improve the reliability and
completeness of information required to rent a home;
thereby reducing the administrative burden and wasted
time for all involved in the process.
The Tenant Passport is the first in a number of innovations
serving the lettings market and one of many useful digital
tools in our product pipeline that serve both home hunters
and housing professionals. We look forward to many more
years of providing increasing value to these audiences as
well as our supportive shareholders.
Financial results
The strength of our business model and core value
proposition once again underpins a healthy set of financial
results in 2018. Underlying operating profit(1) was up 10% to
£203.3m (2017: £184.4m) and operating profit was up 11%
at £198.6m (2017: £178.3m) driven by revenue growth of
10% to £267.8m (2017: £243.3m) and a disciplined approach
to cost control. Underlying basic earnings per share(2) and
basic earnings per share were up 12% and 13% respectively
at 18.3p (2017: 16.3p(3)) and 17.8p (2017: 15.7p (3)), even
greater than the percentage increase in profits and in part
as a result of 25.0m shares bought back during the year at a
cost of £113.5m as part of our policy of returning free cash
flow to shareholders.
(1) Before share-based payments charge of £4.3m (2017: £4.9m) and NI charge
(3) 2017 comparatives have been restated for ease of comparability to reflect
of £0.4m (2017: £1.2m) on share-based incentives.
the 10:1 share subdivision effective 31 August 2018.
(2) Before share-based payments charge of £4.3m (2017: £4.9m) and NI charge of
(4) Cash generated from operating activities of £200.4m compared to operating
£0.4m (2017: £1.2m) on share-based incentives and no related adjustment for tax.
profit as reported in the profit or loss of £198.6m.
2
rightmove.co.uk
address concerns about the Board commitments of both
myself and Peter. Following these conversations, I believe that
we have consensus support for an orderly succession plan that
contemplates the further development of Chair candidates on
the Board and the recruitment of up to two non-executives
with appropriate profiles, prior to the May 2020 AGM, on which
date I intend to resign from the Board as Chairman.
Peter Williams, after more than five years of exemplary Board
service, will not stand for re-election at the May 2019 AGM,
to make room for a potential Chair candidate with the ability
to serve as Board Chair for a longer tenure. Jacqueline de
Rojas will be appointed as Senior Independent Director in
May 2019 and has agreed to oversee the committee process
of appointing a new Chair prior to the 2020 AGM. Lorna
Tilbian will chair the Remuneration Committee following an
understudy year of active committee participation.
I’d like to personally thank Peter for his support and sage
advice to me as Senior Independent Director as well as his
valuable contributions to the Rightmove Board and all
committees over the past five years.
Looking forward
Once again, 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 maintain Rightmove’s
position as the essential marketplace for home hunters
and for property advertisers to reach by far the widest
possible audience.
Scott Forbes
Chairman
Returns to shareholders and dividend
Our commitment to return excess cash promptly to
investors continues to be as strong as ever and in 2018
we returned a further £168.5m (2017: £140.4m) to
shareholders through dividends and share buybacks,
bringing our total cash returned to shareholders, as a
listed company to over £1bn. Operating
cash conversion(4) was again very strong and remains
in excess of 100% of operating profit.
The Board increased the interim dividend to 2.5p
(H1 2017: 2.2p(3)) per ordinary share, which was paid on
2 November 2018. We are confident in our ability to deliver
sustainable returns to shareholders and consistent with our
policy of increasing the total dividend for the year broadly
in line with earnings per share, the Board recommends a
final dividend of 4.0p (2017: 3.6p(3)) per ordinary share.
This brings the total dividend for the year to 6.5p
(2017: 5.8p(3)), an increase of 12%. The final dividend,
subject to shareholder approval, will be paid on 31 May 2019
to all shareholders on the register on 3 May 2019.
Corporate governance
One of the Board’s responsibilities is to ensure 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 38 to 43.
Board changes
Lorna Tilbian was appointed as a non-executive director
on 1 February 2018, bringing with her a wealth of capital
markets experience, following a distinguished career in the
media sector. Lorna’s appointment is also noteworthy in
that our Board now has 50/50 gender representation and we
have been prominently recognised for our focus on diversity
within the Hampton-Alexander FTSE 100 rankings.
At the AGM in May 2018, a significant minority of votes were
received against the re-election of myself as Chairman and
Peter Williams, our Senior Independent Director. During the
autumn I actively consulted with a majority of shareholders
in relation to our plans for orderly Board succession and to
Rightmove plc annual report 2018
3
Strategic reportGovernanceFinancial statements
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 6
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 20
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rightmove.co.uk
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 18
building
great teams
We focus on building great teams and making
Rightmove a great place to work.
Page 22
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 strong growth. Trust, continued delivery of
increased value to all our customers and consumers and
restless innovation have taken on increased significance
against a backdrop of continuing political and economic
uncertainty, and these are all proven strengths of Rightmove.
Over the past year we have reinforced our position as central
to the UK home moving process. Visits from home movers
grew by over 4% and they spent over a billion minutes on
Rightmove every month in 2018, up 5% year on year. This
growth has seen our market share of time spent on the top
four property portals grow to 76%(1) (2017:73%).
2018 highlighted the resilience of our Agency customer base,
with only 2% fewer branches at the start of 2019 than the
previous year. Our number of advertisers remained at an
all-time high of nearly 20,500 with the slight reduction in
Agency branches being balanced by an increase in New
Homes developments, which are at their highest levels
since 2009. Less certain times underline the value of our
proposition to our customers and the robustness of the
Rightmove business model. Our revenue increased by
10% to £267.8m with underlying operating profit(2) up
10% to £203.3m and operating profit up 11% to £198.6m.
Our continued progress is testament to our unwavering focus
on the UK property advertising market and the huge effort
Rightmovers have made to build our business in partnership
with our industry customers. We remain confident in our ability
to deliver further growth as we continue to shape the UK
property market, and innovate to make our marketplace
simpler and more efficient.
Our strategy – making home moving easier
The place consumers turn to
first and engage with most
Our position at the heart of the home moving process in the
UK comes from being the place where consumers turn to first
when thinking about property. Rightly, home movers are ever
more demanding of the technology and services offered to
them. Rightmove’s focus on continual improvement and
innovation to simplify the start of the home moving process
and create the most compelling experience for consumers
stands us in good stead.
We continue to achieve this by providing consumers with
the most up to date, engaging and comprehensive property
content together with the best search, research and home
moving tools to support their home moving journey. Of the
hundreds of updates to our platforms each month, recent
improvements included ‘Keyword Sort’ which provides
the ability to sort search results by keywords taking into
account natural language such as “not” as a negation and
the use of synonyms.
For those home hunters who are struggling to find their dream
home we have also introduced an auto-suggest feature to
help consumers who find no properties matching their criteria.
The feature suggests changes to their search criteria to help
them explore other properties nearby or at a similar price.
Consumers expect the platform they rely on to be available
all of the time. Testament to the engineering prowess and
dedication of the team, Rightmove again recorded an industry
leading level of ‘uptime’ of 99.997%. More consumers than
ever turned to Rightmove in 2018 with over 1.5 billion visits
across all our platforms. Those consumers spent a record
12.3 billion minutes on Rightmove, up 5% on 2017. Our
market share of traffic across both desktop and mobile was
76%(1) with the mobile component even higher at 79%(1).
(1) Source: comScore, December 2018.
(2) Before share-based payments charge of £4.3m (2017: £4.9m) and
NI charge of £0.4m (2017: £1.2m) on share–based incentives.
Rightmove plc annual report 2018
5
Strategic reportGovernanceFinancial statements Strategic report | Our strategy
Developing our brand
investing in
our market
leading
brand
Our presence in London
includes 400 branded taxis and
an exclusive partnership with
the London Evening Standard
6
rightmove.co.uk
Our TV adverts tell human
stories to illustrate why people
move, covering all segments
of the market
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.
Rightmove is a trusted brand with 80% of
our visits coming from consumers typing
the brand directly into their web browser
or launching our app.
Strategic report | Chief Executive’s review
A significant proportion of people buying a home also have a
home to sell. Researching the property market is an important
step for many potential home sellers and is a vital step for
potential landlords. The comprehensive, simple tools we
provide for researching the market help sellers and landlords
understand the market more easily and give them another
reason to turn to Rightmove first. 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 UK properties and 41 million historical
property records. Perhaps reflecting the increase in pent-up
demand in the marketplace, consumers spent over 450 million
minutes using our research tools in 2018 which was up by over
8% on the previous year.
We have consistently invested in our brand and product since
2001 creating a trusted brand where 80% of the visits to
Rightmove come from consumers typing the brand directly
into their web browser or launching our app.
Our brand strength has been reinforced by our ‘find your
happy’ campaign. Our ‘always on’ activity has focused equally
on the rental market as well as those looking to sell and/or
buy. The campaign tells human stories to illustrate why
people move, not just the search process. Topics vary from
downsizing and growing families, setting up home with a new
partner, finding a new home after a divorce and, in our latest
TV advert, having insufficient space for a growing family.
These stories cover all segments of the market from first
time buyers through to downsizers.
Our investment in brand building will continue to focus on
national television through our partnership with Channel 4
supported by online video on demand and digital advertising.
We will also continue to focus on our presence in London
with 400 branded taxis and our exclusive partnership with
the London Evening Standard.
Unrivalled exposure, leads and
products for our customers
With visits to our platforms again growing year on year we
continued to increase the exposure of our customers’ brands
and properties. This exposure generated over
42 million leads for our customers. This was down 3% year
on year mirroring the fall in property transactions as a result
of a slightly cooler housing market in 2018.
Winning the right to an instruction to sell or let a property
is critical to an agent’s success. Our premium packages,
Enhanced and Optimiser, help our customers to generate
more opportunities to win instructions cost effectively.
The packages include branding and property promotion
solutions to boost agents’ performance in the ‘awareness’
stage of the marketing funnel, while our popular Local
Valuation Alert and Rightmove Discover products fast-track
agents to the ‘consideration’ stage. Local Valuation Alert and
Rightmove Discover delivered over 200,000 leads from
people asking for a valuation on their home in 2018. Together
the products lead to our Optimiser customers, on average,
having over twice the share of voice on Rightmove than an
average customer and, combined with agents’ skill at
converting the opportunities into business, helps them
list on average twice as many properties.
Our customers continue to focus on getting the maximum
return from their marketing investment to drive their brand
exposure and gain market share. This creates significant
headroom for Rightmove 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 digital solutions. In 2018 despite the slightly
cooler housing market Average Revenue Per Advertiser
(ARPA) passed £1,000 for the first time to reach £1,005,
demonstrating the value of the products and services we
offer our customers.
Rightmove plc annual report 2018
7
Strategic reportGovernanceFinancial statements Strategic report | Chief Executive’s review continued
Our Commercial property advertising business is bringing the
efficiency benefits of the Rightmove platform to commercial
property transactions. We have a considerably larger audience
than any other commercial property marketing proposition
with 29 million visits to our specialist commercial property
search. This unrivalled commercial property specific audience
has created a cost effective marketing platform for our
commercial agent and landlord customers, leading to
increased customer numbers across all segments.
Our Data Services business continues to help the property
industry by leveraging our unrivalled repository of property
data. In addition to providing our Agency and New Homes
customers with invaluable data-driven insights and tools,
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. During 2018 the Surveyors Comparable Tool,
which helps surveyors make accurate, quick and compliant
valuations, assessed and scored over 1.8 billion comparable
property records to create over 2.2 million property
comparable reports for surveyors. It is the de facto standard
used by surveyors in over three quarters of mortgage
transactions in England, Scotland and Wales.
Despite the continuing uncertainty about the UK’s
relationship with the EU our Overseas property business
continued to grow due to the value we deliver to advertisers.
The dream of owning a property abroad continues to be a
popular one for many of the British public with the total
number of site visits and leads during 2018 remaining
broadly consistent with our levels in the last two years.
Innovation to create a simpler
and more efficient marketplace
We continue to focus on making the property marketplace
more efficient, from the renting process to property valuations.
Renting a property is a time-consuming process for
both tenants and agents. Tenants must collate a raft of
documentation and submit it with each tenancy application,
which must be processed and verified by agents. The Tenant
Fee ban, which comes into force in June 2019 and restricts
the ability of agents to charge tenants, places extra focus
on this time intensive process.
The Rightmove Tenant Passport aims to make the process
of renting a property simpler, quicker and more efficient for
tenants and agents. We began the roll out of the first phase of
this Passport solution in Q4 2018. Phase one of the Passport
allows tenants to ‘pre-qualify’ themselves when sending a lead
to agents by including their full property requirements and
basic household details. We will be releasing further phases
of the Passport solution in 2019 which will focus on making it
easier and more convenient for agents and renters alike to
arrange and manage property viewings and increase the
speed and efficiency of the referencing process.
By combining our software’s whole of market dataset and 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.
8
rightmove.co.uk
The slightly tougher market conditions in 2018 made it harder
for our New Homes developers to grow their sales volumes.
In these conditions our market intelligence tools, based on
our unique perspective of the UK property market, together
with our digital marketing solutions, have become even more
valuable to them. New Homes developers are using the
analytics to help understand market dynamics and home
moving patterns to define efficient marketing strategies for
their developments and uncover hitherto hidden markets
for their developments.
Whilst our software tools are already recognised as being best
in class and widely adopted with 90% of our customers using
our tools each month, it is not in our DNA to stand still. In 2018
we continued to enhance our market intelligence software for
agents, Rightmove Plus.
Rightmove Plus, which is included free of charge as part of
all Rightmove membership packages, helps customers
throughout the property marketing lifecycle. For example,
agents tell us that the Best Price Guide, which helps them
gather comparable properties to support their suggested
property price, saves them up to 45 minutes per market
appraisal. The Best Price Guide was used over 10 million times
in 2018. 2019 will see us continue to focus on agent efficiencies.
In November 2018 we released a beta version of an improved
Best Price Guide and early feedback suggests this might save
agents a further 15 minutes per market appraisal.
In addition, our Marketing Report shows the interest a
property is generating compared to similar properties on the
market, to help agents more efficiently communicate the
marketing performance of properties to their customers, the
property sellers. As an indication of the value agents place on
the effectiveness and efficiency saving the Marketing Report
brings, it was run on nearly 700,000 different properties for
sale in 2018, 50% more properties than in 2017.
Our data continues to provide the basis for a rich seam of
innovation. We launched Rightmove Active Display in 2018,
which allows 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. Utilising this data has resulted in our customers’
adverts receiving 50% more exposure. Following successful
experiments during 2018, we intend to launch the second
phase of Active Display in 2019 allowing our customers to
micro-target their potential audience on other websites
based on their Rightmove search behaviour.
We care about our customers’ business success and building
strong partnerships is vital to support their ambitions. To that
end we are spending more time with customers than ever
before and making sure that our recommendations add
value to their business.
In 2018 we continued our successful customer seminar
programme. Seminars covered topics which relate directly
to Rightmove, such as how to create the ultimate listing on
Rightmove, and also topics which relate to the wider agency
industry such as how to build a world class agency team.
We also recognise our role in helping our customers keep
up to date with a changing industry, covering subjects as
diverse as the General Data Protection Regulation and
the upcoming Tenant Fee ban legislation. The seminars
are always well attended with over 11,000 agents attending
seminars and webinars throughout the year.
In keeping with an online culture these events are hosted
on the Rightmove Hub, which is an on demand platform,
meaning our customers can benefit from this content
irrespective of whether they were able to attend on the
day. This easy access to compelling content has seen
more than 13,000 agents register on the Hub.
Rightmove plc annual report 2018
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Strategic reportGovernanceFinancial statements Strategic report | Chief Executive’s review continued
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.
Restless, as no Rightmover ever believes we have achieved
all we can, and focused, because everything is guided by
doing the right thing for both our customers and consumers.
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. Every Rightmover is 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.
In the design of our offices 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 early and often, and reinforce this
through events such as town halls, showcases, stand-ups,
team away days and company days which share progress,
successes and challenges. 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.
We are proud of our development culture and the role mobility
it promotes. In 2018 alone 12 members of our customer
experience team joined our technology teams in a variety of
technical roles. Development is not limited to role relevant
skills. For example, 2018 saw our first ‘Wellness Week’ which
covered topics such as the impact of good diet and sleep on
wellbeing. Rightmove was also an early adopter of the ‘Spill’
mental health app which gives every employee anonymous
access to a qualified counsellor at the touch of a button in
the familiar environment of an app or text message.
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.
The actions and behaviours of our people create the sense of
belonging and connection and allow the business to continue
to thrive and attract great people. In our 2018 ‘Have Your Say’
people survey, 91% (2017: 90%) of Rightmovers responded
that they think ‘Rightmove is a great place to work’.
Our vibrant culture sets us apart from many organisations
and is defined by every one of the 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.
Peter Brooks-Johnson
Chief Executive Officer
1 March 2019
10
rightmove.co.uk
Strategic report | Real stories
Supporting our customers
Supporting agents all over the UK as they grow their business is fundamental
to the success of Rightmove. Joanne Hughes, director of Liverpool-based
Greenbank Property Services, explains how Rightmove’s higher value
Optimiser package has helped her agency flourish.
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Joanne Hughes, director of Liverpool-based Greenbank Property Services
The change to digital advertising
We’re far more visible on Rightmove
than when we were in a little box in the
newspaper. We used to advertise in the
local daily paper and it’d cost us £2,000 a
month, but times change.
With Rightmove, it’s the number
one platform where people look for
houses. When we visit sellers, the first
question they ask isn’t ‘when is it going
on your website?’, it’s ‘when is it going
on Rightmove?’
Everyone is coming around to the
fact that digital is everything now.
Even my nan has an iPad and she’s 85!
Older people are becoming more and
more educated about how to use the
online world.
How Rightmove makes a difference
Our package includes a free Premium
Listing on Rightmove as standard,
helping all our properties stand out
ahead of competitors.
If a property is struggling, Rightmove
helps as we can use Rightmove’s
marketing report to encourage
vendors to reduce their price.
The proof is in the pudding. They can
see the Rightmove logo and know
straight away it isn’t something we’ve
made up. When we go on valuations we
can show a potential seller a market
share report from Rightmove that
shows we sold at least double the
amount of properties last year as our
nearest competitor, and it’s backed by
a respected brand.
Our Rightmove account manager Sam
also visits us once a month and always
gives us great tips and advice. She used
to be an estate agent, so she knows
the industry and knows what she’s
talking about.
Local experts
Our local market is buoyant, it’s really
busy. We’ve begun the year brilliantly
and have started as we mean to go
on. Going by last year’s figures, we
have already beaten January 2018’s
numbers.
Our biggest selling point is the respect
that we have in the area and getting our
fees right. We’ve got a good reputation
and people know we’re honest. I believe
people buy into a person before
anything else.
Rightmove plc annual report 2018 11
Strategic report | Real stories continued
Strategic report | XXX?
Developing our people
Developing our people is the cornerstone to
Rightmove’s success. There are several career
paths to explore, and our very own Sam Pesce,
business analyst, reveals the story behind
her own ambitious journey.
Sam Pesce, business analyst within
the product development team
The foundations for progression
My job is brilliant, I love it here. I feel
like I have a real purpose working at
Rightmove and I’m able to make
things happen, which is such a fun
part of the job.
I started in the finance department
back in 2009, so I have now been at
Rightmove over ten years.
I’m now a business analyst within
the product development team, but
previously I was in internal systems.
I started there as a one-man-band
but in five years I’d grown my corner
of the business to a team of five.
Rightmove is a community
I really enjoy having the freedom to
explore my new role and to explore
myself as well. We discuss how we
solve problems and figure things out.
We all have space to put any ideas
forward, which is great.
Just one person can affect change,
and I think that’s rare. We have a flat
structure at Rightmove; people say
we’ve achieved an open hierarchy
free of office politics and I believe
that’s true.
Moving to London from the Milton
Keynes office was such a big change
for me, I was terrified at first. But the
interview process was rigorous, which
gave me confidence as I know we set
high standards.
My last boss grew my confidence and
helped me progress my career. He was
full of guidance and support. He wasn’t
just a manager, he was a mentor and
a coach.
Aiming high
My favourite of the Rightmove values,
or Hows as we call them, is to be bold.
It gives us carte blanche to experiment
and to fail and to understand that,
provided we learn from the process,
this is OK.
We set a very high bar for where we
want to get to. We’re 18 years old as a
company so we’re still figuring things
out and we’re constantly maturing
and evolving. Being a part of that is
awesome.
My advice to junior Rightmovers would
be to tell your manager what you want,
because they need to know. They will
help you get to where you want to go.
We employ great people and we’re all
ambitious and want to try new things,
so don’t be afraid to express what
your goals are.
12
rightmove.co.uk
Homemovers
Roohi and Bally
S
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Supporting our consumers
Rightmove helped a young Birmingham couple, Roohi and Bally,
find their dream home. Their story resonates with millions of
home-hunters searching for their next move on Rightmove,
so we spoke to them about their journey.
The light at the end of the tunnel
We were living in this sprawling urban
environment and now we’ve come to
this beautiful, rural and picturesque
countryside setting – we feel like
we’ve won the lottery.
We were looking on the outskirts
of the city for quite a while and we
couldn’t find anything we liked, and
that’s when I expanded the map area
on Rightmove’s ‘draw a search’ feature
to include Warwick.
And, bam, it was literally a couple of
days later that we found our new place
on Rightmove. As soon as we saw it
we were blown away and were just
imagining what we could do with it.
We never thought of getting something
like the house we’re in now.
A new beginning
We only realised after moving into our
home that we have so much on our
doorstep and therefore so much to be
grateful for. We got what we wanted
and a lot more.
It’s so beautiful and calming and really
makes us appreciate the move and
where we have come from to what
we have now.
Our quality of life has increased
massively. It’s perfect; this home is just
everything we always wanted, it’s ideal.
I think we got lucky to find this and
we’re healthier and happier living here.
We’d say to other first-time buyers
searching for a home that they
shouldn’t fixate on one area, if you
know the region that you’re after
try to be more open-minded.
Rightmove plc annual report 2018 13
Strategic report | Business model
The Rightmove network effect
C
E F FICIE N
Y E
M
P
O
W
E
RI
N
The place consumers
turn to first and
engage with most
BUYERS
SELLERS
RENTERS
LANDLORDS
SIMPLICITY
G
AGENTS
DEVELOPERS
Unrivalled exposure,
leads and products
for our customers
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.
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
almost the entire 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.
Our customers are primarily estate agents, letting agents
and new homes developers advertising properties for sale
and to rent in the UK.
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
and 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.
Finding your next home can be a stressful experience, home
buyers will often say “it’s got to be perfect” and renters will
say “it’s got to be worth it”. The simplicity Rightmove brings
can reduce the stress. The carefully designed website avoids
distractions in pursuit of simplicity, putting home hunters in
control of their search and research.
Rightmove keeps investing to deliver the most engaging
experience for home movers and our culture of restlessness
continues to drive improvement and innovation. The
hundreds of updates to our platforms released each month
include recent improvements and innovations such as
‘Keyword Sort’, which allows home hunters to prioritise
those properties which meet their diverse needs from
the over one million UK homes for sale or rent listed on
Rightmove and a raft of technical changes which have
further reduced the response time of the property search.
14
rightmove.co.uk
Rightmove takes some of the effort out of the home search
by proactively bringing suitable properties to home hunters,
and in 2018 we sent more than three-quarters of a billion
instant alerts (an increase of 30% compared to 2017) to
over two million people. Knowing the moment when 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.
Beyond finding a buyer or tenant, the tools we provide for
researching the market bring simplicity and confidence to
sellers and landlords as they consider one of the largest
transactions of their lives and choose an agent to help
them on their home moving journey.
How we make the market more efficient for
industry professionals
By creating the UK’s largest property marketplace we have
brought together virtually all the audience our customers
want to attract. We are able to offer the most significant
and effective exposure for their brands and properties
resulting in the largest source of high quality leads, thereby
significantly increasing our customers’ marketing efficiency.
Our digital solutions help our customers reach their
audience faster and more efficiently. Winning new business
is key, but time consuming for our Agent customers; those
customers who buy our highest value Optimiser package,
on average win twice as many instructions as those who
don’t use our solutions.
Our solutions for New Homes developers help them reach
almost every serious home buyer in the UK and also help
them target these buyers both on and off Rightmove.
Based on our deep knowledge of search habits we
introduced ‘Active Display’ in 2018 to allow developers to
re-target interested home hunters within the Rightmove
environment. Active Display has increased the exposure
of the properties our New Homes customers are looking
to promote by 50%.
We also help drive efficiencies within our Agent customers’
businesses by providing best in class software that delivers
data, market insight and analytical tools to help them inform
their decisions, with 90% of our Agent customers now using
our software each month.
Rightmove’s culture of restless innovation helps create
more efficiency opportunities for our customers. For
example, in 2018 our lead reporting tools were upgraded
to make them faster and also help agents better identify
those leads which might contain new business opportunities
from the 42 million leads we sent in the year. As a result of
the upgrades more than twice as many customers used
the lead reports in 2018 saving them valuable time.
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
solutions. Our additional advertising solutions increase a
customers’ 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 2018 our ARPA was again driven by the value our
customers see in our platform and our higher value
packages and products together with membership fee price
increases. In 2018 ARPA exceeded the £1,000 per month
milestone for the first time.
As the property industry becomes more digital, Rightmove’s
market leading audience, best in class software and
data-driven analytics are becoming even more valuable
to customers. ARPA growth will continue to be driven by
increased product penetration, pricing and innovation and
is underpinned by the value of our unrivalled audience and
data, our substantial product inventory and our culture and
track record of innovation.
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.
Rightmove plc annual report 2018 15
Strategic reportGovernanceFinancial statements Strategic report | Operational key performance indicators
We use the metrics set out below to track our operational performance.
20,121
20,121
20,121
20,121
19,752
19,752
19,752
19,752
19,304
19,304
19,304
19,304
Number of advertisers
Number of advertisers
Number of advertisers
Number of advertisers
Number of advertisers
21,000
21,000
21,000
21,000
20,000
20,000
20,000
20,000
19,000
19,000
19,000
19,000
18,000
18,000
18,000
18,000
17,000
17,000
17,000
17,000
16,000
16,000
16,000
16,000
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
Cash returned to shareholders (£m)
Cash returned to shareholders (£m)
Cash returned to shareholders (£m)
Cash returned to shareholders (£m)
180.0
180.0
Definition
180.0
168.5
180.0
168.5
The total number of paid for UK estate
168.5
168.5
160.0
160.0
and lettings Agency branches/branch
160.0
160.0
equivalents and New Home developer
120.0
120.0
120.0
sites advertising properties on
120.0
80.0
Rightmove
80.0
80.0
80.0
40.0
40.0
40.0
40.0
0
0
0
0
+0%
2018 performance
140.4
140.4
140.4
140.4
103.4
103.4
103.4
103.4
131.3
131.3
131.3
131.3
112.5
112.5
112.5
112.5
2014
2014
2014
2014
2017
2017
2017
2017
2016
2016
2016
2016
2015
2015
2015
2015
2018
2018
2018
2018
20,427 20,454
20,427 20,454
20,427 20,454
20,427 20,454
e
v
o
m
t
h
g
R
i
:
e
c
r
u
o
S
2017
2017
2017
2017
2018
2018
2018
2018
842
842
842
842
684
684
684
684
922
922
922
922
754
754
754
754
1,005
1,005
1,005
1,005
Average revenue per advertiser
Revenue (£m)
Average Revenue Per Advertiser (ARPA in £ per month)
Average revenue per advertiser
Revenue (£m)
Average revenue per advertiser
Revenue (£m)
Average revenue per advertiser
Revenue (£m)
300
1,000
300
1,000
300
1,000
300
1,000
250
250
800
800
250
250
800
800
200
200
600
200
600
200
600
150
600
150
150
400
150
400
100
400
100
400
100
100
200
200
50
50
200
200
50
50
0
0
0
0
0
0
0
0
+9%
e
v
o
m
t
h
g
R
e
c
r
u
o
S
:
i
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
2014
2014
2014
2014
2018 performance
Definition
Revenue from Agency and New Home
advertisers in a given month divided by
192.1
192.1
the total number of advertisers during
192.1
167.0
192.1
167.0
the month, measured as a monthly
167.0
167.0
average over the year
243.3
243.3
243.3
243.3
220.0
220.0
220.0
220.0
267.8
267.8
267.8
267.8
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
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
Strategic link
Unrivalled exposure, leads and
products for our customers
Risks
1
2
3
Traffic (time on site measured in billions of minutes)
Traffic – time on site (billions of minutes)
Traffic – time on site (billions of minutes)
Traffic – time on site (billions of minutes)
Traffic – time on site (billions of minutes)
14
14
14
14
12
12
12
12
10
10
10
10
8
8
8
8
6
6
6
6
4
4
4
4
2
2
2
2
0
0
0
0
11.7
11.7
11.7
11.7
11.7
11.7
11.7
11.7
12.3
12.3
12.3
12.3
11.1
11.1
11.1
11.1
10.2
10.2
10.2
10.2
l
s
c
i
t
y
a
n
A
e
g
o
o
G
l
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
:
e
c
r
u
o
S
100
100
100
100
95
95
95
95
90
90
90
90
85
85
85
85
80
80
80
80
75
75
75
75
95
95
95
95
94
94
94
94
91
91
91
91
90
90
90
90
91
91
91
91
e
v
o
m
t
h
g
R
i
:
e
c
r
u
o
S
Underlying basic EPS (pence)
Underlying basic EPS (pence)
Underlying basic EPS (pence)
Underlying basic EPS (pence)
Definition
20.0
20.0
20.0
Total time measured in billions
20.0
of minutes spent on Rightmove
platforms during the year
10.0
10.0
10.0
10.0
12.1
12.1
12.1
12.1
2018 performance
10.0
10.0
10.0
+5% year on year
10.0
14.3
14.3
14.3
14.3
15.0
15.0
15.0
15.0
16.3
16.3
16.3
16.3
5.0
5.0
5.0
5.0
0
0
0
0
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
Underlying operating profit (£m)
Underlying operating profit (£m)
Underlying operating profit (£m)
Underlying operating profit (£m)
Definition
200
200
184.4
Based on the number of employee
200
184.4
200
184.4
184.4
respondents selecting ‘Yes’ as a
response to this question in the
124.6
124.6
annual employee survey
124.6
124.6
144.3
144.3
144.3
144.3
166.2
166.2
166.2
166.2
150
150
150
150
100
100
100
100
2018 performance
+1% points
50
50
50
50
0
0
0
0
Employee engagement – ‘Rightmove is a great place to work’
Employee engagement (%)
Employee engagement (%)
Employee engagement (%)
Employee engagement (%)
2016
2016
2016
2016
Risks relevant to our KPIs (read more on pages 25 to 27)
2014
2014
2014
2014
2018
2018
2018
2018
2017
2017
2017
2017
2015
2015
2015
2015
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
2016
2016
2017
2017
2017
2017
2018
2018
2018
2018
18.3
18.3
18.3
18.3
Strategic link
The place consumers turn to first
and engage with most
Risks
2
3
4
203.3
203.3
203.3
203.3
Strategic link
Build great teams with a
culture to innovate
Risks
5
1 Macroeconomic environment
2 Competitive environment
3 New or disruptive technologies and changing
4 Cyber security and IT systems
consumer behaviours
5 Securing and retaining the right talent
16
rightmove.co.uk
Number of advertisers
Cash returned to shareholders (£m)
20,121
19,752
19,304
20,427 20,454
168.5
131.3
140.4
103.4
112.5
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
Average revenue per advertiser
Number of advertisers
Revenue (£m)
Cash returned to shareholders (£m)
180.0
160.0
120.0
80.0
40.0
0
300
180.0
250
160.0
200
120.0
150
267.8
168.5
243.3
140.4
220.0
131.3
192.1
112.5
167.0
103.4
1,005
922
20,427 20,454
842
20,121
754
19,752
684
19,304
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
80.0
100
Strategic report | Financial key performance indicators
50
40.0
0
0
We use the metrics set out below to track our financial performance.
2014
2014
2018
2018
2016
2016
2015
2015
2017
2017
Number of advertisers
Traffic – time on site (billions of minutes)
Average revenue per advertiser
Cash returned to shareholders (£m)
Revenue £m
Underlying basic EPS (pence)
Revenue (£m)
1,005
20,427 20,454
922
12.3
11.7
20,121
11.7
842
19,752
11.1
754
19,304
10.2
684
180.0
20.0
300
160.0
250
15.0
120.0
200
10.0
150
80.0
192.1
12.1
112.5
103.4
167.0
10.0
18.3
168.5
267.8
16.3
243.3
140.4
14.3
220.0
131.3
2018 performance
+10%
Revenue grew strongly in 2018 up 10% to £267.8m (2017: £243.3m)
Risks
2014
2014
2014
2015
2015
2015
2016
2016
2016
2017
2017
2017
2018
2018
2018
0
0
0
2014
2014
2014
2015
2015
2015
2016
2016
2016
2017
2017
2017
2018
2018
2018
40.0
100
5.0
50
Employee engagement (%)
Average revenue per advertiser
Traffic – time on site (billions of minutes)
1,005
94
684
10.2
754
11.1
91
842
95
11.7
922
11.7
90
12.3
91
2014
2014
2014
2015
2015
2015
2016
2016
2016
2017
2017
2017
2018
2018
2018
150
200
15.0
150
100
10.0
100
50
50
5.0
0
0
0
Underlying operating profit(1) £m
Revenue (£m)
Underlying operating profit (£m)
Underlying basic EPS (pence)
300
200
20.0
250
203.3
267.8
18.3
184.4
243.3
16.3
166.2
220.0
14.3
144.3
192.1
12.1
124.6
167.0
10.0
Traffic – time on site (billions of minutes)
Employee engagement (%)
Underlying basic EPS(2) (pence per ordinary share)
Underlying basic EPS (pence)
Underlying operating profit (£m)
2014
2014
2014
2015
2015
2015
2016
2016
2016
2017
2017
2017
2018
2018
2018
1
2
3 4 5
1
2
3 4 5
2018 performance
+10%
Underlying operating profit(1) increased by 10% to £203.3m (2017: £184.4m)
with underlying operating margin(1) increasing to 75.9% (2017: 75.8%).
Operating profit increased by 11% to £198.6m (2017: £178.3m) with
operating margin increasing to 74.1% (2017: 73.3%)
Risks
Number of advertisers
Employee engagement (%)
Cash returned to shareholders £m
Cash returned to shareholders (£m)
Underlying operating profit (£m)
10.2
94
11.1
91
11.7
12.3
11.7
95
90
91
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
20.0
200
15.0
150
10.0
100
5.0
50
0
0
19,752
20,121
95
94
19,304
20,427 20,454
91
90
91
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
180.0
200
160.0
150
120.0
100
80.0
50
40.0
0
0
18.3
203.3
16.3
184.4
166.2
14.3
144.3
12.1
124.6
10.0
2018 performance
+12%
Underlying basic EPS(2) increased by 12% to 18.3p (2017: 16.3p(3)).
Basic EPS grew by 13% to 17.8p (2017:15.7p(3))
Risks
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
203.3
168.5
184.4
140.4
166.2
131.3
144.3
112.5
124.6
103.4
1
2
3 4 5
2018 performance
+20%
During the year free cash flow was returned to shareholders in the form of share
buybacks and dividends with cash returns totalling £168.5m (2017: £140.4m).
The strong cash return in percentage terms reflects the fact that we have ended
the year with a £5.1m lower net cash balance than at the start of the year
Risks
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
1
2
3 4 5
Average revenue per advertiser
(1) Before share-based payments charge of £4.3m (2017: £4.9m) and NI charge of £0.4m (2017: £1.2m) on share-based incentives.
(2) Before share-based payments charge of £4.3m (2017: £4.9m) and NI charge of £0.4m (2017: £1.2m) on share-based incentives
Revenue (£m)
and no related adjustment for tax.
300
(3) 2017 comparatives have been restated for ease of comparability to reflect the 10:1 share subdivision effective 31 August 2018.
267.8
1,005
922
842
754
684
243.3
220.0
192.1
167.0
17
250
200
150
100
50
0
20.0
15.0
10.0
5.0
0
200
150
100
50
0
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
Traffic – time on site (billions of minutes)
Underlying basic EPS (pence)
11.7
11.7
12.3
11.1
10.2
18.3
16.3
14.3
12.1
10.0
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
Employee engagement (%)
Underlying operating profit (£m)
94
95
91
90
91
144.3
124.6
203.3
184.4
166.2
2014
2015
2016
2017
2018
2014
2015
2016
2017
2018
21,000
20,000
19,000
18,000
17,000
16,000
1,000
21,000
800
20,000
600
19,000
400
18,000
200
17,000
0
16,000
21,000
14
1,000
20,000
12
19,000
800
10
600
8
18,000
6
400
17,000
4
200
2
16,000
0
0
1,000
100
14
800
95
12
600
10
90
8
400
85
6
200
4
80
2
0
75
0
14
100
12
95
10
8
90
6
85
4
2
80
0
75
21,000
100
20,000
95
19,000
90
18,000
85
17,000
80
16,000
75
1,000
800
600
400
200
0
14
12
10
8
6
4
2
0
100
95
90
85
80
75
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements Strategic report | Our strategy
Continuing to innovate
focusing on
making the
UK property
marketplace
simpler and
more efficient
Our Marketing Report shows
the interest a property is
generating compared to similar
properties allowing agents to
communicate the marketing
performance to a vendor
18
rightmove.co.uk
The Rightmove Tenant
Passport aims to make the
process of renting a property
simpler, quicker and more
efficient for agents and tenants
Phase one of the Passport allows
tenants to ‘pre-qualify’ themselves
when sending an email lead to
an agent by including their full
property requirements and basic
household details.
Further phases of the Passport solution are
planned for 2019 which will focus on making
it easier to arrange a viewing of a property
and increase the speed and efficiency of
the tenant referencing process.
Strategic report | Financial review
Robyn Perriss
Finance Director
During 2018 we have continued to deliver improvements
for our customers, consumers and our business which has
resulted in a robust financial performance, despite the
backdrop of a slightly tougher UK housing market.
Other revenue which includes Overseas, Data Services,
Commercial and Third Party advertising services increased
by £2.0m to £20.6m in 2018, driven principally by growth in
our Commercial business which grew by 36% to £5.5m.
Revenue
Agency
New Homes
Other
Total revenue
2018
£m
201.0
46.2
20.6
267.8
2017
£m
185.2
39.5
18.6
243.3
Change
Revenue by
segment 2018 (%)
9%
17%
11%
10%
8
17
75
Agency branches
New Homes developments
17,328
3,126
17,626
2,801
(2)%
12%
2018
2017
Change
Total membership
at year end
20,454
20,427
0%
Agency
New
Homes
Other
Revenue bridge (£m)
300
275
250
225
200
175
150
125
100
243.3
2017
20.4
2.1
2.0
267.8
ARPA
growth
Customer
growth
Other
growth
2018
We have experienced another year of strong revenue growth
with overall revenue up 10% at £267.8m. Our Agency
business, which is our largest business, was the principal
driver of the revenue growth increasing by £15.8m year on
year to £201.0m (2017: £185.2m). Revenue growth was
driven by a combination of increased spending on advertising
products and packages and membership price increases.
The number of Agency offices ended down 2.0% compared
to the start of the year at 17,328 (2017: 17,626), reflecting
slightly tighter trading conditions for our customers in the
second half of 2018.
Revenue from our New Homes business grew strongly to
£46.2m (2017: £39.5m), an increase of 17% year on year.
This was driven by sales of additional advertising products
including record digital marketing revenue and encouraging
growth in our new Active Display product, underpinned by
growth in development numbers, up 12% year on year to
3,126 developments (2017: 2,801).
Underlying operating profit
Revenue
Underlying operating costs
Underlying operating profit
Share-based payments
NI on share-based incentives
Operating profit
2018
£m
267.8
(64.5)
203.3
(4.3)
(0.4)
198.6
2017
£m
243.3
(58.9)
184.4
(4.9)
(1.2)
178.3
Change
10%
10%
10%
(12)%
(67)%
11%
Underlying operating profit(1) increased by 10% to £203.3m
(2017: £184.4m) and underlying operating margin(1)
increased to 75.9% (2017: 75.8%). 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 £5.6m to £64.5m
(2017: £58.9m). Of the increase, £2.4m related to salaries
and associated employee costs representing an increase in
average headcount to 495 (2017: 479) together with general
Rightmove plc annual report 2018 19
Strategic reportGovernanceFinancial statements
Strategic report | Our strategy
Supporting our customers
helping our
customers
win more
business
Our seminars are always well
supported with 11,000 agents
attending seminars and
webinars in 2018
We care about our customers’
business success and building
strong partnerships is vital to
support their ambitions.
Customer focused tools and products.
We have continued to innovate our market
intelligence software for agents, Rightmove
Plus, with 90% of our Agency customers
using our tools each month.
We recognise our role in helping
our customers keep up to date
with a changing industry,
covering subjects such as GDPR
20
rightmove.co.uk
Strategic report | Financial review continued
wage inflation. Technology costs increased by £1.0m year on
year due to continued innovation in our platforms and tools
including investment in the Rightmove Tenant Passport
proposition. The balance of the year on year increase related
to continued investment in the Rightmove brand principally
through increased media spend, primarily television and
outdoor advertising.
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.
Earnings per share (EPS)
Underlying basic EPS(2) increased by 12% to 18.3p
(2017: 16.3p(3)). Basic EPS increased by 13% to 17.8p
(2017: 15.7p(3)). Underlying basic EPS is considered to be
more representative of the operating performance of the
business and the year on year trends as share-based
payments are a non-cash charge and NI on share-based
incentives is subject to volatility based on the Rightmove plc
share price. A reconciliation between basic EPS and
underlying basic EPS is set out in Note 11.
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
901.3m (2017: 919.3m(3)).
Share-based payments and National Insurance (NI)
In accordance with IFRS 2, a non-cash charge of £4.3m
(2017: £4.9m) 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 closing share price of £4.32 at
31 December 2018 in respect of the outstanding share-based
incentives granted, together with the realised NI cost on
share-based incentives exercised in the year, there was a
charge of £0.4m (2017: £1.2m) in the year.
Taxation
The consolidated effective tax rate for the year ended
31 December 2018 was 19.1% (2017: 19.1%) broadly in
line with the UK enacted tax rate of 19.0%.
We are committed to being a responsible tax payer acting
in a straightforward and open manner in all tax matters.
The total tax paid in respect of 2018 was £103.0m
(2017: £96.6m). £39.0m (2017: £38.6m) related to
corporation tax and employer’s NI and apprenticeship
levy borne by the Group while the remaining £64.0m
(2017: £58.0m) 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.
Balance sheet
Summary consolidated statement of financial position
Property, plant and equipment
Intangible assets
Deferred tax assets
Trade and other receivables
Contract assets
Cash & money market deposits
Trade and other payables
Contract liabilities
Lease liabilities
Provisions
Income tax payable
Net assets
2018
£m
15.2
2.9
2.8
22.5
0.4
19.9
(18.1)
(2.1)
(13.0)
(1.1)
(16.8)
12.6
2017
£m
2.7
3.3
5.7
35.1
–
25.0
(38.9)
–
–
(1.0)
(14.7)
17.2
Change
£m
12.5
(0.4)
(2.9)
(12.6)
0.4
(5.1)
20.8
(2.1)
(13.0)
(0.1)
(2.1)
(4.6)
Rightmove’s balance sheet at 31 December 2018 showed
total equity of £12.6m (2017: £17.2m). The year on year
reduction of £4.6m reflects the growth in profit and retained
earnings in the year, offset by the return of capital to
shareholders in the form of share buybacks and dividends
during the year in excess of profits, resulting in a lower
cash and money market deposits balance of £19.9m
(2017: £25.0m).
The early adoption of IFRS 16 Leases has resulted in the
recognition of new right of use assets included within
property, plant and equipment in relation to leased premises
and motor vehicles and a corresponding lease liability
reflecting the net present value of future minimum
lease payments.
Rightmove plc annual report 2018 21
Strategic reportGovernanceFinancial statements
Strategic report | Our strategy
Building great teams
a place
where
everyone
has the
space to
grow
Our people have a wide range of
experience, skills and perspectives
that we believe promotes
innovation, constructive
challenge and success
22
rightmove.co.uk
During the year over 50 employees
came together to take part in the
Milton Keynes Marathon, raising
funds for two charities which are
important to many Rightmovers
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.
During 2018, £113.5m was spent in the repurchase of
our own shares (2017: £90.8m) whilst a further £55.0m
(2017: £49.6m) was paid in dividends reflecting the increased
final dividend for 2017 and the 0.3p increase in the interim
dividend for 2018 to 2.5p. This brings the total cash returned
to shareholders in the year to £168.5m (2017: £140.4m).
The closing Group cash and money market deposit balance
at the end of the year was £19.9m (2017: £25.0m).
Dividends
Consistent with our policy of growing dividends in line
with the increase in underlying EPS(2), the directors are
recommending a final dividend of 4.0p (2017: 3.6p(3)) per
ordinary share, which together with the interim dividend
makes a total dividend for the year of 6.5p (2017: 5.8p(3)),
an increase of 12%. The final dividend, subject to
shareholder approval, will be paid on 31 May 2019
to all shareholders on the register on 3 May 2019.
Robyn Perriss
Finance Director
1 March 2019
Our deferred tax asset, representing the future tax
benefits from share-based incentives, is lower at £2.8m
(2017: £5.7m) due to the exercise of share-based
incentives during the year outweighing new share-based
awards granted.
The adoption of IFRS 15 Revenue from Contracts with
Customers has resulted in some reclassification in the
balance sheet as the Group no longer recognises trade
receivables and a corresponding deferred income balance
(within trade and other payables), for amounts billed in
advance for which services have not yet been provided.
IFRS 15 classifies this as a contract liability as the Group
has not yet delivered the services to its customers, and a
contract asset. IFRS 15 requires the offset of contract
assets and liabilities within the same contract. There is
no overall impact at a net asset level as set out in Note 2
on page 98.
Adjusting for the application of IFRS 15 on a like for like basis
trade receivables increased by 15.0% which is higher than
the growth in revenue reflecting the timing of cash
collections over year end. On a like for like basis trade and
other payables were broadly in line with 2017.
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(4) was up 9% to £200.4m
(2017: £183.9m) and operating cash conversion was once
again in excess of 100%.
Tax payments were slightly lower at £32.8m (2017: £33.2m)
reflecting the reduction in the UK enacted tax rate from
19.3% to 19.0%. £0.2m (2017: £0.2m) was paid in relation to
bank charges and bank facility fees resulting in net cash from
operating activities of £167.4m (2017: £150.5m).
Capital expenditure of £1.7m (2017: £2.2m) includes
investment in new servers and computer equipment and
the final phase of the refurbishment of our London office.
Proceeds of £0.6m (2017: £0.7m) were received on the
exercise of share-based incentives and £0.7m (2017: £0.8m)
was applied to purchase shares to fund the Rightmove Share
Incentive Plan.
(1) Before share-based payments charge of £4.3m (2017: £4.9m) and NI charge
(3) 2017 comparatives have been restated for ease of comparability to reflect the
of £0.4m (2017: £1.2m) on share-based incentives.
10:1 share subdivision effective 31 August 2018.
(2) Before share-based payments charge of £4.3m (2017: £4.9m) and NI charge
of £0.4m (2017: £1.2m) on share-based incentives and no related adjustment
for tax.
(4) Cash generated from operating activities of £200.4m compared to operating
profit as reported in the profit or loss of £198.6m.
Rightmove plc annual report 2018 23
Strategic reportGovernanceFinancial statements 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. The Board reviewed the risk
register at both the February 2018 and November 2018
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 other 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 in relation to the
design and implementation of effective financial controls.
Further detail of these activities are included within the Audit
Committee report on pages 44 to 50.
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
24
rightmove.co.uk
Strategic report | Principal risks and uncertainties
A description of the principal risks and uncertainties faced
by the Group in 2018, 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
Changes in the year
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 EU
have been outlined on
page 28.
Substantially fewer housing
transactions than the
norm may lead to a
reduction in the number
of Agency branches or
New Home developments,
both of which are 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.
Housing transactions in
2018 were down 2% year
on year versus 2017
ending the year at 1.2m(1).
Stable overall membership
numbers with a 2% fall in
Agency branches being
offset by a 12% rise in New
Homes developments.
ARPA was up £83 year on
year to £1,005(2), reflecting
continued adoption of
advertising products and
price rise activities.
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.
Increased competition may
impact on Rightmove’s
ability to grow revenue due
to the potential loss of:
• audience;
• advertisers;
• demand for additional
advertising products.
Market share of the top
four property portals has
seen a small increase to
76%(3) with Rightmove
continuing to have the
largest and most engaged
audience of any UK
property portal.
• 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.
• 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.
Rightmove plc annual report 2018 25
Strategic reportGovernanceFinancial statements
Strategic report | Principal risks and uncertainties continued
Key risk and description
Impact
Changes in the year
Monitoring and mitigation
Change
from
prior year
Failing to innovate may
impact on Rightmove’s
ability to grow revenue due
to the potential loss of:
• audience engagement;
• advertisers;
• demand for additional
advertising products.
Phase one of the
Rightmove Tenant
Passport was launched in
2018. This allows tenants
to ‘pre-qualify’ themselves
when sending a lead to
agents by including their
full requirements and a
simple affordability check.
3 New or disruptive
technologies and
changing consumer
behaviours
Rightmove operates in
a fast-moving online
marketplace. Failure to
innovate or adopt new
technologies or failure
to adapt to changing
customer business
models and evolving
consumer behaviour may
impact the Group’s ability
to offer the best products
and services to its
advertisers and the best
consumer experience.
4 Cyber security and IT
systems
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.
Any loss of website
availability or theft or
misuse of data held within
the Group’s databases and
IT systems could result in:
• reputational damage to
the Group as a result of
loss of consumer and
customer confidence in
the Rightmove brand; and
• financial loss arising from
potential penalties and
fines.
The enactment of the
new EU General Data
Protection Regulation
(GDPR) in May 2018 has
significantly increased
the maximum potential
financial impact of a
personal data breach.
Over the past year we have
taken the opportunity to
review processes that
involve data collection,
storage or processing
and updated or amended
them to ensure they meet
GDPR requirements.
• 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.
• 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.
• 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.
26
rightmove.co.uk
Key risk and description
Impact
Changes in the year
Monitoring and mitigation
Change
from
prior year
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.
Our latest employee survey
showed continued strong
levels of employee
engagement with 91% of
Rightmovers thinking that
‘Rightmove is a great place
to work’.
• Ongoing succession
planning and development
of future leaders.
• Payment of competitive
reward, including a blend
of short and long-term
incentives for senior
management.
• The ability for all employees
to participate in the
success of the Group
through the SIP and
SAYE schemes.
• Regular staff
communication
and engagement.
• Maintaining the culture of
the Group, which generates
significant staff loyalty.
Small increase in risk
Risk unchanged
(1) Source: HMRC transactions for the UK as published on 22 January 2019.
(2) 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.
(3) Source: comScore.
Rightmove plc annual report 2018 27
Strategic reportGovernanceFinancial statements
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 25. During 2018 the Board has continued to
assess the impact of the EU referendum result in relation
to the broader housing market, transaction levels and our
customer base 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 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.
In relation to both our cost base and day to day operational
issues we perceive the potential impact on Rightmove of a
‘hard Brexit’ to be low as:
• We are a UK domiciled business with very little interaction
with EU customers or suppliers;
• None of our employees will lose the right to stay in the UK;
we currently employ 23 EU nationals; and
• We purchased less than £100,000 in supplies from
EU-based suppliers in 2018. The impact of further
depreciation of Sterling versus the US Dollar in relation to
licence costs is also not considered to be material.
Our balance sheet philosophy to date has been to maintain a
simple debt-free position, which we believe is a strength as
we have no debt-refinancing or interest-related Brexit risks.
Strategic report | Viability statement
In accordance with provision C.2.2. of the 2016 UK Corporate
Governance 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 25 to 27.
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 2021.
The directors have determined that a three-year period to
31 December 2021 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 Board and is developed on a segment by
segment basis using a bottom up model. The three-year plan
makes certain assumptions about Agency and New Homes
customer numbers, ARPA growth and Other 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
concentrated customer base with no single customer
constituting more than 2% of Group revenue.
Also 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.
28
rightmove.co.uk
Strategic report | Corporate responsibility
As the largest property portal in the UK, Rightmove is
committed to its responsibility as a corporate member
of society. How we operate our business underpins the
contributions we make to our workplace, our marketplace,
the environment and wider society. At the heart of
everything we do are the Rightmove Hows, the essential
values and behaviours our employees exemplify, which
reflect our culture and benefit both the business and the
wider communities in which we operate.
The Hows
Do the right thing for consumers and customers
Build great teams because Rightmove is people
Be curious and go out of your way to understand
Share honestly, early and often
Take responsibility and make things that matter happen
Make complex things as simple as possible
Drive improvement, we can always be better
Dare to do, be bold. Don’t be afraid of mistakes
you can learn from
Be approachable and appreciate what others do
Enjoy the journey, be part of it
Making a difference to our
employees in the workplace
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 open and supportive culture is shaped by the
Rightmove Hows and these values manifest themselves
in our fast-paced and highly customer-oriented approach
in our commitment to being an exciting, innovative and
digital-led company.
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 focused on maintaining a happy, collegiate
working environment and providing a comprehensive range
of benefits to attract and retain the best people.
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 that 70 people
have celebrated ten or more years’ service, which represents
over 14% of our employees and we believe contributes to
our strong people survey results.
Referrals from existing employees are a valuable source of
new recruits, typically ensuring a higher quality candidate
with a better cultural fit. In 2018, 8% of new employees were
introduced to Rightmove by an existing employee.
Employees with disabilities
It is our policy that people with disabilities should have full
and fair consideration for all vacancies. During the year we
continued to demonstrate our commitment to interviewing
and employing those people with disabilities who fulfil the
minimum criteria for a role and we endeavour to support
and retain employees who become disabled during their
employment with us.
People development and training
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. All new employees joining Rightmove are given
the best introduction to the business and our customers
through attending two ‘How Rightmove fits together’
courses based at our Milton Keynes and London premises.
They also attend an off-site residential induction course to
introduce them to Rightmove’s culture and values.
We recognise that all our employees are unique and have
different needs and learning styles. We offer learning
opportunities covering both technical and non-technical
skills that are aligned to our collaborative and inclusive culture;
including workshops, on the job training, attendance at
conferences, coaching and mentoring, online learning and
professional qualifications. In 2018, 5% of our employees
were promoted into new roles. We are proud of our
development culture and the skills mobility it promotes.
In 2018 alone 12 members of our customer experience
team joined our technology teams in a variety of
technical roles.
Rightmove plc annual report 2018 29
Strategic reportGovernanceFinancial statements Strategic report | Corporate responsibility continued
Employee benefits
Whilst we believe that being a great place to work helps us
attract the best talent we also reward all our employees
with a range of 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
2018, the Group’s tenth 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.
Awards under the Rightmove Share Incentive Plan were
again made to every qualifying employee. This year, 500(1)
shares were awarded to each employee in January 2018 and
a further award of 475 shares was made in late December.
In January 2018 the Group’s first SIP free share award
became available for employees to sell, subject to tax,
allowing them to benefit from the strong share price
growth since 2015.
We offer flexible working arrangements, fully support part-
time working and reduced hours to allow our employees
to balance their work and family commitments. A flexible
holiday scheme, was introduced in 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.
The scheme is popular, with 22% of employees taking
advantage of buying or selling holiday in 2018.
Engagement
We encourage employee involvement and keep colleagues
informed of the Group’s activities through town halls,
business performance updates with senior management
and quarterly sales conferences.
We have an employee recognition scheme, based on the
Rightmove Hows which allows us to focus on how we work,
not just on what we achieve. Every month, we focus on one
of the Rightmove Hows and employees have the opportunity
to recognise colleagues demonstrating these behaviours.
We conduct bi-annual ‘Have your Say’ people surveys 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:
• 91% of respondents think Rightmove is a great place to work;
• 95% of respondents enjoy working in their team; and
• 92% of respondents are proud to tell people they work
for Rightmove.
We believe employee engagement is vital. Harnessing
and directing that engagement leads to the Group’s
performance, therefore it is pleasing to note that 90%
of respondents understand how their role contributes
to achieving the business plan.
An employee engagement score will again form part of the
senior management bonus criteria in 2019, demonstrating
the importance of employee engagement to the continuing
success of Rightmove.
Equality and diversity
Rightmove is committed to equality of opportunity in all our
employment policies and practices. Our recruitment and
selection processes focus on selecting the best candidate
for each 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, skills and perspectives that
we believe promote innovation, constructive challenge and
success. Drawing on a wide variety of personal attributes
helps us anticipate what our customers expect from their
Rightmove membership and what home hunters want from
Rightmove, which drives value in the way we do business.
The Board continues to focus on succession planning and
developing potential within the senior management team.
During the year Russell Reynolds conducted a succession
and capability review covering high potential employees
within our leadership team. The review covered independent
capability interviews, internal referencing and psychometric
profiling. The intent of the review was not only to provide
independent feedback on succession, but to provide an
opportunity for personal development to help these
employees be ‘the best they could be’.
As at 31 December 2018, 36% (2017: 26%) 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 FTSE 350. Rightmove has met its Hampton-Alexander
Review target of 33% female leadership by 2020 two years
ahead of schedule.
(1) Adjusted for the 10:1 share subdivision effective 31 August 2018.
30
rightmove.co.uk
At 31 December 2018, female representation on the Board
was 50%, this combined with our strong female leadership
team representation resulted in us being placed second in the
2018 Hampton-Alexander FTSE 100 Women Leaders table.
A breakdown by gender of the number of directors and
employees as at 31 December 2018 by various classifications
as required by the Companies Act 2006, is set out below:
Directors
Hampton-Alexander(1)
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 under-represented in the higher paid senior
management and technology teams and men are
under-represented in the customer experience teams.
Senior management(2)
All Rightmove employees
4
4
12
21
Female (50%)
Male (50%)
Female (36%)
Male (64%)
11
Technology is a sector challenged by a lack of gender
diversity, but accepting the status quo is not part of the
Rightmove culture. We continue to have an equal gender
split within our technical team leader positions and we’re
pleased with the progress of our internal talent pipeline
which has seen opportunities for several females to
progress from Customer Experience roles to positions
in our technology teams.
Male (65%)
Female (51%)
Female (35%)
257
267
20
Male (49%)
Directors
Hampton-Alexander(1)
Senior management(2)
All Rightmove employees
4
4
12
21
11
20
257
267
Female (50%)
Male (50%)
Female (36%)
Male (64%)
Female (35%)
Male (65%)
Female (51%)
Male (49%)
Below is our gender pay gap as at April 2018, together
with a description of some of the initiatives that we have
implemented to improve our gender balance going forward.
Difference between male and female pay
2018
Mean Median
2017
Mean Median
Difference in hourly
rate of pay(3)
28.2%
36.4%
30.6%
37.0%
Difference in bonus pay(4)
63.8%
45.6%
70.4%
36.5%
(3) Calculated using Rightmove Group Limited pay data from April 2018.
(4) Calculated using 12 months of Rightmove Group Limited bonus pay
(1) The Hampton-Alexander cohort comprises members of the Executive
data to 5 April 2018.
Committee and their direct reports.
(2) The Senior Management Team comprises the Hampton-Alexander cohort,
excluding the executive directors.
Gender pay
Rightmove has published its second gender pay gap report,
containing data as at April 2018. Since publishing our first
gender pay gap report in 2017, we have taken a number
of actions towards closing our pay gap. We have seen an
improvement in our gender pay gap closing our mean pay
gap by 2.4% and mean bonus pay gap by 6.6% that shows
we are making positive progress. We are aware that some
of the initiatives we have started will have an impact in the
long-term, but not on the 2018 figures. Full details can be
found on the Company’s website at plc.rightmove.co.uk.
Rightmove plc annual report 2018 31
Strategic reportGovernanceFinancial statements
Strategic report | Corporate responsibility continued
We work hard to create an environment where men and
women have the opportunity to build careers throughout the
business and believe that our open, collaborative culture is key
to that objective. We are committed to a number of actions to
balance our teams in a fair and transparent way, including:
Balance for all
Addressing imbalance
• We continue to offer
workshops to women
before, during and after
maternity leave to retain
talent. We also offer
workshops to men and
women to help consider
how best to balance work
and family life.
• We are launching a
‘Thoughtful Leadership’
programme for everyone
with a people responsibility,
to support our diverse
culture and thinking style.
• To support our commitment
to providing a diverse
thought culture we are
launching a series of
‘Mentoring Circles’
with external keynote
speakers who will provide
stimulus for discussion
on key subjects.
• We are participants in the
30% Club cross-company
mentoring programme. This
supports our internal talent
pipeline to bring more talent
diversity into senior manager
roles. We have eight females
participating from varying
career stages. We match this
with eight mentors from our
senior management team
to mentees from other
participating organisations.
• Our internal talent pipeline
provided job role changes
and promotion opportunities
for 31 people.
• Our graduate programme
in technology has attracted
great new talent to join us
and contribute to increasing
balance in our technology
teams.
• We continuously review all
job specifications and our
interview process to ensure
universal appeal and fair
progression for all to ensure
we attract the best talent .
Being a trusted
marketplace
Rightmove is the largest property portal in the UK,
advertising over one million properties for sale and to rent on
behalf of our customers, who are estate and letting agents,
new homes developers, commercial property agents, and
overseas agents and property owners, who pay to advertise
their properties across our platforms. We carry out vetting
checks on all of our customers before we allow them to
advertise on Rightmove.
Rightmove is committed to ensuring the property adverts
we display are accurate and genuine. Our dedicated data
quality team monitor the website to ensure that any
potential misleading or inaccurate adverts can be
investigated and removed if necessary.
All of our employees undergo annual training in the areas
of fraud, anti-bribery, GDPR and information security to
ensure they remain up to date and alert to the signs of
unethical practices.
We have a dedicated Safety and Security section on our
website designed to help consumers stay safe and avoid
fraud when searching for their next home.
Protecting customers’ and consumers’ data
Protecting the data of our customers and consumers is
incredibly important to Rightmove. We continue to invest
heavily in data and security protection and our fraud, data
protection and information security teams all work vigilantly
to ensure that the data is kept secure and that we remain
compliant with legislation. Over the last 18 months, with the
introduction of the General Data Protection Regulations in
May 2018, we have reviewed and strengthened our policies
and processes in line with the new, more stringent legislation.
Anti-Bribery and Corruption
Rightmove has zero tolerance to any form of bribery and
corruption, both within our business and in any dealings
with our customers, suppliers and other third parties we
may deal with in the course of our business. We will not
conduct business with any service provider, customer
or supplier which does not support our anti-bribery
objectives. Our Anti-Bribery and Corruption Policy
can be found on our website plc.rightmove.co.uk.
Human rights including modern slavery
Rightmove does not have a specific human rights policy,
however we do 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.
Rightmove is absolutely committed to preventing slavery
and human trafficking in its business and supply chains.
We seek to uphold the highest standards of honesty and
integrity in all our business dealings and relationships and
we have a zero-tolerance approach to the mistreatment of
people in our employment and wherever possible, employed
in our supply chain. Our Modern Slavery Statement can be
found on our website plc.rightmove.co.uk.
Whistleblowing
At Rightmove, we believe that by following clear and
transparent business practices and consistently applying
high ethical standards in all our business dealings, we can
contribute to a fairer and honest marketplace where
customers and consumers know that we can be trusted.
We operate a whistleblowing facility for employees if they
suspect anything inappropriate or experience any serious
misconduct or wrong doing in our business.
32
rightmove.co.uk
Making a difference
to our communities
Making a difference
to our environment
2018 saw the launch of our charitable fundraising initiative
‘On The Move’. The initiative has an objective to raise funds,
and awareness, for charitable causes by connecting people
particularly in our home town of Milton Keynes.
During the year over 50 employees came together to take
part in the Milton Keynes Marathon, raising funds for two
charities which are important to many Rightmovers; local
charity the Winter Night Shelter in Milton Keynes and
national charity Meningitis Now. The team raised over
£45,000 in total, with Rightmove donating an additional
£26,000 split between the two charities.
In the spirit of connecting people, the ‘On The Move’ initiative
also aims to evoke a wider sense of community amongst
those that take part and their supporter base. In 2019 we
will see the campaign broaden its reach outside of the direct
Rightmove family, by expanding our fundraising team to
invite the local community to partner with us and participate
in our charitable efforts. Our aim is to see employees and the
local community running and fundraising as one team, all in
the name of charitable causes and community spirit.
With the success of the ‘On The Move’ campaign in year
one, we were delighted to continue our ongoing partnership
with the Milton Keynes Marathon by becoming their primary
sponsor, and the race now officially being known as the
Rightmove MK Marathon. Additionally Rightmove will host
the Rightmove MK Marathon Race Village, a family-friendly
entertainment area for spectators and runners alike, which
brings our local community together and celebrates the
hometown of Rightmove.
We also continue to support our local community in Milton
Keynes in a multitude of ways, including sponsoring many
of the city’s sporting teams. 2018 saw us sponsor Milton
Keynes City volleyball and ice hockey teams for the first
time, and Milton Keynes College football team for the third
consecutive year. Our partnership with Milton Keynes
College also included us working with three of their sports
science students in the final stages of their qualification with
work placements, including offering employees free fitness
assessments and exercise sessions. This benefits both our
employees by promoting a healthy lifestyle at work, but
also gives the students vital data to use in completing their
qualifications. The placement is a two-year course and we
will welcome them back in 2019.
Our employees are also able to donate directly from their
monthly salary to any charity or recognised cause that is
important to them as an individual, through the Charities
Trust, which provides a tax efficient means of giving.
We are conscious of playing our part in tackling climate
change and always encourage the efficient use of resources
that contribute to environmental damage.
As an internet-based business with most staff employed in
two office locations, our direct environmental footprint is
small. We continue to encourage our employees to minimise
their use of resources and recycle materials wherever possible
with dedicated recycling bins provided in both our offices.
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
2018, our fuel card provider Allstar, continued to partner 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 naturally work in a near 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, marketing
reports and product documentation.
By far our biggest environmental contribution continues to
be the way Rightmove has changed the way people search
for property. 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 all on screen and available instantly.
All these innovations have helped to reduce the carbon
footprint generated by prospective home buyers and renters
through reliance on printed media and making unnecessary
travel journeys to visit unsuitable properties.
Rightmove plc annual report 2018 33
Strategic reportGovernanceFinancial statements Strategic report | Corporate responsibility continued
Our overall emissions are down 12.9% on the previous year
with emissions per employee also showing a reduction of
10.0%. This is mainly attributable to:
• lower fuel consumption due to the leasing of company cars
(principally a diesel fleet) with increased fuel efficiency;
• a reduction in electricity consumption due in part to closing
one floor of our London office for a period of three months
for refurbishment during 2018, and new meters being
installed increasing the accuracy of the readings;
• a change in the Defra factor used for calculating electricity
emissions; and
• an increase in average headcount.
We continue to monitor and look for ways to improve
our carbon footprint.
Health and safety
At Rightmove, our approach to the effective management
of health and safety is to treat it as an integral part of
business management. 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. During the year, we continued our fire
safety, first aid and workplace safety training.
FTSE4Good Index
Created by the global index provider FTSE Russell, the
FTSE4Good Index Series is designed to measure the
performance of companies demonstrating strong
Environmental, Social and Governance (ESG) practices.
The FTSE4Good indices are used by a wide variety of
market participants to create and assess responsible
investment funds and other products.
We are pleased to report that having been independently
assessed according to the FTSE4Good criteria, FTSE Russell
(the trading name of FTSE International Limited and Frank
Russell Company) has confirmed that Rightmove has
satisfied the requirements to become a constituent of
the FTSE4Good Index Series.
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
between Scope 1, Scope 2 and Scope 3 emissions.
Direct GHG emissions (Scope 1) are emissions from sources
that are owned or controlled by Rightmove, specifically
Company cars. Indirect GHG emissions (Scopes 2 & 3) are
emissions that are a consequence of the activities of the
Group but that occur at sources owned or controlled by
other entities. These include our electricity consumption at
our Milton Keynes and London offices and our Data Centres.
We do not have responsibility for any other material emission
sources. We have used the Greenhouse Gas Protocol
Corporate Accounting and Reporting Standard (revised
edition), ISO 14064 Part 1 2006 and emission factors from
UK Government’s Conversion Factors for Company
Reporting 2018.
The Group is required to report Scope 1 and 2 emissions
for its reporting year to 31 December 2018. 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.
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 adjacent.
Rightmove emissions by scope
Scope
Source
Scope 1
Scope 2
Scope 3
Total
Company cars
Electricity
Outsourced data centres
Total (Scopes 1 & 2 only)
Scope 1, 2 & 3 emissions
normalised per employee (tCO2e)
Scope 1 & 2 emissions
normalised per employee(2) (tCO2e)
Tonnes CO2e(1)
2018
484
187
206
877
671
1.8
1.4
2017
495
255
257
1,007
750
2.0
1.5
(1) UK emissions factors have been used for all data. All emission factors have
been selected from the emissions conversion factors published annually:
www.gov.uk/government/publications/greenhouse-gas-reporting-
conversion-factors-2018.
(2) Based on 495 (2017: 479) employees taken as the average number of
employees in the Group throughout the year.
34
rightmove.co.uk
Non-Financial Information Statement
Rightmove aims to comply with the new Non-Financial Reporting Directive requirements. The table below sets out where
relevant information can be found in this Annual Report.
Reporting Requirement
Policies
Relevant Information
Environmental matters
The Company does not have a specific policy on environmental issues, however, more information
on our business impact on the environment can be found in the Corporate Responsibility Report,
pages 33 to 34, which also contains the statutory carbon emission data on page 34
Employees
• Employee Handbook, which includes:
– Code of Conduct
– Whistleblowing Policy
• Modern Slavery Statement
• Data Retention Policy
• Privacy Policy
• Chief Executive’s review, page 10
• Corporate Responsibility Report,
pages 29 to 32
• Corporate Responsibility Report, page 32
Human rights
Social matters
Anti-bribery and
corruption
Business model
Principal Risks
Non-financial key
performance indicators
The Company does not have a specific policy on social matters, however, information on how our
business supports the local and wider community can be found in the Corporate Responsibility
Report, page 33
• Employee Handbook, which includes:
– Anti-Bribery and Corruption Policy
– Code of Conduct
• Strategic Report, pages 14 to 15
• Corporate Responsibility Report, page 32
• Strategic Report, the EU Referendum, page 28
• Strategic Report, principal risks and uncertainties, pages 25 to 27
• Operational key performance indicators, page 16
Rightmove plc annual report 2018 35
Strategic reportGovernanceFinancial statements Governance | Directors and officers
Scott Forbes
Chairman
Peter Brooks-Johnson
Chief Executive Officer
Robyn Perriss
Finance Director
Nationality American and British
Appointment to the Board
13 July 2005
Committee membership
Nomination (Chairman)
Current external commitments
Chairman of Cars.com Inc
Chairman of Ascential plc
Non-executive director of Travelport Worldwide
Limited (Retirement pending completion of agreed
sale of Travelport to a financial sponsor group)
Previous roles and relevant experience
Chairman of Orbitz Worldwide until September
2015 and Director of NetJets Management Ltd,
a subsidiary of Berkshire Hathaway until October
2009. Scott has over 40 years’ experience in
operations, finance and mergers and acquisitions
including 15 years at Cendant Corporation which
was formerly the largest worldwide provider of
residential property services. Scott established
Cendant’s international headquarters in London
in 1999 and led this division as Group Managing
Director until he joined Rightmove.
Nationality British
Appointment to the Board
10 January 2011
Current external commitments
Non-executive director of MPI –
Marketplaces International
(The international online classifieds operation
of Schibsted Media Group)
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.
Nationality British and South African
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
Andrew Findlay
Non-Executive
Director
Sandra Odell
Company Secretary
Nationality American
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
Previous roles and relevant experience
Rakhi was a non-executive director of Be Heard
Group plc until August 2018 and a 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.
Nationality British
Appointment to the Board
1 June 2017
Committee membership
Audit (Chairman), 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.
36
rightmove.co.uk
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.
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
Peter Williams
Senior Independent
Non-Executive Director
Nationality British
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
(retiring on 15 March 2019)
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
Lorna Tilbian
Non-Executive
Director
Nationality British
Appointment to the Board
30 December 2016
Committee membership
Audit, 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.
Nationality British
Appointment to the Board
1 February 2018
Committee membership
Remuneration, Nomination
Current external commitments
Non-executive director of Jupiter UK
Growth Investment Trust plc
Non-executive director of Proven VCT plc
Non-executive director of Finsbury Growth
& Income Trust PLC
Non-executive director of Euromoney
Institutional Investor PLC
Non-executive director M&C Saatchi PLC
Previous roles and relevant experience
Lorna was Executive Director and Head of the
Media Sector in Corporate Broking & Advisory at
Numis Corporation PLC until September 2017.
She was a founder of Numis when it launched in
2001 having worked at Sheppards, as a director
of SG Warburg and executive director of WestLB
Panmure. Lorna sits on the Advisory Panel of Tech
City UK’s Future Fifty programme and has served
as a Cabinet Ambassador (for Creative Britain)
for the Department of Culture, Media & Sport.
Diversity on the Board
Rightmove recognises the benefits of having
diversity across the Board to ensure variety of
thought in relation to the business strategy and
effective engagement with key stakeholders.
The age, gender and tenure of Board members
as at 31 December 2018 is set out below.
Board Tenure
Board Tenure
Board Tenure
Board Gender
Board Gender
Board Gender
1
1
1
1
1
1
3
3
3
3
3
3
4
4
4
4
4
4
e
g
n
a
r
e
g
A
0–3
0–3
years
years
0–3
3–6
3–6
years
years
years
6–9
3–6
6–9
years
years
years
9+
6–9
9+
years
years
years
9+
years
Female
Female
Female
Male
Male
Male
Board Age
Board Age
Board Age
60+
60+
60+
50–59
e
g
n
50–59
a
r
e
g
A
40–49
40–49
e
g
n
a
r
e
g
A
50–59
40–49
0
0
0
3
1
2
No. of directors
3
1
2
No. of directors
3
1
2
No. of directors
4
4
Board Composition
Board Composition
Board Composition
2
2
2
5
5
5
1
1
1
4
Executive
Executive
Executive
Non-Executive
Non-Executive
Non-Executive
Executive
directors
Executive
directors
Chairman
Executive
Chairman
directors
Chairman
Non-
Non-
executive
executive
directors
directors
Non-
executive
directors
Rightmove plc annual report 2018 37
Governance | Corporate governance report
Introduction
The following sections explain how the Company applied
the main provisions of the UK Corporate Governance Code
2016 (the Code) issued by the Financial Reporting Council
(FRC), as required by the Listing Rules of the Financial
Conduct Authority (FCA) and meets the relevant
information provisions of the Disclosure and Transparency
Rules of the FCA.
The statement of corporate governance covers:
• the structure and role of the Board and its committees;
• relations with the Company’s shareholders and the Annual
General Meeting (AGM); and
• the reports of the Audit Committee and Nomination
Committee including Board effectiveness and evaluation.
The report of the Remuneration Committee is set out
separately in the Directors’ Remuneration Report on pages
58 to 59.
The Group’s risk management and internal control
framework and the principal risks and uncertainties are
described on pages 24 to 27. The Directors’ Report on pages
54 to 56 also contains information required to be included in
this statement of corporate governance.
Statement of compliance
The Code sets out the principles and provisions relating to
good governance of UK listed companies and can be found
on the FRC’s website at frc.org.uk
We are pleased to confirm that, for the year under review,
the Company has complied fully with the principles and
provisions of the Code.
The Board’s role
The Board is collectively responsible to shareholders for the
overall direction and control of the Group and has the powers
and duties set out in the Companies Act 2006 (the Act) and
the Company’s Articles of Association. The Board delegates
certain matters to the Board committees and delegates
the day to day operation of the business to the executive
directors.
The schedule of matters requiring Board approval includes:
• Rightmove’s business strategy;
• the annual business plan;
• changes to the Group’s capital structure;
• the capital management and dividend policies;
• the annual and half-year results and shareholder
communications;
• major acquisitions and disposals;
• appointment and removal of officers of the Company; and
• the system of internal control and risk management.
The key responsibilities and actions carried out by the Board during the year are set out below:
Responsibility
Specific actions and information received during the year
Strategy and
direction
The Board held an off-site strategy
meeting in July. Discussion
included potential threats and
opportunities to the business
model arising from economic,
regulatory and other market
changes
Strategic initiatives
identified at the strategy
away day were analysed
and discussed at
subsequent Board
meetings
The Group’s 2019
budget and three-
year business plan
was approved
Presentations were
received in relation to
innovation in the rental
market including updates
on the Rightmove Tenant
Passport launched
during the year and
discussions around
future opportunities for
making renting easier
Performance
monitoring
The Board receives a monthly
management report covering all
financial and operational KPIs
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
high-level Agency, Tenant
Services, New Homes,
Commercial and
Overseas business
performance and
progress against other
business initiatives
38
rightmove.co.uk
Responsibility
Specific actions and information received during the year
Shareholder
engagement
The Chairman met with
Rightmove’s investors to explain
the actions taken in light of the
2018 AGM voting results, with
a particular focus on Board
succession planning
The Remuneration
Committee engaged
with investors in relation
to the 2019 remuneration
proposals
Reports were received from
the Audit Committee on
Rightmove Assurance
reviews, with continued
focus on Fraud and
Cyber risk reviews with
recommendations being
implemented during
the year
Governance
and risk
People and
values
The Board conducts a bi-annual
review of the entire risk register,
including principal risks, with
particular focus on new and
emerging risks affecting
the business
The Board received a detailed
presentation on management’s
view of possible Brexit implications
for Rightmove’s business,
employees and cost base
The Board considered the new
Corporate Governance Code
requirements around employee
engagement and approved various
proposals to enhance existing
employee engagement
The Board considered the
strengths and capability
required for senior
managers’ succession and
the skills and experience of
its directors in relation to
the skills and capabilities
identified in the Board
Strategy Review, that are
necessary to help
Rightmove achieve its
strategic objectives
The Board
received
presentations
from senior
managers
throughout the
year to ensure
exposure to the
breadth and
depth of talent
supporting
business growth
Investor feedback
was received via
the executive
directors
throughout the
year, particularly
following the
results and
investor
roadshows
The Directors
participated in a
Board Strategy
Review and
considered
actions in relation
to Board
succession
Monthly reports are
received on the
shareholder demographic
and analysis of significant
changes to the share
register; Rightmove’s
Corporate Broker, UBS
updated the Board on the
key market drivers of the
Group’s valuation
Senior management
gave briefings and
presentations covering a
range of topics including
data protection, cyber
and information security
risks, corporate
governance and the
2018 insurance renewal
programme
Group employee
satisfaction scores as
part of the ’Have your say’
survey were monitored
across a range of criteria
There are usually seven scheduled Board meetings each
year including one meeting or away day(s) 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 frequent communication 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, research analyst 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 42. The composition of these Committees is reviewed
regularly, taking into consideration the recommendations
of the Nomination Committee.
Rightmove plc annual report 2018 39
Strategic reportGovernanceFinancial statements Governance | Corporate governance report continued
Membership required
under the terms
of reference
Minimum number of
meetings per year
Three
At least three
members who
should be
independent
non-executive
directors
Committee
report on
pages
44 to 50
Two
58 to 59
and 71 to 84
At least three
members who
should be
independent
non-executive
directors
Committee
Role and terms of reference
Audit
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.
Recommends the appointment of the
external auditors to the Board for approval by
shareholders.
Remuneration
Makes recommendations to the Board on:
• the Remuneration Policy and strategy for
executive directors and senior
management;
• long-term performance 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 investors’ views
and alignment of executive directors’
remuneration with all employees.
Nomination
Undertakes an annual review of organisation
and succession planning and ensures that
the membership and composition of the
Board, including the balance of skills,
remains appropriate.
Makes recommendations for the
membership of the Board, Audit and
Remuneration Committees.
At least three
members, the
majority of whom
should be
independent
non-executive
directors
Two
51 to 53
Board composition
The Board at the date of this report comprises two executive
directors and six 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), Rakhi Goss-Custard,
Jacqueline de Rojas, Andrew Findlay and Lorna Tilbian.
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 Code,
all directors who have served during the year and remain a
director as at 31 December 2018 will retire and offer
themselves for re-election at the next AGM.
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 of 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 71 to 84. At the
date of this report, the executive directors were deemed to
have a non-beneficial interest in 2,248,020 ordinary shares
of 0.1 pence each held by held by The Rightmove
Employees’ Share Trust (EBT).
40
rightmove.co.uk
Biographical details of all directors at the date of this report
appear on pages 36 to 37 and details of Committee
membership appear on page 42.
The Board’s size and composition is kept under regular
review by the Nomination Committee.
Board changes
Ashley Martin retired from the Board on 4 May 2018, having
served nine years as a non-executive director and latterly as
Audit Committee Chairman. Peter Williams (Remuneration
Committee Chairman) will retire from the Board and not
stand for re-election at the AGM on 10 May 2019. More
information on proposed Board changes and the work of the
Nomination Committee can be found on pages 51 to 53.
Division of responsibilities
The posts of Chairman and Chief Executive Officer are separate and there are clear written guidelines to support their
division of responsibilities. The key responsibilities of the Board members are summarised below:
Chairman
Responsible for the leadership and governance of the Board, including:
• ensuring its effectiveness by creating and managing constructive relationships between
the executive and non-executive directors;
• ensuring there is ongoing and effective communication between the Board and its key
stakeholders; and
• with the assistance of the Company Secretary, planning the Board’s agenda and ensuring
that adequate time is available for discussion and effective decision making, and that
directors receive sufficient, relevant, timely and clear information.
Chief Executive Officer
Responsible for the day to day management of the Group, including:
• the operational and financial performance of the Group;
• developing the Group’s objectives and strategy and following Board approval, the successful
Non-executive directors
Senior Independent Director
Company Secretary
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
judgment 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 36 to 37 and demonstrates a range of
business expertise that provides the right mix of skills and experience given the size of the Group.
The role of the Senior Independent Director is to:
• act in an advisory capacity to the Chairman;
• deputise for the Chairman if required;
• serve as an intermediary for other directors when necessary;
• be available to shareholders if they have concerns which they have not been able to
resolve through the normal channels of the Chairman and Chief Executive Officer or
other executive directors for which such contact is inappropriate; and
• conduct an annual review of the performance of the Chairman and, in the event it
should be necessary, convening a meeting of the non-executive directors.
The Company Secretary:
• advises the Board on corporate governance matters;
• monitors compliance with appropriate Board procedures;
• 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.
Rightmove plc annual report 2018 41
Strategic reportGovernanceFinancial statements Governance | Corporate governance report continued
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 2018, 50% of both executive and non-
executive Board members were female. We remain
committed to recruiting the best people and appropriate
talent for the business whilst seeking to maintain as near
50:50 gender balance on the Board as possible.
The range of skills and experience the Board considers
necessary to deliver Rightmove’s business strategy,
and which were identified in the recent 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 Board reviews each non-executive director’s
independence on an annual basis and considers that all
non-executive directors are fully independent of
management and independent in character and judgment.
The review takes into account such factors as directors’
contribution to unbiased and independent debate during
meetings to determine whether they are independent in
character and judgment and whether there are relationships
or circumstances which are likely to affect, or could appear to
affect, the director’s judgment. The Board approved a new
Conflicts of Interest Policy in 2018 and reviews the Register
of Directors’ Interests at least annually.
The Board considered that there is an appropriate balance
between executive and non-executive directors.
The 2018 UK Corporate Governance Code (effective
from 1 January 2019) has introduced a provision that the
Chairman should not remain in post for more than nine years
from the date of first appointment to the Board. It also states
that to facilitate effective succession planning, the period
may be extended for a limited time. As Scott Forbes has
served as Chairman of the Board since 2005, the Board
recognises that it will not be compliant with this provision
during 2019. The Nomination Committee is planning for an
orderly Board succession plan, following active consultation
with shareholders representing a majority of the Company’s
shares in the second half of 2018. The Board believes that a
consensus view has been established in favour of an orderly
succession plan for the Board Chairman, including the
recruitment and orientation of capable and experienced
succession candidates. The Company remains committed
to good governance, but recognises the need for any
transition to be smooth to preserve Group knowledge,
culture and shareholder confidence.
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.
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 Act. All directors are subject to election at
the first AGM following their appointment and in accordance
with the Code, all directors, except Peter Williams, will seek
re-election at the 2019 AGM.
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
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas(1)
Andrew Findlay
Lorna Tilbian(2)
Ashley Martin(3)
7
7
7
7
7
7
7
7
6
1
5
–
–
–
5
5
2
–
3
–
5
–
–
–
5
–
4
5
–
1
2
2
–
–
2
2
2
2
2
–
(1) Jacqueline de Rojas was a member of the Remuneration Committee until
4 May 2018 when she joined the Audit Committee.
(2) Lorna Tilbian joined the Board on 1 February 2018, with 4 May 2018 being
her first Board meeting and became a member of the Remuneration and
Nomination Committees on 4 May 2018.
(3) Ashley Martin retired from the Board on 4 May 2018.
42
rightmove.co.uk
The Board is kept informed of the views and opinions of
those with an interest in the Company’s shares through
reports from the Chairman, Chief Executive Officer and the
Finance Director, as well as reports from the Company’s
brokers, UBS and Numis.
Shareholders are also kept up to date with the Group’s
activities through the half year results statement and
Annual Report and the investor relations section of its
website, at plc.rightmove.co.uk, which provides details of
all the directors, the financial calendar, latest news including
financial results, investor presentations and Stock Exchange
announcements.
Annual General Meeting
The AGM provides an opportunity for shareholders to vote
on aspects of the Company’s business, meet the directors
and ask them questions. The AGM will be held on 10 May
2019 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 poll, the results of
which are reported after each resolution and published
on the Company’s website.
In addition to the above meetings, the Chairman conducts
meetings with the non-executive directors without the
executive directors being present as required. Peter
Williams, the Senior Independent Director, chaired a meeting
in December 2018 of the non-executive directors at which
the performance of the Chairman was also reviewed,
without the presence of the Chairman.
Indemnification of directors
The Articles of Association of the Company allow for a
qualifying third party indemnity provision for the purposes
of S234 of the Act between the Company and its past and
present 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 Company 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 and Chief Executive or the Chairman
alone, attended meetings with shareholders representing
the majority of the Company’s shares in the second half of
2018 regarding orderly Board succession plan consultation,
corporate governance, business strategy and other business
matters. The Senior Independent Director was also available
to shareholders if they wished to supplement their
communication, or if contact through the normal channels
was inappropriate and engaged with investors in his capacity
as Remuneration Committee Chairman.
The Remuneration Committee proactively engaged with
the Company’s largest shareholders ahead of setting the
Remuneration Policy which was approved at the 2017 AGM
and again in late 2018 when setting executive director base
salary levels for 2019.
Rightmove plc annual report 2018 43
Strategic reportGovernanceFinancial statements Governance | Audit Committee report
Andrew Findlay
Chairman of the
Audit Committee
Dear shareholder
I am pleased to present the 2018 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 40 of the Corporate
Governance Report.
The Committee has overseen a detailed programme of work
in 2018 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 PwC 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 continued to focus on the Group’s General
Data Protection Regulation compliance programme and
received regular updates since the introduction of the new
regulations in May 2018. The Committee also reviewed the
results of PwC’s cyber maturity assessment performed
in late 2017 and management’s planned actions,
supplemented by further discussions at Board level,
reflecting the focus in this key risk area. The oversight of
financial controls continues to be a key area of work for the
Committee with all key financial cycles having been reviewed
by Rightmove Assurance across the past three years
including an ‘end to end’ billing review in 2018.
In November 2018 the Committee received a presentation
from management providing an overview of the Financial
Conduct Authority (FCA) principals and regulations in
relation to the newly authorised Group entity, Rightmove
Rent Services Limited. The presentation also covered
Rightmove’s approach to risk and compliance within an
FCA regulated framework. Rightmove has decided on a
co-sourced FCA compliance function, whereby ultimate
responsibility for FCA requirements remains within the
Group, with assistance from an external provider. This allows
Rightmove to build knowledge of FCA requirements and
best practice, whilst being supported by external expertise.
Following a competitive tender process, Deloitte LLP were
appointed as the co-sourced FCA compliance provider.
As 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.
Following the publishing of the Financial Reporting Council’s
(FRC) 2017/2018 Audit Quality Report in June 2018, the
Committee received a presentation from KPMG’s Head of
Audit UK to explain how KPMG as a firm is addressing the
FRC’s review points. The Committee also requested that
KPMG provide regular updates on the progress of their
Audit Quality Transformation Programme as well as the
internal review processes relating to the Rightmove audit.
With effect from 1 January 2018 the Group has adopted
IFRS 9 Financial Instruments, IFRS 15 Revenue from
Contracts with Customers and IFRS 16 Leases. The
Committee carefully considered the treatment and
disclosures in the Annual Report in relation to the new
accounting standards with both IFRS 15 and IFRS 16
having a material effect on the Group’s Balance Sheet.
The Committee as part of its annual governance cycle
also reviewed the Group’s treasury, anti-bribery and
whistleblowing policies and the gifts and hospitality register.
Looking forward to the next 12 months, the Committee will
continue to focus on key risk areas such as cyber security
and IT systems together with FCA compliance reviews for
the newly regulated part of the business providing tenant
passport services.
I have greatly enjoyed my first year as Chairman of the Audit
Committee and I will be available at the AGM to answer any
questions about the work of the Committee.
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Audit Committee effectiveness
The effectiveness of the operation of the Committee was
reviewed in December 2018 as part of the independent
Board and Committee evaluation process. 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 report and annual
financial statements. The Committee does this by
considering, among other things, the accounting policies
and practices adopted by the Group; the correct application
of applicable reporting standards and compliance with
broader governance requirements; the approach taken by
management to the key judgmental areas of reporting and
the comments of the external auditor on management’s
chosen approach.
Significant issues
The key significant issue in the context of the 2018 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.
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.
Andrew Findlay
Chairman of the Audit Committee
Committee membership and meetings
All the members of the Audit Committee are independent
non-executive directors in accordance with provision C3.1
of the Code. The Board has determined that Andrew Findlay
as the Committee Chair has recent and relevant financial
experience as required by the Code due to his executive
role as Chief Financial Officer of easyJet plc. Both Andrew
Findlay and Peter Williams are qualified accountants.
As a whole, the Committee possesses experience relevant
to the business through the digital experience of Andrew
Findlay and Peter Williams, and the technology background
of Jacqueline de Rojas.
Biographies of the members of the Committee are set
out on pages 36 to 37.
The Committee met five times in 2018 and attendance
of the members is shown on page 42 of the Corporate
Governance Report. 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.
Rightmove plc annual report 2018 45
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Issue
Committee review
Revenue is a prime area of audit focus, particularly the timing of revenue
recognition in relation to the billing of subscription fees and additional products.
During the year, management performed data analytics procedures on the
amounts billed to the two largest customer groups (Agency and New Homes).
This included investigating anomalies such as billing gaps and single bills raised
and reporting to the Committee in this regard.
KPMG further supplement the data analytics work performed by management
by using computer assisted audit techniques to match sales ledger postings to
cash receipts recorded against trade receivable balances to further evidence the
existence of revenue, with the results of this work reported to the Committee.
The Committee discussed any anomalies with management and with KPMG
in relation to the data analytics work performed. The Committee was satisfied
with the explanations provided and conclusions reached.
The data analytics performed work above is supplemented by a detailed
analytical review of margin 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 in the
10-year period since 2008, resulting in a current market value in excess of
£4 billion, significantly higher than 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 19 and 98 to
100 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 in relation to the 2018 Financial Statements.
Issue
Committee review
Adoption of new accounting standards:
IFRS 9 Financial instruments
IFRS 15 Revenue from contracts with
customers
IFRS 16 Leases
Going concern and viability statements
The Committee carefully considered the treatment and disclosures in the Annual
Report in relation to the new accounting standards with both IFRS 15 and IFRS 16
having a material effect on the Group’s Balance Sheet.
The Committee also obtained the external auditor’s assessment of the implication
of the new accounting standards and the related disclosures. The results of this
review were that the Committee was satisfied the new accounting standards had
been appropriately adopted.
In assessing the validity of the statements detailed on pages 28 and 97, the
Committee reviewed the work undertaken by management to assess the Group’s
resilience to the Principal Risks under various stress test scenarios including
consideration of the impact of a ‘hard Brexit’. The Committee gained appropriate
assurance that sufficient rigour was built into the process to assess going concern
and viability over the designated periods.
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Fair balanced and understandable
One of the key governance requirements is for the Annual
Report and the Financial Statements, taken as a whole, to be
fair, balanced and understandable and provide the information
necessary for shareholders to assess the Group’s position
and performance, business model and strategy.
The Committee was provided with an early draft of the
Annual Report in order to assess the strategic direction and
key messages being communicated. Feedback was provided
by the Committee in advance of the February Board
meeting, highlighting any areas where the Committee
believed further clarity was required. The draft report was
then amended to incorporate this feedback prior to being
tabled at the Board meeting for final comment and approval.
When forming its opinion, the Committee reflected on the
information it had received and its discussions throughout
the year. In particular, the Committee considered:
Is the report fair?
• Is the whole story presented and has any sensitive material been omitted that should
have been included?
• Are key messages in the narrative aligned with the KPIs and are they reflected in
the financial reporting?
• Are the KPIs being reported consistently from year to year?
• Is the reporting on the business areas in the narrative reporting consistent with
the financial reporting in the financial statements?
Is the report balanced?
• Do you get the same messages when reading the front end and back end of the
Annual Report independently?
• Are threats identified and appropriately highlighted?
• Are the alternative performance measures explained clearly with appropriate
prominence?
• Are the key judgements referred to in the narrative reporting and significant issues
reported in this Committee Report consistent with disclosures of key estimation
uncertainties and critical judgements set out in the financial statements?
• How do these judgements compare with the risks that KPMG are planning to include
in their Auditor’s 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?
Is the report understandable?
Following its review, the Committee is of the opinion that the
2018 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, KPMG LLP (KPMG), who is engaged to conduct a
statutory audit and express an opinion on the financial
statements. KPMG’s audit includes the review and testing
of the systems of internal financial control and data which
are used to produce the information contained in the
financial statements.
The Committee is responsible for making recommendations
to the Board in relation to the appointment of the external
auditor. KPMG was reappointed as auditor of the Group at
the 2018 AGM. The current external audit engagement
partner is Anna Jones, who has held this role since the
beginning of 2018. A timeline setting out the tenure of
KPMG as auditor is set out overleaf:
Rightmove plc annual report 2018 47
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External Audit tendering timeline
2000
2006
2013
2018
2023
KPMG appointed
as auditor
Rightmove becomes
a publicly listed entity
KPMG reappointed as
auditors, following a
competitive audit
tender process
Mandatory
appointment of new
audit lead partner
after five years
Competitive tender
will need to take place
prior to this date,
being 10 years since
last audit tender.
KPMG will not be
invited to re-tender
as maximum period
in office is 20 years,
i.e. 2026
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 approved the audit fees of £151,000 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.
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 £28,000 for non-audit services, representing less
than 17% of the 2018 audit fee. Of this, £19,000 related to the
half-year review, and £5,000 to a review of the Group’s first
payment practices report. Further details of these services
can be found in Note 6 to the financial statements.
Non-audit service
Policy
Assurance-related services directly related to the audit.
For example the review of the half-year Financial Statements.
Permitted non-audit services
Including but not limited to: accounting advice, work related
to mergers, acquisitions, disposals, joint ventures or circulars
and corporate governance advice.
Prohibited services
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 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.
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, in accordance with the EU Audit Reform.
External auditor effectiveness
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.
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The Committee reviewed the FRC’s Audit Quality Report
(AQR) relating to KPMG and discussed the year on year
decline in the percentage of audits inspected that met the
standard of good/limited improvements (61% in 2017/2018
versus 65% in 2016/2017). The AQR highlighted that in a
sample of audits inspected, KPMG had failed to evidence
and record its processes in relation to challenge of
management on areas of judgement. The Committee
asked KPMG to comment on the actions taken by them
as a firm since the review.
KPMG acknowledged that it was not satisfied with the scores
and is committed to putting it right, having taken a number
of actions to drive improvement through its Audit Quality
Transformation Programme. Specifically, KMPG has
mandated more standard work papers, expanded its second
line of defence reviews, accelerated implementation of
existing technology based audit tools, increased central
monitoring of audits, together with more mandatory face
to face training, tailored by sector. KPMG agreed to provide
the Committee with regular updates on the internal review
processes in place for the Rightmove audit.
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 key audit reports
and the capability and experience of the audit team. For the
2018 financial year, the Committee was satisfied that there
had been appropriate focus and challenge on the primary
areas of audit risk and concluded that the performance of
KPMG remained efficient and effective.
Internal audit
The Group has an Internal Audit function, known as
Rightmove Assurance which is fully outsourced to PwC.
The aim of Rightmove Assurance is to provide independent
and objective assurance on the adequacy and effectiveness
of internal control, risk management and governance
processes. This includes assurance that underlying financial
controls and processes are working effectively, as well as
specialist operational and compliance reviews that focus on
emerging risks in new and evolving areas of the business.
The Rightmove Assurance plan for 2018 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:
• GDPR readiness in flight review to re-perform an earlier
readiness assessment performed in 2017 and to validate
completed actions as part of the GDPR programme;
• Counter fraud review to identify areas of greatest fraud
risk or cash leakage to the business; and
• End to end billing system review to evaluate the design
and effectiveness of controls, including review of the
new automated billing system developed for the
Overseas business.
Reports setting out the principal findings of the Rightmove
Assurance reviews and agreed management actions were
discussed by the Committee. The Committee also
reviewed open actions from previous reviews, together
with monitoring the progress by management in completing
these actions.
Effectiveness of the internal audit process
The work of Rightmove Assurance provides a key additional
source of assurance and support to management and the
Audit Committee on the effectiveness of internal controls as
well as providing guidance and recommendations to further
enhance the internal control environment, and provide
specialist insight into areas of change in the business.
During the year, the Audit Committee undertook a review
of the effectiveness of the Rightmove Assurance function.
The evaluation was led by the Committee Chairman and
involved issuing tailored evaluation questionnaires which
were completed by Rightmove management, the external
auditors, KPMG, the Committee and PwC themselves.
The evaluation concluded that the function had an
appreciation of the key issues facing the business, was
realistic and robust with audit suggestions and added
value to the business.
Anti-bribery and whistleblowing
The Code includes a provision requiring the Committee to
review arrangements by which employees of the Group may
in confidence raise concerns about possible improprieties
in matters of financial reporting or other matters. The
Committee’s objective is to ensure that arrangements are
in place for the proportionate and independent investigation
of such matters and for the appropriate follow up action.
Rightmove is committed to the highest standards of
quality, honesty, openness and accountability. The Group
has a whistleblowing process which enables employees
of the Group to raise genuine concerns on an entirely
confidential basis. The Committee receives reports on the
communication of the whistleblowing policy to the business
and the use of the service including any whistleblowing
incidents and their outcomes.
The Board believes that it is important for the Group and
its employees to follow clear and transparent business
practices and consistently apply high ethical standards in all
business dealings thereby supporting the objectives of the
Bribery Act 2010. An Anti-Bribery and Corruption Policy
and procedures have been established to set out what is
expected from employees and other stakeholders who act
Rightmove plc annual report 2018 49
Strategic reportGovernanceFinancial statements Governance | Audit Committee report continued
on behalf of the Group to ensure that they protect
themselves as well as the Group’s reputation and assets.
The Anti-Bribery and Corruption Policy is communicated
to all new joiners as part of the induction process and is
communicated annually to all employees at the town halls.
Rightmove has a zero-tolerance approach to bribery and any
breach of the Bribery Act is regarded as serious misconduct,
potentially justifying immediate dismissal.
All corporate gifts and hospitality offered or received valued
at more than £50 are recorded in the Group’s gifts and
hospitality register. For any gifts or hospitality greater than
£100 approval is required prior to accepting and the register
is examined by the Committee at least annually.
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 (formerly known as the Turnball
Guidance) 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 has established the procedures
necessary to ensure that there is an ongoing process for
identifying, evaluating and managing the principal risks to the
Group. These procedures have been in place for the whole of
the financial year ended 31 December 2018 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, financial and
regulatory 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;
• 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;
• Clearly defined policies for capital expenditure and
investment exist, including appropriate authorisation
levels, with larger capital projects, acquisitions and
disposals requiring Board approval;
• A treasury function which manages cash flow forecasts
and cash on deposit and is responsible for monitoring
compliance with banking agreements, where appropriate;
• A comprehensive disaster recovery plan and business
continuity plan based upon:
– co-hosting of the Rightmove.co.uk website across three
separate locations, which is regularly tested and reviewed;
– the ability of the business to maintain business critical
activities in the event of an incident;
– the capability for employees to remote work from home
or a third party location in the event of a loss of one of
our premises which is regularly tested through planned
office closures;
– regular testing of the security of the IT systems and
platforms, regular backups of key data and ongoing threat
monitoring to protect against the risk of cyber attack;
• A framework which provides guidelines in meeting the
FCA regulatory requirements for our newly authorised
subsidiary entity, Rightmove Rent Services Limited;
• A Group Data Protection Framework which provides
guidelines in meeting the requirements of the data
protection principles set out in the Data Protection
Act 2018; and
• Whistleblowing and Anti-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.
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Governance | Nomination Committee report
Scott Forbes
Chairman of the
Nomination Committee
Dear Shareholder
I am pleased to present the Nomination Committee report
for 2018.
The role of the Nomination Committee (the Committee)
is to keep the structure, size and composition of the Board
and Committees under review with the primary objective of
matching the skills, knowledge and experience of directors
to Rightmove’s business strategy and requirements.
Our priority is to optimise Board performance, enabling
the Group to prosper, compete and manage risk effectively
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 2018 by:
• reviewing the Group organisation and succession plans;
• conducting and discussing the Board Strategy review,
including the Board succession plan;
• recommending the appointment of a new non-executive
director; and
• conducting external Board and Committee evaluations.
Further details of the Board evaluation can be found on
page 53.
The Committee continued its focus on orderly Board
succession, comparing Rightmove’s strategic objectives
with the profiles of its existing directors to determine future
Board requirements and shape recruitment plans. The Board
discussed its proposed succession plan with shareholders,
representing a majority of the Company’s shares, with a
particular focus on addressing the significant minority
vote against the re-election of the Chairman and Senior
Independent Director at the 2018 AGM. Following the
consultation and investor feedback, the Board believes
that we have developed a consensus view in support of
an orderly succession plan, further details of which are
set out on pages 52 to 53 of this report.
During the year Lorna Tilbian was appointed as a
non-executive director on 1 February 2018. Following
the 2018 AGM, Lorna was appointed a member of the
Remuneration and Nomination Committees and
Andrew Findlay succeeded Ashley Martin as Audit
Committee Chairman.
The Board currently consists of eight directors including six
non-executive directors, five of which are considered to be
independent. Following the intended retirement of Peter
Williams at the 2019 AGM and absent the appointment of a
non-executive director prior to then, the Board will comprise
seven directors (two executive and five non-executive
directors). Korn Ferry International (Korn Ferry) has been
appointed and has commenced a search for up to two
new non-executive directors during 2019 including
individuals with a range of skills and experience to succeed
the current Chairman and to complement the potential
successor candidates already on the Board. The Board
has established a committee to work with Korn Ferry in
connection with Board recruitment for potential successors
to the Board Chairman.
I will be available at the AGM to answer any questions
about the work of the Committee.
Scott Forbes
Chairman of the Nomination Committee
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Governance | Nomination Committee report continued
Composition and attendance at meetings
The Chairman and non-executive directors are members
of the Committee. Peter Brooks-Johnson, Robyn Perriss
and the Head of People & Development attended meetings
by invitation.
The Committee met twice during the year and attendance
at the meetings is shown on page 42.
Membership
The Committee is comprised of non-executive directors,
whose biographical details can be found on pages 36 to 37.
As at 31 December 2018, all the non-executive directors
(five out of six members of the Committee) were considered
by the Board to be independent. At the request of the
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 for any discussion about the appointment of
his successor, when 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 2018
During the year the Committee has:
• reviewed the composition and diversity of the Board;
• reviewed the membership of Board committees;
• approved the plans for the organisation and succession
of the executive directors and senior management;
• considered the Board Strategy Review and
recommendations for candidate profiles for new
non-executive directors;
• considered the implementation of a Board succession
plan in light of the shareholder consultation following
the AGM vote on directors’ re-election;
• agreed the process for an external Board evaluation
and considered actions arising;
• considered potential conflicts of interest and directors
proposed appointments to other boards; 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 proactively arrange
periodic meetings with executive directors and senior
management in Rightmove’s office outside of Board
meeting dates and are invited to attend customer events
and briefings. 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. The Board receives
technical briefings and training on critical and new areas,
such as cyber security and the FCA regulation of
Rightmove’s tenant passport business.
Board succession and independence
Informed by previous Board Strategy Reviews, the
Committee has always taken a long-term view of Board
succession, carefully considering whether non-executive
director skills, experience and interest make them potential
candidates for the role of Chairman and Senior Independent
Director, in order to provide for orderly Board succession.
The Board had determined that all directors had sufficient
capacity to meet their commitments to Rightmove,
including during periods when greater involvement may be
required of them. Nevertheless, the Board recognised the
value of consulting with shareholders to explain its orderly
Board succession plan following the AGM in May 2018
when a significant minority of votes were received against
the re-election of our Chairman, Scott Forbes and
Peter Williams, our Senior Independent Director based on
concerns about the number of their Board appointments.
Following the consultation, the Chairman and Board believe
we have received support from investors for an orderly
succession plan for the Senior Independent Director and
Chairman as outlined below:
• Peter Williams intends not to stand for re-election at
the 2019 AGM to allow for the development and possible
recruitment of a successor to the Chairman who has the
potential to fill the role for an extensive period of time;
Peter has served more than five years as a non-executive
director and Remuneration Committee Chairman.
• The Board proposes to elect Jacqueline de Rojas as Senior
Independent Director and she will chair the committee that
will oversee the process for appointing and/or developing
a new Chairman.
52
rightmove.co.uk
• Lorna Tilbian will be elected as Chair of the Remuneration
Committee following the retirement of Peter Williams at
the 2019 AGM, having served on the Remuneration
Committee for over a year.
• Scott Forbes has stated his intention not to stand for
re-election at the 2020 AGM, provided that a suitable
candidate has been identified and is ready to assume
the Board Chair role at that time.
• The Nomination Committee has engaged Korn Ferry to
conduct an external search for, and will recommend the
appointment of, up to two new non-executive directors
with the experience and capabilities matching candidate
profiles identified in Rightmove’s Board strategy review.
The candidates will include individuals with the skills and
experience required for Chair succession to supplement
the potential successor candidates already on the Board.
In selecting new non-executive directors, the Nomination
Committee will give due consideration to the conclusions
of the Board Strategy Review (externally facilitated by Korn
Ferry in 2018), the current Board composition and the
Group’s strategic plan.
Board effectiveness and evaluation
In 2018, the Board completed an externally facilitated
evaluation of its performance, including performance of its
Committees. Independent Audit was appointed to conduct
the evaluation using their online self-assessment service,
Thinking Board, which all directors and the Company
Secretary were invited to complete.
The Board received Independent Audit’s comprehensive
report, which was discussed at the Board meeting in
February 2019. The report concluded that the Board and
its Committees were operating effectively with an open
and supportive Board dynamic focussed on Group strategic
priorities resulting in effective challenge and collaboration
between non-executive and executive directors.
The Board agreed initiatives to further improve Board
effectiveness which include refreshing the Board
programme with input from non-executive directors,
reprioritising Board agenda items and optimising the
format and delivery of Board presentations by the
senior management team.
An internally facilitated review of the performance of the
Board and its Committees will be conducted in 2019.
Rightmove plc annual report 2018 53
Strategic reportGovernanceFinancial statements Governance | Directors’ report
The directors submit their report together with the audited
financial statements for the Company (Number: 06426485)
and its subsidiary companies (the Group) for the year ended
31 December 2018.
The Directors’ Report comprises these pages, the sections
of the Annual Report referred to under the Corporate
Governance statement and other information below which
are incorporated into the Directors’ Report by reference.
The Board has included certain disclosures in the Strategic
Report in accordance with section 414C(11) of the
Companies Act 2006 (the Act).
Strategic Report
The Strategic Report can be found on pages 5 to 35. The Act
requires this Annual Report to present a fair, balanced and
understandable view of Rightmove’s business during the
year ended 31 December 2018 and of the position of the
Group at the end of the financial period, together with a
description of the principal risks and uncertainties facing
the business.
For the purposes of compliance with DTR 4.1 the required
content of the management report can be found in the
Strategic Report and this Directors’ Report, including the
sections of the Annual Report incorporated by reference.
Corporate governance statement
The Disclosure and Transparency Rules (DTR) require certain
information to be included in a corporate governance
statement in the Directors’ Report. Information that fulfils
these requirements can be found in the Corporate
governance report on pages 38 to 43 and is incorporated
into the Directors’ Report by reference.
Directors
The directors of the Company as at the date of this report
are Scott Forbes, Peter Williams, Andrew Findlay, Jacqueline
de Rojas, Lorna Tilbian, Rakhi Goss-Custard, Peter Brooks-
Johnson and Robyn Perriss. Ashley Martin was a non-
executive director until his retirement on 4 May 2018.
Biographies of current directors can be found on pages
36 to 37.
Share capital
On 31 August 2018 shareholders approved a resolution to
subdivide the Company’s ordinary shares of 1 pence each
(1p shares) into ten ordinary shares of 0.1 pence (0.1p shares)
each in the capital of the Company. Following the subdivision,
each shareholder held ten 0.1p shares for each 1p share
immediately prior to the subdivision. Each new 0.1p share
carries the same rights and entitlements as the 1p shares,
as set out in the Company’s Articles of Association.
The shares in issue, including 14,813,304 0.1p shares held
in treasury (2017: 1,892,456 1p shares) at the year-end
amounted to 907,684,330 0.1p shares (2017: 93,266,207
1p shares), with a nominal value of £907,684
(2017: £932,662). 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.
Results and dividends
The Group reported underlying profit(1) before tax of
£203.3m (2017: £184.4m) and the profit before tax for
the year of £198.6m (2017: £178.3m). The directors are
recommending a final dividend for the year of 4.0 pence
per 0.1p share (2017: 36.0p per 1p share) amounting to
£35,702,000 (2017: £32,758,000), which together
with the interim dividend of 2.5 pence per 0.1p share
(2017: 22.0 pence per 1p share), makes a restated total
for the year of 6.5 pence per 0.1p share (2017: 58.0 pence
per 1p share).
Subject to shareholder approval at the Annual General
Meeting (AGM) on 10 May 2019, the final dividend will be paid
on 31 May 2019 to shareholders on the register of members
at the close of business on 3 May 2019.
Share buyback
The Company’s share buyback programme continued during
2018. Of the 10% authority granted by shareholders at the
2018 AGM, a total of 1,325,040 1p shares and 11,723,700
0.1p shares (2017: 2,224,059 1p shares) were purchased
in the year to 31 December 2018, being 2.8% (2017: 2.4%)
of the shares in issue (excluding shares held in treasury)
at the time the authority was granted. The average price
paid per 1p share was £45.46 and per 0.1p share was £4.55
(2017: £40.83 per 1p share) with a total consideration paid
(excluding all costs) of £113,528,000 (2017: £90,809,000).
Since the introduction of the new parent company in
January 2008, a total of 39,964,605 1p shares and
11,723,700 0.1p shares had been purchased, of which
14,813,304 0.1p shares were held in treasury as at
31 December 2018 with the remainder having been
cancelled. A resolution seeking to renew this authority
will be put to shareholders at the AGM on 10 May 2019.
Shares held in trust
As at 31 December 2018, 2,248,020 0.1p shares
(2017: 263,767 1p shares) were held by The Rightmove
Employees’ Share Trust (EBT) for the benefit of Group
employees. These shares had a nominal value at
(1) Before share-based payments and NI on share-based incentives.
54
rightmove.co.uk
31 December 2018 of £2,248 (2017: £2,638) and a market
value of £9,711,000 (2017: £11,870,000). The shares held by
the EBT may be used to satisfy share-based incentives for
the Group’s employee share plans. During the year, 3,579
1p shares and 178,860 0.1p shares (2017: 77,008 1p shares)
were transferred to Group employees following the exercise
of share-based incentives. Additionally, 157,525 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 2018, 810,095 0.1p shares
(2017: 67,700 1p shares) were held by the SIP for the
benefit of Group employees. These shares had a nominal
value at 31 December 2018 of £810 (2017: £677) and a
market value of £3,500,000 (2017: £3,047,000). The shares
held by the SIP are awarded as free shares to eligible
employees 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, 19,500 1p shares and 4,430
0.1p shares (2017: 2,450 1p shares) were released early
from the SIP under the SIP rules.
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 106.
Political and charitable donations
During the year the Group did not make 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 Act (2017: £nil). Details of the Group’s
charitable donations are set out in the Corporate
Responsibility Report on page 33.
Annual General Meeting
The AGM of the Company will be held at the offices of UBS
Limited at 5 Broadgate, London, EC2M 2QS on 10 May 2019
at 10am. The Notice of Annual General Meeting will be
published in April 2019.
The resolutions being proposed at the 2019 AGM are
general in nature, including the renewal for a further year
of the limited authority of the directors to allot 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 2019 AGM.
Auditor
KPMG LLP has indicated its willingness to continue in office
as auditor of the Group. In accordance with section 489 of
the Act, 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 2019 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 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.
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) held on behalf of the
organisations shown in the table below, had been notified to
the Company pursuant to DTR 5.1. The information provided
below was correct as at the date of notification, where
indicated this was not in the 2018 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. Share interests declared before the 10:1 share
subdivision effective on 31 August 2018 have been restated.
% of total
voting
rights (1)
Total voting
rights
Nature of holding
Shareholder
Kayne Anderson
Rudnick Investment
Management, LLC(3)
Direct
American
Depository Receipts
BlackRock Inc
Marathon Asset
Management LLP(2)
Baillie Gifford & Co(2)
Standard Life
Aberdeen
Investments
Generation
Investment
Management LLP
Axa Investment
Managers SA(2)
64,794,160
7.26%
33,429,592
3.75%
50,160,300
5.62%
5,473,130
16,304,460
0.61%
1.83%
Indirect
Contracts for
difference
Stock Lending
Indirect
59,307,550
6.64%
Indirect 58,736,140
6.58%
Indirect
45,307,190
5.08%
Indirect
45,181,680
5.06%
Indirect
Contracts for
difference
44,413,780
4.98%
376,620
0.04%
(1) The above percentages are based upon the voting rights share capital
(being the shares in issue less shares held in treasury) of 892,556,026
as at 28 February 2019.
(2) Date of notification preceded the 2018 financial year.
(3) Date of notification followed the 2018 financial year end.
Rightmove plc annual report 2018 55
Strategic reportGovernanceFinancial statements
Governance | Directors’ report continued
Articles of association
Any amendment to the Articles may be made in accordance
with the provisions of applicable English law concerning
companies, specifically the Act (as amended from time to
time), by way of special resolution at a general meeting of
the shareholders.
Compensation for loss of office
There are no additional agreements between the Company
and its directors or employees providing for compensation
for loss of office or employment that occurs because of a
takeover bid, except that provisions of the Company’s share
plans may allow options and awards granted to directors and
employees to vest on a takeover.
Other Information
Information
Financial instruments and financial risk management
Page(s)
Location in Annual Report
109 to 111
and 132 to 134
Notes 3 and 26, Financial Statements
Appointment, removal and powers of directors
38 and 42
Corporate Governance Report
Future developments of the Group’s business
Employee engagement
Employee share schemes
Health and safety and employee related policies
including diversity and disability
Movements in share capital
Long-term incentive plans
Green House Gas Emissions
Fair, balanced and understandable
5 to 10
30
Strategic Report (1)
Strategic Report: Corporate Responsibility Report(1)
30 and 63 to 64
Strategic Report: Corporate Responsibility Report(1)
and Directors’ Remuneration Report
29 to 32 and 34
Strategic Report: Corporate Responsibility Report(1)
124 to 125
58 to 84
34
47 and 57
Note 23, Financial Statements
Directors’ Remuneration Report
Strategic Report: Corporate Responsibility Report(1)
Audit Committee Report and
Directors’ statement of responsibilities
Directors’ indemnities
43
Corporate Governance Report
(1) The Board has taken advantage of section 414C(11) of the Act to include disclosures in the Strategic Report on these items indicated above.
The Directors’ Report was approved by the Board on 1 March 2019.
Signed on behalf of the Board:
Peter Brooks-Johnson
Chief Executive Officer
1 March 2019
56
rightmove.co.uk
Governance | Directors’ responsibilities statement in respect of the Annual Report and financial statements
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.
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 strategic report includes a fair review of the
development and performance of the business and the
position of the Issuer and the undertakings included in the
consolidation taken as a whole, together with a description
of the principal risks and uncertainties that 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
1 March 2019
The directors are responsible for preparing the Annual Report
and the Group and parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and
parent Company financial statements for each financial
year. Under that law they are required to prepare the Group
financial statements in accordance with International
Financial Reporting Standards as adopted by the European
Union (IFRSs as adopted by the EU) and applicable law and
have elected to prepare the parent Company financial
statements on the same basis.
Under company law the directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
parent Company and of their profit or loss for that period.
In preparing each of the Group and parent Company
financial statements, the directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable,
relevant and reliable;
• state whether they have been prepared in accordance
with IFRSs as adopted by the EU;
• assess the Group and parent Company’s ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern; and
• use the going concern basis of accounting unless they
either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
parent Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They are
responsible for such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and
other irregularities.
Rightmove plc annual report 2018 57
Strategic reportGovernanceFinancial statements Governance | Directors’ remuneration report
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 2018.
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 60.
Performance and reward
The Committee is confident that the executive directors’
remuneration fairly reflects the overall performance of the
Group. Rightmove’s 2018 results again show healthy growth
in revenue and underlying operating profit(1), demonstrating
the strength of the Rightmove business model and the
effective implementation of the business strategy by our
management team.
In keeping with the Remuneration Policy, the Committee has
reviewed performance against the bonus plan objectives for
2018 and recommended an annual bonus payment of 78%.
The bonus achieved reflects the growth in revenue and
underlying operating profit(1) of 10%, audience growth that
has outstripped Rightmove’s closest competitors by over
800%, growth in revenue of 11% from our Other businesses
and continued strong employee engagement with 91% of
Rightmovers (2) thinking that Rightmove is a great place to
work. These performance targets are considered stretching
and vital to Rightmove’s continued success. Achievement
against each performance target is detailed on page 78 and
reflected in the higher bonus payout for 2018, compared
with 2017. The Committee considers that the performance
conditions set for 2018 were challenging and have
supported the business objectives; the threshold for
each target has been met or exceeded and the payout
is therefore appropriate.
The Group’s performance over the last three financial years
reflects strong revenue growth and efficient capital
management. The 2016 Performance Share Plan (PSP)
awards, measuring performance from 1 January 2016 to
31 December 2018, are due to vest in March 2019. 67% of
the PSP awards will vest as a result of delivering underlying
basic EPS(3) growth of 51% versus a maximum target of 55%
over the three-year performance period. The Company’s
TSR growth did not meet the threshold of TSR equal to the
FTSE 350 Index over the same period. The Committee
tested both performance conditions, which were set at
the beginning of the performance period, and believes
the overall outturn against the performance conditions is
appropriate. The PSP awards will vest in March 2019.
Investor engagement and Remuneration Policy
The current Policy was approved by our shareholders in
2017 and is set out on pages 61 to 70. The Policy is designed
to address 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 CEO and Finance Director. Rather than address this
shortfall in a single significant increase the Committee
implemented a plan, endorsed by investors in 2017, to phase
the increase over the three-year period 2017 to 2019.
The plan increases the executive directors’ salary by 3% in
excess of the average workforce rise each year over the
period. All employees, including executive directors, receive
the same inflationary pay rise, plus any ‘market adjustment’
which recognises the size and complexity of each role and
the present incumbents’ experience and capabilities and so
this approach is consistent with that for other members of
the workforce.
The Committee’s key objective is to agree a remuneration
framework that rewards and incentivises our management
team to deliver Rightmove’s longer-term strategy.
(1) Before share-based payments and NI on share-based incentives.
(2) Based on the number of employee respondents selecting ‘Yes’ as a
response to this question in the annual employee survey.
(3) Before share-based payments and NI on share-based incentives with no
related adjustment for tax. Prior year EPS has been adjusted for the 10:1
share subdivision effective on 31 August 2018.
58
rightmove.co.uk
Rightmove’s culture is based on the belief that ‘we’re all in
it together’ and reflected in the alignment of pay rises and
benefits available to all employees in recognition of their
commitment to the business and strong performance.
The Remuneration Policy for executive directors seeks
to deliver 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’s KPIs. Performance-related pay is geared
towards long-term sustainable performance, with a high
level of annual bonus deferred into shares, long-term
incentive awards and suitable share ownership guidelines.
In 2018, we consulted with our major shareholders
(representing over 60% of the Company’s share capital) on
the proposed executive base salary increases for 2019 and
the three-year vesting period for PSP awards. We received
feedback from a number of investors that pay awards
should be aligned to all employee rises and that a longer
post-vesting holding period for LTIPs were considered to
be the norm. Both Peter Brooks-Johnson and Robyn Perriss
have been key members of the senior leadership team for
more than ten years and built up significant shareholdings,
in excess of the shareholding guidelines of 200% of current
salaries. Since their appointment as directors in 2011 and
2013 respectively, Peter and Robyn have helped deliver
consistently strong year on year revenue growth and
generated significant returns for investors. The Committee
has given careful consideration to investor comments and
believes that in the context of the final year of a cohesive
Remuneration Policy, the 2019 pay and share awards
remain appropriate for the present executive directors.
The Committee will review all elements of executive
remuneration in 2019, cognisant of recommended best
practice in the 2018 Corporate Governance Code and
investor policies on executive remuneration. A new
Remuneration Policy will be proposed for shareholder
approval at the 2020 AGM.
We continue to value the engagement and support of
our shareholder base.
Peter Williams
Chairman of the Remuneration Committee
Rightmove plc annual report 2018 59
Strategic reportGovernanceFinancial statements Governance | Remuneration at a glance
2018 Financial performance
Revenue
+10%
Underlying operating profit(1)
Returns to shareholders
+10%
£168.5m
Long-term incentive plan – outcome against maximum targets: 67%
Underlying basic EPS(2)
Underlying basic EPS(2)
Total shareholder return
Total shareholder return
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12.1
0
0
2015
2015
2018
2018
67% out of a maximum 75% of 2016 PSP awards vest
67% out of a maximum 75% of 2016 PSP awards vest
on achievement of three-year EPS growth of 51%.
on achievement of three-year EPS growth of 51%.
2017
2017
2016
2016
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Rightmove
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FTSE 350
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Dec 2016
Dec 2016
Dec 2017
Dec 2017
Dec 2018
Dec 2015
Dec 2018
Dec 2015
This graph shows the value, by 31 December 2018, of £100 invested
This graph shows the value, by 31 December 2018, of £100 invested
in Rightmove on 31 December 2015, compared with the value of £100
in Rightmove on 31 December 2015, compared with the value of £100
invested in the FTSE 250 and the FTSE 350 Indices on the same date.
invested in the FTSE 250 and the FTSE 350 Indices on the same date.
25% of the 2016 PSP did not vest as relative three-year TSR
25% of the 2016 PSP did not vest as relative three-year TSR
performance did not meet the threshold of TSR equal to the
performance did not meet the threshold of TSR equal to the
FTSE 350 index.
FTSE 350 index.
Annual bonus plan – outcome against maximum targets: 78%
Underlying operating profit(1)
Threshold target:
£194.4m
£203.3m
Actual:
Growth in absolute time on
site in minutes relative to
our nearest competitors(4)
Threshold target: the same
absolute growth in minutes
Maximum target: 50% higher
Actual: growth in time in minutes
year on year over 800% larger
than our nearest competitors
Pay and performance for 2018
Salary
Benefits
Cash Bonus
Deferred Share Bonus
Long-term incentives
Total remuneration
Chief
Executive Officer
Finance
Director
£472,268
£339,200
£2,192
£184,185
£276,277
£555,256
£1,414
£132,288
£198,432
£439,219
£1,490,178
£1,110,552
Growth in Other revenue(3)
Employee survey respondents
who think ‘Rightmove is a
great place to work’
Threshold target:
Threshold target:
10%
11%
Actual:
90%
91%
Actual:
Shareholder alignment
Shareholding guidelines:
200%
of salary for all executive directors
Proportion of variable awards received in shares:
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 PSP 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. Prior year EPS has been adjusted for the 10:1 share
subdivision effective on 31 August 2018.
60
rightmove.co.uk
(3) Other revenue is all revenue excluding Agency and New Homes.
(4) Time in minutes spent on Rightmove platforms, measured by comScore,
relative to our nearest competitors.
Remuneration Policy Report (unaudited)
Introduction
This report sets out the Company’s Policy on directors’
remuneration for the forthcoming year as well as information
on remuneration paid to directors for the financial year
ended 31 December 2018. 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 2016 UK Corporate Governance Code (the Code).
This report comprises a Policy Report and an Annual Report
on Remuneration. The Remuneration Policy was approved
by shareholders at the 2017 AGM. The Annual Report on
Remuneration will be subject to an advisory vote at the 2019
AGM and a new Remuneration Policy will be proposed for
shareholder approval at the 2020 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 Group 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,
through the deferral of 60% of annual bonuses for a further
two years after the performance targets have 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:
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Remuneration Policy
Element of
remuneration
Purpose and
link to strategy
Operation
Maximum
opportunity
Performance
criteria
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.
Directors’ current salaries are
set out on page 72.
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.
The Committee considers both
individual and Group performance
in a broad context when
determining base salary increases.
Not applicable
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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
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 72 and 78.
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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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,
to retain key
individuals
and align
interests with
shareholders.
All-employee
Sharesave
Plan
Share
Incentive Plan
(SIP)
Provides all
employees with
the opportunity
to own shares 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.
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 and
will be modest in value, historically
shares to the value of £2,000
per employee.
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 guidelines.
Maximum
opportunity
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
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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
reviewed in 2018 and are set
out on page 73.
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’ fees are
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
that the conditions achieve their original purpose and are
not materially less difficult to satisfy.
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Any use of the above discretions would, where relevant,
be detailed in the Annual Report on Remuneration and if
appropriate, the subject of prior communication with the
Company’s major shareholders.
For the avoidance of doubt, all previous commitments or
entitlements agreed prior to the approval of this Policy or
appointment to the Board will be permitted to pay out on
their original terms or in line with the Policy in force at the
time they were agreed.
Selection of performance measures and how
targets are set
The performance metrics used for the annual bonus and
long-term incentive plans are derived from the Group’s
key performance indicators. Each performance measure
has a threshold target, with 25% payable, and a stretching
maximum target with 100% payable and a sliding scale for
intermediate performance.
Underlying operating profit is the primary performance metric
for the annual bonus as it is a key financial performance
indicator used within the business and aligned to the Group’s
strategy of delivering profitable growth. Operating profit is
measured on an underlying basis for consistency and 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 based around meeting and
exceeding the business plan for the year.
The annual bonus is also payable for performance against
other operational metrics, including a traffic market share
target, growth in Other business 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, measured as the time consumers spend on
Rightmove compared to our nearest competitors, is a key
indicator of the size and engagement of our audience and
the value which Rightmove brings to our customers. The
Committee therefore considers it important to set a
challenging target to increase Rightmove’s share of this
audience from an already very high starting point.
The Other revenue target measures growth in revenue from
businesses other than Agency and New Homes. As some of
these businesses are still at an early stage of development
compared to Rightmove’s core Agency and New Homes
businesses, growth in revenue rather than in operating
profit is considered to be a more appropriate measure;
this element of the bonus remains a small proportion
of the total bonus opportunity.
For the longer term PSP awards, a combination of underlying
basic earnings per share (EPS) and relative TSR performance
conditions are used as performance measures. 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
pay out for threshold performance levels, with the maximum
award requiring substantial out-performance. For TSR, the
range of targets measure how successful the Company is in
out-performing the FTSE 350 Index with 25% of this part of
the award vesting at the threshold performance level,
through to full vesting for 25% out-performance of the Index
over the three-year performance period. For historic PSP
awards, performance against the FTSE 250 Index was the
selected measure, however, the Company has resided in the
top quartile of the FTSE 250 for some time and is a current
FTSE 100 constituent and thus 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 shareholders and to maintain
tax-favoured status the awards must operate on a
consistent basis for all employees.
How the views of employees are taken into account
The Committee has not felt it necessary to consult directly
with employees on executive remuneration matters, however,
it always seeks employee views via management when
considering remuneration proposals. The Committee is
aware of 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 Group’s strategy to keep remuneration simple
and consistent, benefits and pension arrangements provided
to executive directors are identical to those offered to all
Group employees.
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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
there is a stronger connection between 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. In 2018, the Committee consulted major
shareholders representing over 60% of the Company’s
share ownership on the application of the Policy in relation to
2019 executive director remuneration proposals. The
shareholders consulted were generally supportive of the
proposals for 2019. The Committee received constructive
feedback in relation to the alignment of directors’ pay to all
employee rises in basic salary and shareholders’ preference
for post-vesting holding periods for long-term incentives.
Shareholder feedback has been carefully considered by the
Committee and will contribute to the development of the
2020 Remuneration Policy.
Reward scenarios
The Company’s 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
£503
100%
Minimum
£2,130
47%
29%
24%
£1,473
43%
23%
34%
£1,058
42%
23%
34%
£361
100%
£1,530
47%
29%
24%
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 2019 annual bonus and 62.5% vesting of the 2019 PSP awards being the midpoint
between threshold vesting of 25% and maximum vesting of 100%.
3. Maximum = 100% payable of the 2019 annual bonus and 100% vesting of the 2019 PSP awards.
Base salary is as set at 1 January 2019. The value of taxable benefits is based on the cost of supplying those benefits
(using the cost as disclosed on page 76) for the year ended 31 December 2018. 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. The executive directors do not participate in the
SIP and the value of any vested Sharesave options is included in the directors’ remuneration set out on page 77.
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.
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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 appointment, 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
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Directors’ service contracts and non-executive
directors’ terms of appointment
The Committee’s policy on service agreements for
executive directors is that they should provide for
12 months’ notice of termination by the Company and by
the executive. Any proposals for the early termination by
the Company of the service agreements of directors are
considered by the Committee.
The service agreements for the executive directors allow
for lawful termination of employment by making a payment
in lieu of notice or by making phased payments over any
remaining unexpired period of notice. The phased payments
may be reduced if, and to the extent that, the executive finds
an alternative remunerated position.
In addition, any statutory entitlements or sums to settle
or compromise claims in connection with the termination
would be paid as necessary. The Company may also
provide a contribution toward reasonable legal fees or
outplacement services.
Peter Brooks-Johnson and Robyn Perriss are entitled to
a payment in lieu of notice, restricted to base salary and
benefits. In good leaver circumstances a bonus may be
paid at the normal time subject to achievement of the
performance conditions and pro-rating for the period
worked in the year.
For awards granted under the PSP ‘good leaver’ status may
be determined, in certain prescribed circumstances, such
as death, ill health, disability, redundancy, transfer or sale
of the employing company, or other circumstances at the
discretion of the Committee. If defined as a ‘good leaver’,
awards will remain subject to performance conditions, which
will be measured over the performance period from grant to
the original vesting date, unless the Committee determine
to assess performance from grant to the date of cessation,
and which will be reduced pro-rata to reflect the proportion
of the performance period actually served. The Committee
retains the discretion to disapply time pro-rating in
exceptional circumstances and to accelerate the vesting
of awards for ‘good leavers’ in the event of death.
For awards granted under the DSP, ‘good leaver’ status
may be determined for reasons of death, injury, disability,
redundancy, transfer or sale of the employing company or
other circumstances at the discretion of the Committee. If
defined as a ‘good leaver’, awards will be retained and vest on
the original vesting date, save as above in the event of death,
when the Committee has the discretion to accelerate vesting.
Scott Forbes’ appointment may be terminated by either
party giving to the other not less than three months’ notice
in writing. The Company may also terminate by making a
payment in lieu of notice. Scott Forbes is not contractually
entitled to any other benefits on termination of his contract.
The Letters of Appointment for the non-executive directors
provide for a term of up to two three-year periods and a
possible further three-year term (subject to re-election
by shareholders and subject to the director remaining
independent). The appointments may be terminated
with a notice period of three months on either side and
the Letters of Appointment set out the time commitments
required to meet the expectations of their roles.
Copies are available for inspection on request to the
Company Secretary.
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Further details of all directors’ contracts and Letters of Appointment are summarised below:
Executive directors
Peter Brooks-Johnson(1)
Robyn Perriss(2)
Non-executive directors
Scott Forbes (Chairman)(3)
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
28 February 2019
10 January 2011
22 February 2011
30 April 2013
1 May 2013
12
12
8 years 1 month
5 years 10 months
13 July 2005
21 February 2006
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
13 years 7 months
5 years 1 month
4 years 7 months
2 years 2 months
1 year 9 months
1 year 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 13 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 11 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.
In October 2018, Peter Brooks-Johnson was appointed as a Non-Executive Director of the Interim Board of
MPI – MarketPlaces International. MPI is the preliminary business name of the international online classifieds operation
owned by Schibsted ASA, which will be spun off and established as an independent, listed company. Peter received a directors’
fee of 149,250 Norwegian Krone from MPI for the period of his appointment to 31 December 2018.
Robyn Perriss currently holds no outside directorships.
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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 2018:
Peter Williams (Chairman of the Committee)
Rakhi Goss-Custard
Jacqueline de Rojas (to 4 May 2018)
Lorna Tilbian (from 4 May 2018)
The Committee met five times during 2018 and attendance
at meetings is shown in the Corporate Governance Report
on page 42.
The quorum for meetings of the Committee is two
members. The Committee will meet as necessary, but
normally 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 CEO may also be invited to meetings
when the Committee is considering his recommendations
on the remuneration of executive colleagues and
management below Board level. No executive director
is involved in deciding their own remuneration.
External advisors
Aon, 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
Aon are available from the Company Secretary on request.
The total fees paid to Aon in respect of services to the
Committee during the year were £27,000.
During 2018 Aon 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 five 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;
• review of 2018 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 2018 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;
• review of the 2018 AGM voting and feedback from
institutional investors;
• approval of changes to the share plan rules for the new
Data Protection Act;
• consultation with shareholders on the 2019 executive
remuneration proposals;
• adoption of a new Restricted Share Plan for use with market
purchase shares for senior managers;
• evaluation of the Committee’s performance during the
year; and
• review of the Committee’s terms of reference.
Rightmove plc annual report 2018 71
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Governance | Directors’ remuneration report continued
Application of Policy for the year ending
31 December 2019
Salaries
The executive directors’ salaries for the 2019 financial year
are set out in the table below:
Salary
1 January 31 December
2018
2019
Salary Workforce
increase
Executive directors
Peter Brooks-Johnson £500,605 £472,268
Robyn Perriss
£359,552 £339,200
plus Change
3%
3%
6%
6%
The 6% increase in base salaries for the executive directors
represents an increase of 3% above the average workforce
rise of 3% for 2019, 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. All employee salaries
are subject to annual review and market adjustments as
appropriate; the Committee approves salaries for the
senior management team and other key roles.
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 on the same terms as all
employees in the Group’s private medical insurance scheme
and receive life assurance cover equal to four times base
salary. Additionally, the executive directors are members of
the Group’s medical cash plan.
Annual bonus
The annual bonus for the 2019 financial year will be
consistent with the policy detailed on page 63 of
the 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.
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The performance measures and weightings will be as follows:
Measure
As a % of maximum bonus opportunity
Financial targets
Underlying operating profit(1)
Strategic targets
Traffic market share(2)
Other revenue(3)
Tenant Services(4)
Employee engagement(5)
65%
15%
10%
5%
5%
(1) Operating profit before share-based payments and NI on share-based
incentives.
(2) Measured on a time on site basis (minutes spent relative to our nearest
competitors) by reference to comScore.
(3) Revenue excluding Agency and New Homes.
(4) Based on the number of Rightmove Tenant Passports delivered during 2019.
(5) 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 2019 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 Other revenue as a percentage of
maximum bonus opportunity has been reduced from 15%
in 2018 to 10% in 2019. A new tenant services operational
business target has been introduced at 5%. The new
measure reflects the business plan objective to grow the
number of Rightmove Tenant Passports completed by
prospective tenants, measured as a percentage of leads
received by customers via Rightmove that contain a
completed Passport. All other performance measures
and weightings remain unchanged from 2018.
The targets themselves, as they relate to the 2019 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 by the Committee
in 2018, remain at 200% of base salary for both executive
directors.
Consistent with the current Policy and previous years,
awards to the executive directors under the PSP in 2019 will
be subject to a mixture of EPS (75% of awards) and relative
TSR (25% of the awards) performance conditions. The 2019
targets are as follows:
EPS performance condition
The Group’s EPS growth will be measured over the period of
three financial years (2019 to 2021). 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 2019 awards:
Underlying basic EPS growth
from 2019 to 2021(1)
Less than 20%
20%
50%
% of award vesting
(maximum 75%)
0%
18.75%
Chairman and non-executive directors’ fees
In line with our Policy, the Chairman and non-executive
directors’ fees were reviewed in a market context and in
light of directors’ time commitments during 2018 and
increased with effect from 1 January 2019. The next review
is scheduled for 2021 with any increase taking effect in 2022.
The basic non-executive fee has been increased to
£55,000 with an additional £15,000 fee per annum paid for
the chairing of the Audit and Remuneration Committees.
The extra fee of £5,000 for the Senior Independent
Director is unchanged:
Annual fee
Annual fee
1 January 2019 31 December 2018
Between 20% and 50%
Straight-line vesting
Peter Williams
75%
Scott Forbes (Chairman)
£185,000
(1) The benchmark underlying basic EPS for the financial year 2018 from which
these targets will be measured is 18.3p.
As in prior years, the targets that are intended to operate
for the 2019 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 prior year awards.
Relative TSR performance condition
The vesting schedule for the relative TSR element of
executive directors’ 2019 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.
Andrew Findlay
Rakhi Goss-Custard
Jacqueline de Rojas
Lorna Tilbian
£75,000
£70,000
£55,000
£55,000
£55,000
£170,000
£65,000
£56,558(1)
£50,000
£50,000
£45,833(2)
(1) Fee for non-executive director to 4 May 2018 and for Audit Committee
Chairman from that date.
(2) Fee for 11 months from appointment on 1 February 2018.
Statement of shareholder voting at AGM
At the AGM on 4 May 2018, shareholders overwhelmingly
voted in favour of the Directors’ Remuneration Report.
The Committee believes this illustrates the strong level
of shareholder support for the remuneration framework.
The table below shows full details of the voting outcomes
for the Directors’ Remuneration Report:
Votes % Votes
for
for
Votes % Votes
Votes
against against withheld(1)
Directors’
Remuneration
Report
72,763,617
95.12 3,731,967
4.88 295,965
(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 will be made to our Policy where it is considered
appropriate to do so.
Rightmove plc annual report 2018 73
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Governance | Directors’ remuneration report continued
Review of past performance
Share price performance
The Company’s share price ended the year at £4.32, down
4.0% year-on-year (the FTSE 250 Index was down 15.6% and
the FTSE 350 Index was down 13.0%). On a three-year basis
the share price has increased by 4.6% and performance
relative to FTSE 250 and FTSE 350 Indices over that period
is shown in the graphs below.
Total shareholder return (TSR)
The first graph below compares the TSR of Rightmove’s
shares against the FTSE 250 Index and the FTSE 350
Index for the three-year period from 1 January 2016 to
31 December 2018. 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
150
140
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 (and more
recently in the FTSE 100) 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 March 2019.
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 ten years to
31 December 2018.
130
120
)
d
e
s
a
b
e
r
(
£
e
u
a
V
l
)
d
e
s
a
b
e
r
(
£
e
u
a
V
l
TSR Graph – three years
Total shareholder return
110
100
150
90
140
80
130
70
120
60
110
100
90
80
70
60
5
1
c
e
D
6
1
c
e
D
Rightmove
FTSE 250
FTSE 350
This graph shows the value, by 31 December 2018, of £100 invested in Rightmove on 31 December 2015,
compared with the value of £100 invested in the FTSE 250 and the FTSE 350 Indices on a daily basis.
5
1
c
e
D
6
1
c
e
D
Rightmove
FTSE 250
FTSE 350
This graph shows the value, by 31 December 2018, of £100 invested in Rightmove on 31 December 2015,
compared with the value of £100 invested in the FTSE 250 and the FTSE 350 Indices on a daily basis.
7
1
c
e
D
7
1
c
e
D
TSR Graph – ten years
Total shareholder return
)
£
(
e
u
a
V
l
)
£
(
e
u
a
V
l
4000
3500
3000
2500
2000
4000
1500
3500
1000
3000
500
2500
0
2000
1500
1000
500
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
Rightmove
FTSE 250
FTSE 350
This graph shows the value, by 31 December 2018, of £100 invested in Rightmove on 31 December 2008,
compared with the value of £100 invested in the FTSE 250 and the FTSE 350 Indices on a daily basis.
74
rightmove.co.uk
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
Rightmove
FTSE 250
FTSE 350
This graph shows the value, by 31 December 2018, of £100 invested in Rightmove on 31 December 2008,
compared with the value of £100 invested in the FTSE 250 and the FTSE 350 Indices on a daily basis.
+19%
+9%
+9%
+19%
+9%
8
1
+9%
c
e
D
Source: Thomson Reuters
8
1
c
e
D
Source: Thomson Reuters
+2741%
+2741%
+262%
+136%
8
1
c
e
D
7
1
c
e
D
Source: Thomson Reuters
+262%
+136%
8
1
c
e
D
7
1
c
e
D
Source: Thomson Reuters
5
1
c
e
D
5
1
c
e
D
6
1
c
e
D
6
1
c
e
D
Total remuneration for the Chief Executive Officer
The table below shows the total remuneration figure for the Chief Executive Officer over a ten-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
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
Executive
Peter Brooks-Johnson
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 £
1,490,178
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
Annual Bonus
outturn
(% of maximum)
Long-term
incentive outturn
(% of maximum)
78%
60%
n/a
92%
100%
70%
85%
n/a
90%
100%
100%
100%
67%
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.
Rightmove plc annual report 2018 75
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Governance | Directors’ remuneration report continued
Directors’ remuneration (audited)
The information included below up to and including page 84 is audited.
The remuneration of the directors of the Company during 2018 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 2018
£
subtotal
£
Executive directors
Peter Brooks-Johnson
Robyn Perriss(4)
Non-executive directors
Scott Forbes
Ashley Martin(5)
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
Andrew Findlay(6)
Lorna Tilbian(7)
472,268
2,192
474,460
460,462
555,256 1,015,718 1,490,178
339,200
1,414
340,614
330,720
439,219
769,939 1,110,553
170,000
20,870
65,000
50,000
50,000
56,558
45,833
–
–
–
–
–
–
–
170,000
20,870
65,000
50,000
50,000
56,558
45,833
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
170,000
20,870
65,000
50,000
50,000
56,558
45,833
(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 2018 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 2019
(including dividend roll up), which are dependent on the three-year performance period ended 31 December 2018 and multiplying by the year-end closing share
price of £4.32.
(4) In cash terms, Robyn received £6,523 less in relation to her base salary as she exchanged salary for five additional days’ holiday benefit under the Group’s flexible
holiday policy.
(5) Fee for the period to retirement on 4 May 2018.
(6) Fee as a non-executive director to 4 May 2018 and as Audit Committee Chairman from that date.
(7) Fee for 11 months from appointment on 1 February 2018.
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rightmove.co.uk
The remuneration of the directors of the Company during 2017 was:
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
Peter Brooks-Johnson(4)
Robyn Perriss
Non-executive directors
Scott Forbes
Colin Kemp (5)
Ashley Martin
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
Andrew Findlay(6)
420,103
320,000
170,000
18,102
60,000
65,000
50,000
50,000
29,166
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
18,102
60,000
65,000
50,000
50,000
29,166
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
170,000
18,102
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 31 December 2017 closing share price of £4.50; and
• the notional capital gain on Sharesave options exercisable on 1 November 2017 which reflects the difference between the option grant price and the market value
of shares on the date they vested.
(4) 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.
(5) Fee for four months to 9 May 2017.
(6) Fee for seven months from 1 June 2017 to 31 December 2017.
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 either year. The Company does not contribute to any personal pension arrangements.
Rightmove plc annual report 2018 77
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Governance | Directors’ remuneration report continued
How was pay linked to performance in 2018?
Annual bonus plan
The incentive for the financial year ended 31 December 2018 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 2018 bonus targets set, the Committee determined that 78% of the maximum
achievable cash and DSP bonus should be paid to the executive directors. Accordingly, a cash bonus of 39% of base salary
(out of a maximum of 50%) will be paid to the executives and 58.5% of base salary (out of a maximum of 75%) will be granted
to the executive directors under the DSP, which will be deferred until March 2021. More details are provided in the table
below:
Measure
Hurdle
As a % of
maximum
bonus
opportunity
Actual performance achieved
Resulting
bonus
% achieved
Targets:
• £194.4m: 25% payout
• £205.9m: 100% payout
65% Underlying operating profit achieved:
54%
£203.3m
The 2018 underlying operating profit
represented growth of 10% on 2017
Financial targets
Underlying
operating profit(1)
Strategic targets
Traffic market
share
15%
7%
2%
78%
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
15% Growth in time in minutes spent on
Rightmove platforms year-on-year
was over 800% higher than our nearest
competitors
Other revenue(2)
• Growth of 10%: 25% payout
• Growth of 15%: 100% payout
15% Revenue increased by 11% from
£18.6m to £20.6m
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
5% 91% of respondents say ‘Rightmove
is a great place to work’
Total
100%
(1) Operating profit before share-based payments and NI on share-based incentives.
(2) The targets relate to all revenue streams except Agency and New Homes.
(3) Based on the results of the annual employee survey.
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Long-term incentives vesting during the year
The PSP awards granted in March 2016 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 2018.
The vesting schedule for the relative TSR element of executive directors’ 2016 PSP awards is set out below:
Relative TSR condition
Less than the Index
Equal to the Index
25% higher than the Index
% of award vesting
(maximum 25%)
0%
6.25%
25%
Intermediate performance
Straight-line vesting
At the end of the performance period, Rightmove’s TSR was 10.1% compared to 20.7% for the FTSE 350 Index.
This performance is below the Index and therefore this part of the award (maximum 25%) will not vest on 1 March 2019.
Rightmove’s EPS growth is measured over a period of three financial years (2016 to 2018). 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 2016 to 2018
Less than 25%
25%
55%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 25% and 55%
Straight-line vesting
At the end of the performance period, underlying basic EPS was 18.3p which from an underlying basic EPS-base of 12.1p
(restated for comparability to reflect the 10:1 share subdivision effective 31 August 2018) results in three-year EPS growth of
51%, just below the maximum 55% EPS growth target and will result in 67% vesting of this part of the award (maximum of 75%)
on 1 March 2019.
Share awards granted during the year
On 28 February 2018 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
212,310(2)
152,490(2)
£944,536
£678,400
(1) Based on the average mid-market share price for the three consecutive days prior to grant, taken from the Daily Official List, of £44.49 which is equivalent to
£4.45 post the 10:1 share subdivision.
(2) Adjusted for 10:1 share subdivision effective on 31 August 2018.
Rightmove plc annual report 2018 79
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Governance | Directors’ remuneration report continued
The vesting schedule for the relative TSR element of
executive directors’ 2018 PSP awards is set out below. It is
consistent with the TSR condition used for previous grants
under the share option scheme. Performance will be
measured over three financial years.
Relative TSR condition
Less than the Index
Equal to the Index
25% higher than the Index
% of award vesting
(maximum 25%)
0%
6.25%
25%
Intermediate performance
Straight-line vesting
Rightmove’s EPS growth will be measured over a period of
three financial years (2018 to 2020). 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 2018:
Underlying basic EPS growth
from 2018 to 2020
Less than 20%
20%
50%
% of award vesting
(maximum 75%)
0%
18.75%
75%
Between 20% and 50%
Straight-line vesting
The benchmark underlying basic EPS for the financial year
2017 from which these targets will be measured is 16.3p
(restated for comparability to reflect the 10:1 share
subdivision effective 31 August 2018).
80
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Share-based incentives held by the directors and not exercised as at 31 December 2018
Share-based incentives held
Granted in year/
dividend roll-up
1 January 2018
Exercise price
Share-based incentives adjusted
Share-based incentives held
Average share price at
for subdivision (10:1) (1)
at 31 D ece m ber 2018
post-subdivision
post subdivision
date of exercise
Exercise price
Vesting date
Exercised
Expiry date
D ate granted
Executive directors
Peter Brooks-Johnson
05/03/2009
(Unapproved)
05/03/2010
(Unapproved)
03/03/2014
(PSP)
02/03/2015
(PSP)
01/10/2015
(Sharesave)
01/03/2016
(DSP)
01/03/2016
(PSP)
01/03/2017
(DSP)
01/03/2017
(PSP)
09/05/2017
(PSP)
01/10/2017
(Sharesave)
28/02/2018
(PSP)
28/02/2018
(DSP)
01/10/2018
(Sharesave)
139,286
52,553
26,021
–
–
–
£2.24
1,392,860
1,392,860(2) £0.22 £4.37
– 05/03/2012 04/03/2019
£6.66
525,530
– £0.67
–
525,530 05/03/2013 04/03/2020
£0.00
260,210
260,210(3) £0.00 £4.37
– 03/03/2017 02/03/2019
24,556
895
£0.00
254,510
– £0.00
304
–
£29.60
3,040
– £2.96
–
–
254,510 02/03/2018 01/03/2020
3,040 01/11/2018 30/04/2019
£0.00
66,170
66,170(4) £0.00 £4.37
– 01/03/2018 28/02/2019
6,617
18,351
6,141
18,691
3,457
–
–
–
–
–
£0.00
183,510
– £0.00
£0.00
61,410
– £0.00
£0.00
186,910
– £0.00
£0.00
34,570
– £0.00
273
–
£32.89
2,730
– £3.29
– 21,231(7)
£0.00
212,310
– £0.00
–
4,249(8)
£0.00
42,490
– £0.00
–
–
–
–
–
–
–
–
183,510 01/03/2019 28/02/2021
61,410 01/03/2019 29/02/2020
186,910 01/03/2020 28/02/2022
34,570 09/05/2020 08/05/2022
2,730 01/11/2020 30/04/2021
212,310 28/02/2021 27/02/2023
42,490 28/02/2020 27/02/2021
2,313 01/11/2021 30/04/2022
Total
296,250 26,375
–
–
–
–
2,313(9)
– £3.89
3,228,563
1,719,240
–
– 1,509,323
Rightmove plc annual report 2018 81
Strategic reportGovernanceFinancial statements
D ate granted
Robyn Perriss
02/03/2015
(PSP)
01/03/2016
(DSP)
01/03/2016
(PSP)
01/03/2017
(DSP)
01/03/2017
(PSP)
01/10/2017
(Sharesave)
28/02/2018
(PSP)
28/02/2018
(DSP)
Governance | Directors’ remuneration report continued
Share-based incentives held
Granted in year/
dividend roll-up
1 January 2018
Share-based incentives adjusted
Exercised prior to subdivision
for subdivision (10:1) (1)
on 31 August 2018
post subdivision
Exercise price
Exercise price
Share-based incentives held
Average share price at
at 31 D ece m ber 2018
date of exercise
Vesting date
Expiry date
19,425
708 £0.00 20,133(5)
5,234
– £0.00
5,234(6)
–
–
£0.00
£49.48
£0.00
£49.48
–
–
02/03/2018 01/03/2020
01/03/2018 28/02/2019
14,516
– £0.00
– 145,160
£0.00
4,858
– £0.00
–
48,580
£0.00
16,029
– £0.00
– 160,290
£0.00
547
– £32.89
–
5,470
£3.29
– 15,249(7) £0.00
– 152,490
£0.00
–
3,236(8) £0.00
–
32,360
Total
60,609 19,193
– 25,367 544,350
£0.00
–
–
–
–
–
–
–
–
145,160
01/03/2019 28/02/2021
48,580
01/03/2019 29/02/2020
160,290
01/03/2020 28/02/2022
5,470
01/11/2020 30/04/2021
152,490
28/02/2021 27/02/2023
32,360
28/02/2020 27/02/2021
544,350
(1) The Company’s ordinary shares of 1 pence each were divided into 10 new ordinary shares of 0.1 pence each on 31 August 2018. The option prices and the number
of shares under options granted before 31 August 2018 have been restated for the share subdivision. Options exercised before the share subdivision have not
been restated.
(2) The unapproved option granted on 5 March 2009 was exercised by Peter Brooks-Johnson and net settled by the Company on 27 November 2018. Peter subsequently
sold 623,440 shares at a price of £4.37 per share to satisfy the resulting tax liability and retained the balance of 697,406 shares.
(3) The nil cost performance shares awarded under the PSP to executive directors on 3 March 2014 vested in 2017 subject to EPS and relative TSR performance measures,
which were met in full. Peter Brooks-Johnson exercised the nil cost option over 260,210 shares (which included a dividend roll-up of 8,810 shares)
on 27 November 2018 and sold 122,820 shares at an average market price of £4.37 per share to satisfy the resulting tax liability and retained the balance of
137,390 shares.
(4) The nil cost deferred shares granted under the DSP on 1 March 2016 vested in March 2017. Peter Brooks-Johnson exercised the nil cost option over 66,170 shares on
27 November 2018, sold 31,233 shares at an average market price of £4.37 per share to satisfy the resulting tax liability and retained the balance of 34,937 shares.
(5) The nil cost performance shares awarded under the PSP to executive directors on 2 March 2015 vested in March 2018 subject to EPS and relative TSR performance
measures, which were met in full. Robyn Perriss exercised the nil cost option over 20,133 shares (which included a dividend roll-up of 708 shares) on 16 August 2018
and sold 14,798 shares at an average market price of £49.48 per share to satisfy the resulting tax liability and retained 5,335 shares, being half the balance available
after tax.
(6) The nil cost deferred shares granted under the DSP on 1 March 2016 vested in March 2018. Robyn Perriss exercised the nil cost option over 5.234 shares on
16 August 2018 and sold all the shares at an average market price of £49.48 per share.
(7) On 28 February 2018, the executive directors were awarded nil cost deferred shares under the DSP, which vest in March 2020. The average mid-market share
price for the three consecutive preceding days, used to calculate the number of shares awarded, was £44.49.
(8) On 28 February 2018, the executive directors were awarded nil cost performance shares under the PSP, which vest in March 2021. Further details are set out on
pages 72 to 73.
(9) On 1 October 2018, Peter Brooks-Johnson was granted a Sharesave option over 2,313 shares at an exercise price of £3.89. The option will be exercisable from
November 2021.
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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 2019 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 2018, treasury shares were used to satisfy vested DSP and PSP awards and unapproved options over 4,111,256
shares, representing 0.5% of issued share capital (less treasury shares) as at 31 December 2018.
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 0.1 pence
Interests in
share-based incentives
Executive directors
Peter Brooks-Johnson
Robyn Perriss
Non-executive directors
Scott Forbes
Peter Williams
Rakhi Goss-Custard
Jacqueline de Rojas
Andrew Findlay
Lorna Tilbian
Total
At
31 December 2018
At
1 January 2018
(restated 10:1
share subdivision)
PSP & DSP
awards
(unvested)
1,771,493
241,150
907,160
187,890
721,200
538,880
2,193,000
2,193,000
37,280
5,440
1,880
–
–
37,280
5,440
1,880
–
–
–
–
–
–
–
–
PSP & DSP
awards
(vested but
unexercised)
254,510
–
–
–
–
–
–
–
Options
(unvested)
Options
(vested but
unexercised)
5,043
5,470
–
–
–
–
–
–
528,570
–
–
–
–
–
–
–
4,250,243
3,332,650
1,260,280
254,510
10,513
528,570
• The Company’s shares in issue (including 14,813,304 shares held in treasury) as at 31 December 2018 comprised 907,684,330 ordinary shares of 0.1p each,
(2017: 93,266,207 ordinary shares of 1p each).
• The closing share price of the Company was £4.32 as at 31 December 2018. The lowest and highest share prices during the year, restated for the share subdivision, were
£4.18 and £5.35 respectively.
• The executive directors are regarded as being interested, for the purposes of the Companies Act 2006, in 2,248,020 ordinary shares of 0.1p each (2017: 263,767
ordinary shares of 1p each) in the Company currently held by the EBT at 31 December 2018 as they are, together with other employees, potential beneficiaries of
the EBT.
• The directors’ beneficial holdings represent 0.5% of the Company’s shares in issue as at 31 December 2018 (2017: 0.4%) (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 64. The interests of the
executive directors in office at 31 December 2018 in the share capital of the Company as a percentage of base salary were
as follows:
Executive directors
Peter Brooks-Johnson
Robyn Perriss
(1) Based on £4.32 per share, being the closing share price on 31 December 2018.
Number of
Value of shares at
shares held at
1 January 2019 31 December 2018 31 December 2018(1)
Base salary
Value of
shares as a %
of base salary
£500,605
£359,552
1,771,493
£7,652,850
241,150
£1,041,768
1,529%
290%
Rightmove plc annual report 2018 83
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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 6%, in line with the approved Remuneration Policy of awarding 3% above the average
workforce inflationary increase for 2018. The annual bonus of the CEO increased relative to 2017 by 38% as a result of 78%
of the maximum bonus being achieved in relation to the 2018 bonus targets, compared with a payout of 60% for 2017.
The average salary for all employees increased by 5% due to a 3% universal cost of living increase in January 2018, above
cost of living increases for changing roles with greater responsibilities and market adjustments. The bonus increase was due
to 78% of the maximum senior management bonus being achieved, compared with a payout of 60% for 2017.
Chief Executive Officer
Salary
Benefits
Annual bonus
Average of all employees(1)
Salary
Benefits
Annual bonus
Ratio of CEO to average employee pay(2)
(1) Based on 493 employees, which excludes the executive directors.
(2) The multiple of the CEO remuneration compared to the average employee’s remuneration.
2018
£
2017
£
% change
472,268
445,536
2,192
1,852
460,461
334,152
48,193
854
1,805
45,995
770
1,571
19x
16x
6%
2%
38%
5%
11%
28%
14%
Relative importance of the spend on pay
The table below shows the total pay for all Rightmove’s employees compared to other key financial indicators. Additional
information on the number of employees, total revenue and underlying operating profit has been provided for context.
Year ended
31 December
2018
Year ended
31 December
2017
£30,506,000
£28,338,000
£54,977,000
£49,611,000
£113,528,000
£90,809,000
£37,815,000
£34,120,000
495
479
£267,821,000 £243,273,000
£203,329,000 £184,365,000
% change
6%
11%
25%
11%
3%
10%
10%
Employee costs (refer Note 7)
Dividends paid to shareholders (refer Note 12)
Purchase of own shares (refer Note 23)
Income tax (refer Note 10)
Average number of employees (refer Note 7)(1)
Revenue
Underlying operating profit(2)
(1) Average number of employees includes executive directors.
(2) Before share-based payments and NI on share-based incentives.
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Governance | Independent auditor’s report to the members of Rightmove plc
Overview
Materiality:
Group financial
statements as a whole
Coverage
Key audit matters
Recurring risks
£8.5m (2017:£7.5m)
4.3% (2017: 4.2%)
of profit before tax
99.8% (2017:100%) of
Group profit before tax
vs 2017
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 2017), in decreasing order of audit
significance, in arriving at our audit opinion above, together
with our key audit procedures to address those matters and,
as required for public interest entities, our results from those
procedures. These matters were addressed, and our results
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.
1. Our opinion is unmodified
We have audited the financial statements of Rightmove plc
(“the Company”) for the year ended 31 December 2018
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 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.
• 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 first 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 is for the 13 financial years ended
31 December 2018 as a public-interest entity and 19 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.
Rightmove plc annual report 2018 85
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The risk:
Our response:
Processing error:
Our audit procedures included:
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 as well as
controls over the review of analysis of outliers in billing;
Data comparison: Reconciling revenue transactions, through postings
to trade receivables, to cash receipts, on a monthly basis by customer.
We tested a sample of unreconciled revenue entries back to supporting
evidence to assess whether revenue was recognised appropriately;
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; we also reviewed the standard packages against
the revenue recognition policy;
Tests of details: We assessed the appropriateness of contract liabilities
at the period end with reference to advance consideration where
amounts are received 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 all journals posted in respect of revenue
and, using computer assisted audit techniques, analysed these to
identify any entries which were unexpected based upon the specific
characteristic of the journal, considering in particular whether the
opposite side of the journal entry was as expected, based on our
business understanding. We tested a sample of all expected entries
back to supporting evidence to assess whether revenue was
recognised appropriately.
Our results
We found no exceptions performing the procedures described above.
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.
Revenue
recognition
(£267.8 million;
2017: £243.3m)
Refer to page 46
(Audit Committee
Report), pages 98
to 100 (accounting
policy) and pages
112 to 113
(financial
disclosures).
.
The key revenue streams, being
Agency, New Homes and Others,
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 products 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 particular
revenue being recognised at the
incorrect amount or not in the correct
period. 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.
Recoverability of
parent
Company’s
investment in
subsidiaries
(£551.5 million;
2017: £548.7m)
Refer to page 46
(Audit Committee
Report), page 106
(accounting policy)
and pages 120 to
121 (financial
disclosures).
Low risk, high value:
The carrying amount of the parent
Company’s investments in the
subsidiary company Rightmove Group
Limited represents 99%
(2017: 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.
86
rightmove.co.uk
3. Our application of materiality and an overview
Group revenue
Group profit before tax
of the scope of our audit
Materiality for the Group financial statements as a whole was
set at £8.5m (2017: £7.5m), determined with reference to a
benchmark of Group profit before tax, of which it represents
4.3% (2017: 4.2%).
Materiality for the parent Company financial statements as a
whole was set at £6.8m (2017: £6.0m), determined with
reference to a benchmark of Company net assets, of which
it represents 1.3% (2017: 1.1%).
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £0.43m,
in addition to other identified misstatements that warranted
reporting on qualitative grounds.
Of the Group’s four (2017: three) reporting components,
which includes the parent Company, we subjected two
(2017: two) to full scope audits for Group purposes.
The components within the scope of our work accounted
for 100% of total Group revenue, 99.8% of Group profit
before tax and 99.6% of total Group assets.
The remaining 0.4% of total Group assets is represented
by two reporting components none of which individually
represented more than 0.4% of any of total Group revenue,
Group profit before tax or total Group assets. For the residual
components, we performed analysis at an aggregated Group
level to re-examine our assessment that there were no
significant risks of material misstatement within these.
The work on the two reporting components (2017: two
components) was performed by the Group team, which
includes the audit of the parent Company, with materiality
for the components set at £6.8m (2017: £6.0m).
Profit before tax
£198.3m
(2017: £178.2m)
Group materiality
£8.5m (2017: £7.5m)
£8.5m
Whole financial statements
materiality (2017: £7.5m)
£6.8m
Materiality at two components
(£6.8m) (2017: £6.0m)
Profit before tax
Group materiality
£0.43m
Misstatements reported to the
Audit Committee (2017: £0.37m)
100%
(2017: 100%)
100
100
Group total assets
0.4
0.2
99.6%
(2017: 99.8%)
99.8
99.6
0.2
99.8%
(2017: 100%)
99.8
Full scope for Group audit
purposes 2018
Full scope for Group audit
purposes 2017
Residual components
4. We have nothing to report on going concern
The directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or the Group or to cease their operations, and as
they have concluded that the Company’s and the Group’s
financial position means that this is realistic. They have also
concluded that there are no material uncertainties that could
have cast significant doubt over their ability to continue as a
going concern for at least a year from the date of approval of
the financial statements (“the going concern period”).
Our responsibility is to conclude on the appropriateness of
the directors’ conclusions and, had there been a material
uncertainty related to going concern, to make reference to
that in this audit report. However, as we cannot predict all
future events or conditions and as subsequent events may
result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the
absence of reference to a material uncertainty in this
auditor’s report is not a guarantee that the Group and
the Company will continue in operation.
In our evaluation of the directors’ conclusions, we
considered the inherent risks to the Group’s and Company’s
business model, including the impact of Brexit, and analysed
how those risks might affect the Group’s and Company’s
financial resources or ability to continue operations over
the going concern period. We evaluated those risks and
concluded that they were not significant enough to require
us to perform additional audit procedures.
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4. We have nothing to report on going concern continued
Based on this work, 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 97 is materially inconsistent with our audit knowledge.
We have nothing to report in these respects, and we did not
identify going concern as a key audit matter.
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 28 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.
Our work is limited to assessing these matters in the context
of only the knowledge acquired during our financial
statements audit. As we cannot predict all future events or
conditions and as subsequent events may result in
outcomes that are inconsistent with judgments that were
reasonable at the time they were made, the absence of
anything to report on these statements is not a guarantee as
to the Group’s and Company’s longer-term viability.
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
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.
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
88
rightmove.co.uk
• 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.
distributable profits legislation and taxation legislation and
we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial
statement items.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 57,
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’s and the 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 general commercial and
sector experience, through discussion with the directors and
other management (as required by auditing standards), and
discussed with the directors and other management the
policies and procedures regarding compliance with laws and
regulations. We communicated identified laws and
regulations throughout our team and remained alert to any
indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the
financial statements varies considerably.
The Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation),
Whilst the Group is subject to many other laws and
regulations, we did not identify any others where the
consequences of non-compliance alone could have a
material effect on amounts or disclosures in the financial
statements.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our audit in
accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations
(irregularities) is from the events and transactions reflected
in the financial statements, the less likely the inherently
limited procedures required by auditing standards would
identify it. In addition, as with any audit, there remains a
higher risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. We
are not responsible for preventing non-compliance and
cannot be expected to detect non-compliance with all laws
and regulations.
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. 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 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.
Anna Jones (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
1 March 2019
Rightmove plc annual report 2018 89
Strategic reportGovernanceFinancial statements Consolidated statement of comprehensive income for the year ended 31 December 2018
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
4, 5
25
25
6
8
9
10
11
11
12
12
2018
£000
267,821
(69,231)
203,329
(4,320)
(419)
2017
£000
243,273
(64,972)
184,365
(4,836)
(1,228)
198,590
178,301
171
(491)
(320)
129
(214)
(85)
198,270
(37,815)
178,216
(34,120)
160,455
144,096
160,455
144,096
17.80
17.69
6.10
54,977
Restated*
15.67
15.51
5.40
49,611
* Following a ten for one subdivision of the Company’s ordinary share capital, effective 31 August 2018, comparative earnings per share and dividend per share numbers
have been restated for the 2017 financial year to ensure comparability of information.
90
rightmove.co.uk
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
Consolidated statement of financial position as at 31 December 2018
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Total non-current assets
Current assets
Trade and other receivables
Contract assets
Money market deposits
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Contract liabilities
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Lease 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
5
18
18
19
21
5
22
21
22
23
2018
£000
15,203
2,873
2,798
2017
£000
2,709
3,290
5,745
20,874
11,744
22,479
427
4,090
15,847
35,094
–
4,045
20,930
42,843
60,069
63,717
71,813
(18,081)
(1,213)
(2,146)
(16,753)
(671)
(38,888)
–
–
(14,693)
(755)
(38,864)
(54,336)
(11,845)
(424)
(12,269)
–
(294)
(294)
(51,133)
(54,630)
12,584
17,183
908
524
11,152
933
499
15,751
12,584
17,183
The financial statements were approved by the Board of directors on 1 March 2019 and were signed on its behalf by:
Peter Brooks-Johnson
Director
Robyn Perriss
Director
91
Rightmove plc annual report 2018
Company statement of financial position as at 31 December 2018
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
Total equity attributable to the equity holders of the parent
Note
15
16
2018
£000
2017
£000
551,478
966
548,827
2,490
552,444
551,317
552,444
551,317
19
(42,140)
(23,410)
23
(42,140)
(23,410)
510,304
527,907
908
118,374
391,022
933
115,698
411,276
510,304
527,907
The financial statements were approved by the Board of directors on 1 March 2019 and were signed on its behalf by:
Peter Brooks-Johnson
Director
Robyn Perriss
Director
92
rightmove.co.uk
Consolidated statement of cash flows for the year ended 31 December 2018
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
Income tax expense
Operating cash flow before changes in working capital
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in provisions
Increase in contract assets
Increase in contract liabilities
Cash generated from operating activities
Financial expenses paid
Income taxes paid
Net cash from operating activities
Cash flows 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
Net cash used in investing activities
Cash flows used in financing activities
Dividends paid
Purchase of own shares for cancellation
Purchase of own shares for share incentive plans
Share-related expenses
Payment of lease liabilities
Proceeds on exercise of share-based incentives
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Note
13
14
8
9
13
14
25
10
22
13
14
12
23
24
23
21
2018
£000
2017
£000
160,455
144,096
3,307
545
(171)
491
7
–
4,320
37,815
1,311
473
(129)
214
20
203
4,836
34,120
206,769
185,144
(5,344)
(1,069)
46
(261)
287
(5,154)
3,212
689
–
–
200,428
183,891
(190)
(32,798)
(214)
(33,187)
167,440
150,490
118
(1,614)
–
(128)
94
(1,755)
3
(441)
(1,624)
(2,099)
(54,977)
(113,528)
(685)
(778)
(1,532)
601
(49,611)
(90,809)
(761)
(757)
–
728
(170,899)
(141,210)
(5,083)
20,930
7,181
13,749
Cash and cash equivalents at 31 December
18
15,847
20,930
93
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Company statement of cash flows for the year ended 31 December 2018
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
27
27
25
19
18
2018
£000
2017
£000
148,740
144,476
(152,845)
471
1,669
(799)
(149,551)
330
2,211
(1,136)
(2,764)
(3,670)
2,764
3,670
–
–
–
–
–
–
–
–
94
rightmove.co.uk
Consolidated statement of changes in shareholders’ equity for the year ended 31 December 2018
At 1 January 2017
955
(14,447)
339
138
21,057
Share
capital
£000
Own
shares held
£000
Other
reserves
£000
Note
Reverse
acquisition
reserve
£000
Retained
earnings
£000
Total
equity
£000
8,042
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
25
10
12
24
24
23
23
–
–
–
–
–
–
(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)
At 31 December 2017
933
(12,995)
361
138
28,746
17,183
At 1 January 2018
933
(12,995)
361
138
28,746
17,183
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
25
10
12
24
24
23
23
–
–
–
–
–
–
(25)
–
–
–
–
–
2,542
(685)
–
–
–
–
–
–
–
–
25
–
–
160,455
160,455
–
–
–
–
–
–
–
4,320
4,320
10
(54,977)
(1,941)
–
(113,528)
(795)
10
(54,977)
601
(685)
(113,528)
(795)
At 31 December 2018
908
(11,138)
386
138
22,290
12,584
95
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Company statement of changes in shareholders’ equity for the year ended 31 December 2018
At 1 January 2017
955
(12,156)
9,531
103,520
417,957
519,807
Share
capital
£000
Own
shares held
£000
Other
reserves
£000
Note
Reverse
acquisition
reserve
£000
Retained
earnings
£000
Total
equity
£000
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 2017
At 1 January 2018
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
25
10
24
12
23
23
25
10
24
12
23
23
–
–
–
–
–
–
–
(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)
933
(11,017)
12,178
103,520
422,293
527,907
933
(11,017)
12,178
103,520
422,293
527,907
–
–
–
–
–
–
–
(25)
–
–
–
–
–
–
(1,446)
2,438
–
–
–
–
–
2,651
–
–
–
25
–
–
148,740
148,740
–
–
–
–
–
–
–
–
1,669
1,669
83
–
(54,977)
–
(2,438)
(113,528)
(795)
83
2,651
(54,977)
(1,446)
–
(113,528)
(795)
At 31 December 2018
908
(10,025)
14,854
103,520
401,047
510,304
96
rightmove.co.uk
Notes forming part of the financial statements
1 General information
Rightmove plc (the Company) is a public limited 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 2018 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 2018 are available upon request
to the Company Secretary from the Company’s registered office at 2 Caldecotte Lake Business Park, 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 1 March 2019.
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.
This is the first set of the Group’s full financial statements where IFRS 9, IFRS 15 and IFRS 16 have been applied. Changes to
significant accounting policies are described in Note 2.
The financial statements have been prepared on an historical cost basis.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has existing rights that give it the ability to direct
the relevant activities of an entity and has the ability to affect the returns the Group will receive as a result of its involvement with
the entity. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The
financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases.
During the year the Group incorporated two new entities, Rightmove Rent Services Limited and Rightmove Property Services
Limited, with further details of the investments set out in Note 15. The results of these entities have been consolidated in these
Group financial statements, with no significant impact for the financial year.
Going concern
Throughout 2018, 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 £15,847,000 at 31 December 2018 (2017: £20,930,000). The Group also had
£4,090,000 of money market deposits (2017: £4,045,000).
During the year £168,505,000 (2017: £140,420,000) 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
on 13 February 2018. This agreement was extended for a further year on 15 January 2019 and will expire on 12 February 2020.
No amount was drawn under the facility in either year.
The Board of directors is confident that with the existing cash resources and banking facilities in place, coupled with the strength
of the underlying business model, the Group and the Company will remain cash positive and will have adequate resources to
continue in operational existence for a period of 12 months from the date of signing these accounts.
Further information regarding the Group’s business activities, together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report on pages 1 to 35. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described on pages 19 to 23. In addition, Note 3 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.
97
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements Notes continued
1 General information continued
Capital structure – subdivision of shares
On 31 August 2018 the ordinary shares of 1 pence each in the capital of the Company were subdivided into ten ordinary shares of
0.1 pence each in the capital of the Company (the New Ordinary Shares); the purpose being to make the Company’s shares more
accessible to smaller investors, including Rightmove employees. Each New Ordinary Share has the rights and entitlements as
before and continues to be subject to the restrictions set out in the articles of association of the Company. Group disclosures in
relation to earnings per share, dividends, capital and reserves and share-based payments have been updated accordingly.
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.
Management has determined that there are no significant areas of estimation uncertainty or critical judgements in applying
accounting policies that have a significant effect on the amounts recognised in the consolidated and Company financial
statements.
Alternative 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
alternative performance measures presented by the Group are:
• Underlying operating profit – which is defined as operating profit before share-based payments and National Insurance (NI) 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 ordinary
shares in issue for the year.
The directors believe that these alternative performance 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 alternative performance measures are designed to increase comparability of the Group’s financial
performance year-on-year.
2 Significant accounting policies
Changes in significant account policies
The Group has adopted IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases
with effect from 1 January 2018 with IFRS 15 and IFRS 16 having a material effect on the Group’s financial statements.
IFRS 15 Revenue from contracts with customers
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced
IAS 18 Revenue and related interpretations.
The Group has adopted IFRS 15 using the cumulative effect method, with the effect of initially applying this standard recognised
at the date of initial application (i.e. 1 January 2018). Accordingly, the information presented for 2017 has not been restated
– i.e. it is presented, as previously reported, under IAS 18 and related interpretations.
98
rightmove.co.uk 2 Significant accounting policies continued
Under IAS 18 revenue was recognised either over time where there was continuing service provided by Rightmove to the
customer or at the point in time when the risks and rewards of ownership transferred to the customer. Under IFRS 15 revenue is
recognised when performance obligations are satisfied. For the Group the transfer of control under IFRS 15 and satisfaction of
performance obligations remains consistent with the transfer of risks and rewards to the customer under IAS 18. Consequently,
there were no profit or loss impacting adjustments required on application of IFRS 15.
On adoption of IFRS 15 the Group no longer recognises a trade receivable and a corresponding deferred income balance for
amounts billed in advance for services which have not yet been provided. IFRS 15 classifies this as a contract liability, as the Group
has not yet delivered the promised services to its customer, and a contract asset. IFRS 15 requires the offset of contract assets
and contract liabilities within the same contract. Overall, this has resulted in no adjustment at the net asset level.
Accounting policy for revenue in 2018
Revenue is measured based on the consideration specified in a contract with a customer and is recognised when a customer
obtains control of the services.
Revenue principally represents the amounts receivable from customers in respect of membership of the Rightmove platforms.
Rightmove also provides non-property advertising services, including Data Services and third party advertising. Revenue is
recognised as services are provided to customers. Contract assets primarily relate to the Group’s rights to consideration for
services provided but not invoiced at the reporting date. Contract assets are transferred to receivables when invoiced and the
rights have become unconditional. Contract liabilities primarily relate to the advance consideration received from Estate Agency,
Overseas and Commercial customers, for which revenue is recognised as or when the services are provided.
The table below covers the different types of products and services offered to customers along with the nature and timing of
satisfaction of performance obligations:
Type of product/service: Property products
Nature and timing of satisfaction of performance obligations
For membership listing services customers pay monthly subscriptions to list their properties on the Rightmove platforms.
Control is obtained by customers across the life of the contract as their properties are continuously listed on the different
platforms. The continuous listing of properties is a distinct performance obligation for each customer. 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.
Agency, Overseas and Commercial services are typically billed in advance and New Homes developers are billed monthly in arrears.
For additional advertising products customers have the option to enhance their property listings and presence on Rightmove
through additional advertising products. Each additional advertising product is a distinct performance obligation. For products
that provide enhanced brand exposure or property exposure across the life of the product, control is passed to the customer
over time. Revenue is only recognised at a point in time for additional advertising products where the customer does not receive
the benefit until they choose to apply the product.
Additional advertising products are principally billed on a monthly subscription basis in line with core listing services, however
certain products are billed on an individual charge basis.
Contract modifications occur on a regular basis as customers add or remove additional advertising products from their contracts.
Each contract modification is treated as a separate performance obligation. Following a contract modification, the customer is
billed in line with the delivery of the remaining performance obligations.
A receivable is recognised when the Group’s right to consideration is only conditional on the passage of time.
Discounted services may be offered to customers as part of membership or package offers.
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2 Significant accounting policies continued
Type of product/service: Non-property products
Nature and timing of satisfaction of performance obligations
Data Services revenue relates to fees generated for data and valuation services under a variety of contractual arrangements,
with each service being a separate performance obligation. Control is obtained by customers either across the life of the
contract where customers are licensed to use Rightmove’s property tools or at a point in time when a one-off data service is
provided. Discounted services may be offered to customers and are taken into consideration in the transaction price for each
performance obligation.
Third party advertising revenue represents amounts paid in respect of non-property advertising on the Rightmove platforms
and control is obtained by customers across the life of the contract as their advertising is displayed on the different platforms.
Some of the Group’s arrangements with third parties need to be considered to determine if the Group acts as a principal or an
agent in providing the services to the customer. On evaluation of a number of indicators it is appropriate for the Group to be
treated as the agent so revenue is recognised at a net amount reflecting the margin earned.
A receivable is recognised only when the Group’s right to consideration is only conditional on the passage of time.
Accounting policy for revenue in 2017
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.
Data Services, third party advertising and Consumer Services revenue is typically billed in arrears.
IFRS 16 Leases
IFRS 16 Leases was issued in January 2016, and was endorsed by the EU in 2017. 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. The Group has decided to early adopt this standard using the modified
retrospective approach with a date of initial application to the Group of 1 January 2018. Comparative information has not
been restated and continues to be reported under IAS 17.
The adoption of IFRS 16 had a material impact on the Group’s financial statements with the recognition of new right of use assets
and lease liabilities on the Group’s Consolidated Statement of Financial Position. The nature of expenses related to those leases
has also changed as the straight-line operating lease expense has been replaced with a depreciation charge for right of use
assets and interest expense on lease liabilities. On adoption there was no impact to the opening equity position.
Accounting policy for leases in 2018
At inception of a contract, the Group assesses whether or not a contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
For contracts entered into before 1 January 2018, the Group determined whether the arrangement was or contained a lease
based on the assessment of whether fulfilment of the arrangement was dependent on the use of a specific asset and the
arrangement had conveyed a right to use the asset.
100
rightmove.co.uk 2 Significant accounting policies continued
When a lease is recognised in a contract the Group recognises a right of use asset and a lease liability at the lease
commencement date.
The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
prepayments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease
incentives received. The right of use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The estimated useful lives of
right of use assets are determined on the same basis as those of property, plant and equipment. In addition, the right of use asset
is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental
borrowing rate. The weighted average incremental borrowing rate used to measure the lease liability at initial application was 2.3%.
The lease liability is measured at amortised cost using the effective interest method. It is re-measured when there is a change in
future lease payments arising from a change in an index or rate, or if the Group changes its assessment of whether it will exercise
a purchase, extension or termination option.
The Group presents right of use assets in property, plant and equipment and leased liabilities in lease liabilities in the Statement of
Financial Position.
The Group has elected not to recognise right of use assets and lease liabilities for short-term leases of machinery that have a
lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group recognises the lease
payments associated with these leases as an expense on a straight-line basis over the lease term.
Accounting policy for leases in 2017
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.
IFRS 9 Financial instruments
IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell
non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 is effective for
annual periods beginning on or after 1 January 2018 and simplifies the classification of financial assets for measurement
purposes. Comparative information has not been restated and continues to be reported under IAS 39.
There is no impact on the profit or loss or statement of financial position from the adoption of IFRS 9.
Accounting policy for financial instruments in 2018
IFRS 9 eliminates the previous IAS 39 category for financial assets of loans and receivables. Under IFRS 9, on initial recognition,
a financial asset is classified as measured at: amortised cost, fair value through profit or loss or fair value through other
comprehensive income.
A financial asset is measured at amortised cost if it meets both of the following conditions: it is held within a business model
whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding. Under IFRS 9 trade receivables,
without a significant financing component, are classified and held at amortised cost, being initially measured at the transaction
price and subsequently measured at amortised cost less any impairment loss.
The Group has elected to measure loss allowances for trade receivables and contract assets at an amount equal to lifetime
expected credit losses. Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as
the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract
and the cash flows that the Group expects to receive).
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when
estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available
without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s
historical experience and informed credit assessment and including forward looking information. The Group performs the
calculation of expected credit losses separately for each customer group.
101
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements Notes continued
2 Significant accounting policies continued
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The
Group assesses whether a financial asset is in default on a case by case basis when it becomes probable that the customer
is unlikely to pay its credit obligations. The gross carrying amount of a financial asset is written off when the Group has no
reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For all customers, the Group individually
makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of
recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off
could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial
asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
The following table provides information about the exposure to credit risk and expected credit losses for trade receivables as at
1 January 2018.
Current
Past due 1–30 days
Past due 31–60 days
Past due 61–90 days
More than 91 days past due
Weighted-average
loss rate
Gross carrying
amount
£000
Loss
allowance
£000 Credit-impaired
0.0%
3.7%
18.8%
55.4%
16.8%
10,055
2,750
659
336
286
14,086
(4)
(101)
(124)
(186)
(48)
(463)
No
No
No
No
No
The loss allowance as a percentage of gross carrying amount within the category 61–90 days is higher than other categories due
to a specific provision for one customer.
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities.
The adoption of IFRS 9 has not had a significant effect on the Group’s accounting policies related to financial liabilities.
Accounting policy for financial instruments in 2017
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.
Impact of adoption of IFRS 9, 15 and 16 on the financial statements
The following statements summarise the impacts of adopting IFRS 15 and IFRS 16 on the Group’s Consolidated Statement of
Comprehensive Income, Consolidated Statement of Financial Position and its Consolidated Statement of Cash Flows as at and
for the year ended 31 December 2018. Adoption of IFRS 9 had no impact on any of the financial statements and adoption of
IFRS 15 had no impact on the Consolidated Statement of Comprehensive Income.
102
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2 Significant accounting policies continued
Impact on the consolidated statement of comprehensive income
Year ended 31 December 2018
£000
Revenue
Administrative expenses
Underlying operating profit
Share-based payments
NI on share-based incentives
Operating profit
Financial income
Financial expenses
Net financial expenses
Profit before tax
Income tax expense
IFRS 16
Note As reported adjustments
Amounts
without
adoption
4, 5
267,821
–
267,821
(69,231)
(143)
(69,374)
25
25
8
9
203,329
(4,320)
(419)
(143)
–
–
203,186
(4,320)
(419)
198,590
(143)
198,447
171
(491)
(320)
198,270
(37,815)
10
–
302
302
159
(28)
171
(189)
(18)
198,429
(37,843)
Profit for the year being total comprehensive income
160,455
131
160,586
Attributable to:
Equity holders of the Parent
160,455
131
160,586
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Notes continued
2 Significant accounting policies continued
Impact on the consolidated statement of financial position
31 December 2018
£000
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Contract assets
Money market deposits
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Contract liabilities
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Lease 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
104
Note As reported
IFRS 15
IFRS 16
Amounts
without
adoption
13
14
16
17
5
18
18
15,203
2,873
2,798
20,874
–
–
–
–
(12,331)
–
(28)
2,872
2,873
2,770
(12,359)
8,515
22,479
427
4,090
15,847
17,961
(427)
–
–
329
–
–
–
40,769
–
4,090
15,847
42,843
17,534
329
60,706
63,717
17,534
(12,030)
69,221
19
21
5
22
(18,081)
(1,213)
(2,146)
(16,753)
(671)
(19,680)
–
2,146
–
–
(897)
1,213
–
–
–
(38,658)
–
–
(16,753)
(671)
(38,864)
(17,534)
316
(56,082)
21
22
(11,845)
(424)
(12,269)
–
–
–
11,845
–
–
(424)
11,845
(424)
(51,133)
(17,534)
12,161
(56,506)
23
12,584
908
524
11,152
12,584
–
–
–
–
–
131
12,715
–
–
131
908
524
11,283
131
12,715
rightmove.co.uk
2 Significant accounting policies continued
Impact on the consolidated statement of cash flows
Year ended 31 December 2018
£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
Share-based payments
Income tax expense
Operating cash flow before changes in working capital
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in provisions
(Increase)/decrease in contract assets
Increase/(decrease) in contract liabilities
Cash generated from operating activities
Financial expenses paid
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Acquisition of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Purchase of own shares for cancellation
Purchase of own shares for share incentive plans
Share related expenses
Payment of lease liabilities
Proceeds on exercise of share-based incentives
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Note As reported
IFRS 15
IFRS 16
Amounts
without
adoption
13
14
8
9
13
25
10
22
5
5
13
13
14
12
23
24
23
21
160,455
3,307
545
(171)
491
7
4,320
37,815
206,769
(5,344)
(1,069)
46
(261)
287
200,428
(190)
(32,798)
167,440
118
(1,614)
–
(128)
(1,624)
(54,977)
(113,528)
(685)
(778)
(1,532)
601
(170,899)
(5,083)
20,930
–
–
–
–
–
–
–
–
–
(261)
287
–
261
(287)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
131
160,586
(1,863)
–
–
(302)
–
–
28
1,444
545
(171)
189
7
4,320
37,843
(2,006)
204,763
(61)
535
–
–
–
(5,666)
(247)
46
–
–
(1,532)
198,896
–
–
(190)
(32,798)
(1,532)
165,908
–
–
–
–
–
118
(1,614)
–
(128)
(1,624)
–
–
–
–
1,532
–
(54,977)
(113,528)
(685)
(778)
–
601
1,532
(169,367)
–
–
–
(5,083)
20,930
15,847
105
Cash and cash equivalents at period end
18
15,847
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
2 Significant accounting policies continued
The following accounting policies applied by the Group in these consolidated financial statements are the same as those applied
by the Group in its consolidated financial statements as at and for the year ended 31 December 2017.
(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
106
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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 and leased assets
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) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.
(f) 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.
(g) Employee benefits
(i) Pensions
The Group provides access to a stakeholder pension scheme (a defined contribution pension plan) into which employees may
elect to contribute via salary exchange. Obligations for contributions to defined contribution pension plans are recognised as
an employee benefit expense in profit or loss when they are incurred.
(ii) Employee share schemes
The Group provides share-based incentive plans allowing executive directors and other employees to acquire shares in the
Company. An expense is recognised in profit or loss, with a corresponding increase in equity, over the period during which the
employees become unconditionally entitled to acquire equity settled share-based incentives.
107
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Notes continued
2 Significant accounting policies continued
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.
(h) 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.
(i) 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.
(j) 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 and
lease liabilities.
(k) 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.
108
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2 Significant accounting policies continued
Deferred tax is provided in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the
initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and the differences relating to investments in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised.
In accordance with IAS 12, the Group policy in relation to the recognition of deferred tax on share-based incentives is to include
the income tax effect of the tax deduction in profit or loss to the value of the income tax charge on the cumulative IFRS 2 charge.
The remainder of the income tax effect of the tax deduction is recognised in equity.
(l) 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.
(m) 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. 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. The calculation of underlying basic and diluted EPS is disclosed in Note 11.
3 Risk and capital management
Overview
The Group has exposure to the following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market risk
This note presents information about the Group and Company’s exposure to each of the above risks, the Group’s objectives,
policies and processes for measuring and managing risk and the Group’s management of capital. Further quantitative disclosures
are included throughout these consolidated financial statements.
The Board of directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The primary method by which risks are monitored and managed by the Group is through the monthly Executive Management
Committee, where any significant new risks or change in status to existing risks will be discussed and actions taken as appropriate.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly
to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards
and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles
and obligations.
The Audit Committee oversees how management monitors compliance with the Group’s internal controls and reviews the
adequacy of the risk management framework in relation to the risks faced by the Group.
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3 Risk and capital management continued
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% (2017: 88.0%) of the Group’s Agency and New Homes customers pay via monthly direct debit, minimising the
risk of non-payment. The Group establishes an expected credit loss that represents its estimate of losses in respect of trade and
other receivables. Further details of these are given in Note 26.
The Group’s treasury policy is to monitor cash and deposit balances on a daily basis and to manage counterparty risk by ensuring
that no more than £30,000,000 is held with any single institution.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting the obligations associated with its financial liabilities
that are settled by delivering cash. The Group and Company’s approach to managing liquidity is to ensure, as far as possible, that
it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group’s revenue model is largely subscription-based, which results in a regular level of cash conversion allowing it to service
working capital requirements.
The Group and Company ensure that they have sufficient cash on demand to meet expected operational expenses excluding the
potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Throughout the year,
the Group typically had sufficient cash on demand to meet operational expenses, before financing activities, for a period of
138 days (2017: 107 days).
The Group agreed to extend a 12 month agreement with Barclays Bank plc for a £10,000,000 committed revolving loan facility
on 13 February 2018. This agreement was extended for a further year on 15 January 2019 and will expire on 12 February 2020.
Market risk
Market risk is the risk that changes in market prices such as foreign exchange and interest rates will affect the Group’s income.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return on risk.
(i) Currency risk
All of the Group’s sales and more than 97.0% (2017: 95.0%) of the Group’s purchases are Sterling denominated, accordingly
it has no significant currency risk.
(ii) Interest rate risk
The Group has interest bearing lease liabilities, although the interest on these is insignificant. The Group is exposed to
interest rate risk on cash and money market deposit balances. The Company has no interest bearing financial liabilities.
110
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3 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 of 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 £391,022,000 (2017: £411,276,000) as set out in the Company statement of changes
in shareholders’ equity on page 95. The Group has cash and money market deposits at 31 December 2018 of £19,937,000
(2017: £24,975,000), 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 2018 cash
generated from operating activities was £200,428,000 (2017: £183,891,000) 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 2018, 24,977,740 (2017: 22,240,590) shares were bought back and were cancelled at an average price
of £4.55 (2017: £4.08).
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, including Financial Conduct Authority (FCA) requirements for the
provision of the Rightmove Passport through Rightmove Rent Services Limited;
• 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 ongoing succession planning; and
• risk mitigation, including insurance where this is effective.
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Notes continued
4 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 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 2018
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 2017
Revenue
Operating profit(1)
Depreciation and amortisation
Financial income
Financial expenses
Trade receivables(3)
Other segment assets
Segment liabilities
Capital expenditure
Agency
£000
201,022
–
–
–
–
5,367
–
–
–
185,217
–
–
–
–
21,282
–
–
–
New
Homes
£000
46,167
–
–
–
–
9,942
–
–
–
39,478
–
–
–
–
6,610
–
–
–
Subtotal
£000
Other
£000
Central Adjustments
£000
£000
Total
£000
247,189
–
–
–
–
15,309
–
–
–
224,695
–
–
–
–
27,892
–
–
–
20,632
–
–
–
–
1,461
–
–
–
18,578
–
–
–
–
2,283
–
–
–
–
203,329(2)
(3,852)
171
(491)
–
46,768
(50,934)
1,742
–
184,365(2)
(1,784)
129
(214)
–
41,501
(54,493)
2,196
–
267,821
(4,739)(2) 198,590
(3,852)
171
(491)
16,937
46,780
(51,113)
1,742
–
–
–
167(4)
12(4)
(179)(4)
–
–
243,273
(6,064)(2) 178,301
(1,784)
129
(214)
30,293
41,520
(54,630)
2,196
–
–
–
118(4)
19(4)
(137)(4)
–
(1) Operating profit is stated after the charge for depreciation and amortisation.
(2) Central operating profit does not include share-based payments charge of £4,320,000 (2017: £4,836,000) and NI on share-based incentives charge of £419,000
(2017: £1,228,000).
(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 trade receivables and debit balances in trade payables made on consolidation for statutory
accounts purposes.
112
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4 Operating segments continued
Geographic information
In presenting information on the basis of geography, revenue and assets are based on the geographical location of customers.
Group
UK
Rest of the world
2018
Revenue Trade receivables
£000
£000
2017
Revenue Trade receivables
£000
£000
261,031
6,790
16,864
73
236,718
6,555
29,885
408
267,821
16,937
243,273
30,293
5 Revenue
The Group’s operations and main revenue streams are those described in these annual financial statements. The Group’s
revenue is derived from contracts with customers.
The nature and effect of initially applying IFRS 15 on the Group’s financial statements is disclosed in Note 2.
Disaggregation of revenue
In the following table, revenue is disaggregated by property and non-property advertising revenue. The table also includes a
reconciliation of the disaggregated revenue with the Group’s reportable segments (see Note 4).
Year ended 31 December 2018
Revenue stream
Property products
Non-property products
Estate Agency
£000
New Homes
£000
Other
£000
Total
£000
201,022
–
46,167
–
12,300
8,332
259,489
8,332
201,022
46,167
20,632
267,821
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.
Receivables, which are included in trade and other receivables
Contract assets
Contract liabilities
31 December 2018
£000
Note
17
17,655
427
(2,146)
1 January 2018*
£000
14,086
166
(2,724)
* The Group recognised the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance at 1 January 2018. The movement recognised in the
cash flow for the year ended 31 December 2018 is the difference between the reported contract asset and contract liability balances at 31 December 2018 and the
related balances on adoption of IFRS 15.
The contract assets primarily relate to the Group’s rights to consideration for services provided but not invoiced at the reporting
date. The contract assets are transferred to receivables when invoiced and the rights have become unconditional.
The contract liabilities primarily relate to the advance consideration received from Agency, Overseas and Commercial customers,
for which revenue is recognised as or when the services are provided.
The full amount of £2,724,000 recognised in contract liabilities at 1 January 2018 has been recognised as revenue for the year
ended 31 December 2018.
113
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Notes continued
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
All other services
Total non-audit remuneration
2018
£000
30,506
3,307
545
819
–
–
2018
£000
19
132
151
19
9
28
2017
£000
28,338
1,311
473
466
1,361
547
2017
£000
19
122
141
18
12
30
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
2018
Number of
employees
2017
Number of
employees
461
34
495
2018
£000
26,087
3,280
1,139
449
30
479
2017
£000
24,249
3,168
921
30,506
28,338
Wages and salaries include £7,541,000 (2017: £6,740,000) relating to the product development and technology teams; these
teams spend a significant proportion of their time on research and development activities, including innovation of our product
proposition and enhancements to the Rightmove platforms. Social security costs relating to NI on share-based incentives are
not included within this amount.
114
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8 Financial income
Interest income on cash and cash equivalents
Interest income on money market deposits
9 Financial expenses
Other interest payable
Interest unwind on lease liabilities
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
Reduction in tax rate
Total income tax expense
Income tax credit recognised directly in equity
Current tax
Share-based incentives
Deferred tax
Share-based incentives (refer Note 16)
Reduction in tax rate
Total income tax credit recognised directly in equity
2018
£000
126
45
171
2018
£000
190
301
491
2018
£000
2017
£000
110
19
129
2017
£000
214
–
214
2017
£000
37,744
(106)
34,582
(292)
37,638
34,290
50
127
177
(170)
–
(170)
37,815
34,120
2018
£000
2017
£000
(2,780)
(2,666)
2,594
176
2,770
1,367
–
1,367
(10)
(1,299)
Total income tax recognised directly in equity in respect of the Company was a credit of £83,000 (2017: £586,000 credit).
115
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
10 Income tax expense continued
Reconciliation of effective tax rate
The Group’s income tax expense for the year is higher (2017: lower) than the standard rate of corporation tax in the UK of 19.0%
(2017: 19.3%). The differences are explained below:
Profit before tax
Current tax at 19.0% (2017: 19.3%)
Reduction in tax rate
Non-deductible expenses
Share-based incentives
Adjustment to current tax charge in respect of prior years
2018
£000
2017
£000
198,270
178,216
37,671
127
127
(4)
(106)
34,307
–
103
2
(292)
37,815
34,120
The Group’s consolidated effective tax rate on the profit of £198,270,000 for the year ended 31 December 2018 is 19.1%
(2017: 19.1%). The difference between the standard rate and effective rate at 31 December 2018 of 0.1% (2017: (0.2%)) is
primarily attributable to disallowable expenditure and a reduction in the rate at which the deferred tax asset is recognised of
0.1%, offset by an adjustment in respect of prior periods for research and development tax relief.
11 Earnings per share (EPS)
Following the ten for one subdivision of the Company’s ordinary share capital on 31 August 2018 (refer Note 1), the 2017
comparatives have been restated in line with IAS 33.
Year ended 31 December 2018
Earnings
Underlying earnings
Year ended 31 December 2017 (Restated)
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
Issued ordinary shares at 31 December less ordinary shares
held by the EBT and SIP Trust
116
£000
Basic
Diluted
Pence per share
160,455
165,194
144,096
150,160
17.80
18.33
15.67
16.33
17.69
18.22
15.51
16.17
Restated
2017
Number of shares Number of shares
2018
929,347,400
(18,924,560)
(11,423,051)
2,284,329
(7,768)
950,968,410
(22,717,250)
(10,340,150)
1,390,112
(9,110)
901,276,350
919,292,012
rightmove.co.uk
11 Earnings per share (EPS) continued
Weighted average number of ordinary shares (diluted)
For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially
dilutive shares. The Group’s potential dilutive instruments are in respect of share-based incentives granted to employees, which
will be settled by ordinary shares held by the EBT, the SIP and shares held in treasury.
Weighted average number of ordinary shares (basic)
Dilutive impact of share-based incentives outstanding
Restated
2017
Number of shares Number of shares
2018
901,276,350
5,515,657
919,292,012
9,481,838
906,792,007
928,773,850
The average market value of the Group’s shares for the purposes of calculating the dilutive effect of share-based incentives was
based on quoted market prices for the period during which the share-based incentives were outstanding.
Underlying EPS
Underlying EPS is calculated by taking basic earnings for the year and adding back the charge for share-based payments and the
charge for NI on share-based incentives but without any adjustment to the tax charge in respect of these items. A reconciliation
of the basic earnings for the year to the underlying earnings is presented below:
Basic earnings for the year
Share-based payments
NI on share-based incentives
Underlying earnings for the year
2018
£000
160,455
4,320
419
2017
£000
144,096
4,836
1,228
165,194
150,160
12 Dividends
Following the ten for one subdivision of the Company’s ordinary share capital on 31 August 2018 (refer Note 1), the 2017
comparatives have been restated in order to aid comparability of information.
Dividends declared and paid by the Company were as follows:
2016 final dividend paid
2017 interim dividend paid
2017 final dividend paid (restated)
2018 interim dividend paid
2018
Restated
2017
Pence per share
£000
Pence per share
–
–
3.60
2.50
–
–
32,559
22,418
3.20
2.20
–
–
£000
29,507
20,104
–
–
6.10
54,977
5.40
49,611
After the reporting date a final dividend of 4.0p (2017: 3.6p) per qualifying ordinary share being £35,613,000 (2017: £32,758,000)
was proposed by the Board of directors.
The 2017 final dividend paid on 1 June 2018 was £32,559,000 being £199,000 lower than that reported in the 2017 Annual
Report, which was due to a decrease in the ordinary shares entitled to a dividend between 31 December 2017 and the final
dividend record date of 4 May 2018.
117
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Notes continued
12 Dividends continued
The 2018 interim dividend paid on 3 November 2018 was £22,418,000 being £171,000 lower than that reported in the 2018
Half Year Report, which was due to a decrease in the ordinary shares entitled to a dividend between 30 June 2018 and the interim
dividend record date of 2 November 2018.
The terms of the EBT provide that dividends payable on the ordinary shares held by the EBT are waived. No provision was made
for the final dividend in either year and there are no income tax consequences.
13 Property, plant and equipment
Group
Cost
At 1 January 2018
Recognised on application of IFRS 16
Additions
Leased asset additions
Transfers
Disposals
Office
equipment,
fixtures &
fittings
£000
Land &
buildings
£000
Computer
equipment
£000
Leasehold
improvements
£000
Motor
vehicles
£000
Assets in
progress
£000
–
10,059
–
3,194
–
–
857
–
266
–
22
(194)
7,824
–
1,165
–
20
–
834
–
183
–
145
(47)
–
671
–
270
–
–
187
–
–
–
(187)
–
At 31 December 2018
13,253
951
9,009
1,115
941
Depreciation
At 1 January 2018
Charge for year
Disposals
At 31 December 2018
Net book value
At 31 December 2018
–
(1,467)
–
(567)
(110)
187
(6,143)
(1,226)
–
(283)
(108)
47
–
(396)
–
(1,467)
(490)
(7,369)
(344)
(396)
11,786
461
1,640
771
545
–
–
–
–
–
–
Total
£000
9,702
10,730
1,614
3,464
–
(241)
25,269
(6,993)
(3,307)
234
(10,066)
15,203
At 31 December 2017
–
290
1,681
551
–
187
2,709
Included within land & buildings and motor vehicles are £12,331,000 of assets recognised as leases under IFRS 16. Further details
of these leases are disclosed in Note 21.
The assets in progress consisted of capitalised costs relating to the leasehold improvements for the London office that were
brought into use during the year.
118
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13 Property, plant and equipment continued
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 31 December 2016
The Company had no property, plant or equipment in either year.
14 Intangible assets
Group
Cost
At 1 January 2018
Additions
At 31 December 2018
Amortisation
At 1 January 2018
Charge for year
At 31 December 2018
Net book value
At 31 December 2018
At 31 December 2017
Office
equipment,
fixtures &
fittings
£000
Computer
equipment
£000
Leasehold
improve-
ments
£000
Assets in
progress
£000
829
232
(204)
7,053
906
(135)
451
430
(47)
–
187
–
Total
£000
8,333
1,755
(386)
857
7,824
834
187
9,702
(678)
(88)
199
(5,101)
(1,159)
117
(266)
(64)
47
(567)
(6,143)
(283)
–
–
–
–
(6,045)
(1,311)
363
(6,993)
290
1,681
551
187
2,709
151
1,952
185
–
2,288
Goodwill
£000
Computer
software
£000
Market
appraisal
algorithm
£000
Total
£000
2,465
–
5,080
128
309
–
7,854
128
2,465
5,208
309
7,982
–
–
–
(4,401)
(399)
(163)
(146)
(4,564)
(545)
(4,800)
(309)
(5,109)
2,465
408
–
2,873
2,465
679
146
3,290
119
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
14 Intangible assets continued
Group
Cost
At 1 January 2017
Additions
Internally generated
Goodwill
£000
Computer
software
£000
Assets in
progress
£000
Market
appraisal
algorithm
£000
2,465
–
–
4,639
441
–
203
–
(203)
309
–
–
Total
£000
7,616
441
(203)
At 31 December 2017
2,465
5,080
Amortisation
At 1 January 2017
Charge for year
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
–
–
–
–
–
309
7,854
(60)
(103)
(4,091)
(473)
(163)
(4,564)
146
3,290
–
–
–
(4,031)
(370)
(4,401)
2,465
679
2,465
608
203
249
3,525
The Company had no intangible assets in either year.
Impairment testing for cash generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s Agency segment which represents the lowest level
within the Group at which goodwill is monitored for internal management purposes, which is not higher than the Group’s
operating segments as reported in Note 4.
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 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 2018 were as follows:
Company
Nature of business
Rightmove Group Limited
Rightmove Rent Services Limited
Rightmove Property Services Limited
The Outside View Analytics Ltd
Rightmove.co.uk Limited
Rightmove Homes Information Packs Limited
Online property advertising
Online rental services
Online rental services
Property analytics services
Dormant
Dormant
Country of
incorporation
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Holding
Class of shares
100%
100%
100%
100%
100%
100%
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
All the above subsidiaries are included in the Group consolidated financial statements. The registered office for all subsidiaries
of the Group is 2 Caldecotte Lake Business Park, Caldecotte Lake Drive, Caldecotte, Milton Keynes, MK7 8LE.
120
rightmove.co.uk
15 Investments continued
The shares in Rightmove Rent Services Limited, Rightmove Property Services Limited and The Outside View Analytics Ltd are
attributed to the Company by virtue of their being held by Rightmove Group Limited.
Company
Investment in subsidiary undertakings
At 1 January
Additions – subsidiary share-based payments charge
At 31 December
2018
£000
2017
£000
548,827
2,651
546,202
2,625
551,478
548,827
In 2008, the Company became the holding company of Rightmove Group Limited (formerly Rightmove plc, Company no. 03997679)
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 £2,651,000 (2017: £2,625,000)
being recognised in the Company accounts as a capital contribution to its subsidiary.
16 Deferred tax asset
Deferred tax is presented net on the balance sheet in so far as a right of offset exists. The net deferred tax asset is attributable
to the following:
At 1 January 2018
Recognised in income
Recognised directly in equity
Group
Share-
based
incentives
£000
Property,
plant and
equipment
£000
5,222
(191)
(2,770)
315
53
–
Market
appraisal
algorithm
£000
Provisions
£000
231
(62)
–
(23)
23
–
Company
Share-
based
incentives
£000
2,490
(278)
(1,246)
Total
£000
5,745
(177)
(2,770)
At 31 December 2018
2,261
368
169
–
2,798
966
At 1 January 2017
Recognised in income
Recognised directly in equity
6,604
(15)
(1,367)
252
63
–
125
106
–
(39)
16
–
6,942
170
(1,367)
3,757
(142)
(1,125)
At 31 December 2017
5,222
315
231
(23)
5,745
2,490
The decrease in the deferred tax asset relating to share-based incentives at 31 December 2018 is due to increased exercises
of share-based incentives in 2018 as well as the decrease in the Company’s share price from £4.50 (adjusted for the 10:1 share
subdivision effective 31 August 2018) at 31 December 2017 to £4.32 at 31 December 2018, which has outweighed the number
of new share scheme awards.
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 2018
has been calculated at the rate of 18% which represents the average expected rate at which the net deferred tax asset will
reverse in the future.
121
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Notes continued
17 Trade and other receivables
Group
Trade receivables
Less provision for impairment of trade receivables
Net trade receivables
Prepayments
Accrued income
Interest receivable
Other debtors
2018
£000
17,655
(718)
16,937
5,446
–
24
72
2017
£000
30,756
(463)
30,293
4,545
166
16
74
22,479
35,094
Following the application of IFRS 15, effective 1 January 2018, trade receivables have reduced (refer Note 2).
Exposure to credit and currency risks and expected credit losses relating to trade and other receivables are disclosed in Note 26.
The Company had no trade and other receivables in either year.
18 Cash and deposits
Group
Cash and cash equivalents
Money market deposits
2018
£000
15,847
4,090
2017
£000
20,930
4,045
19,937
24,975
Cash balances with an original maturity of less than three months were held in current accounts during the year and attracted
interest at a weighted average rate of 0.4% (2017: 0.3%).
The cash and cash equivalents balance includes £1,718,000 (2017: £1,803,000) 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% (2017: 1.1%).
The Company had no cash and cash equivalents either year.
19 Trade and other payables
Trade payables
Trade accruals
Other creditors
Other taxation and social security
Deferred revenue
Inter–group payables
2018
£000
2,653
5,197
368
9,863
–
–
Group
Company
2017
£000
1,424
6,867
99
11,105
19,393
–
2018
£000
–
1,483
–
–
–
40,657
2017
£000
–
3,393
–
–
–
20,017
18,081
38,888
42,140
23,410
Following the application of IFRS 15, effective 1 January 2018, deferred revenue is no longer recognised (refer Note 2).
Exposure to currency and liquidity risk relating to trade and other payables is disclosed in Note 26.
122
rightmove.co.uk
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
on 13 February 2018. This agreement was extended for a further year on 15 January 2019 and will expire on 12 February 2020.
The Company had no bank loans and borrowings in either year.
21 Leases
The Group leases assets including land and buildings and motor vehicles that are held within property, plant and equipment.
Information about leases for which the Group is a lessee is presented below.
Analysis of property, plant and equipment
between owned and leased assets
Net book value property, plant and equipment owned
Net book value right of use assets
Net book value of right of use assets
Balance at 1 January 2018
Additions
Depreciation charge
Balance at 31 December 2018
Lease liabilities
Maturity analysis – contractual undiscounted cash flows
Less than one year
One to five years
More than five years
2018
£000
2,872
12,331
15,203
Total
10,730
3,464
(1,863)
Property
Vehicles
10,059
3,194
(1,467)
671
270
(396)
11,786
545
12,331
Lease liabilities included in the statement of financial position at 31 December 2018
Current
Non-current
Amounts recognised in profit or loss
Interest on lease liabilities
Expenses relating to short-term leases
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets
Amounts recognised in the statement of cash flows
Total cash outflow for leases
2018
£000
1,517
7,283
5,736
14,536
2018
£000
1,213
11,845
13,058
2018
£000
301
81
37
419
2018
£000
1,532
123
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
21 Leases continued
Comparative amounts for 2017 represent the non-cancellable operating lease rentals under IAS 17:
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
During 2017 the Group entered into three new operating lease arrangements for additional space at the London office.
These leases were capitalised on adoption to IFRS 16 on 1 January 2018. For further detail, refer Note 2.
The Company had no operating lease commitments in 2017.
22 Provisions
At 1 January
Utilised during the year
Charged in the year
At 31 December
Current
Non-current
Dilapidations
provision
£000
2018
Employee
provisions
£000
Dilapidations
provision
£000
Total
£000
381
–
43
668
(250)
253
1,049
(250)
296
272
–
109
2017
Employee
provisions
£000
88
–
580
Total
£000
360
–
689
424
671
1,095
381
668
1,049
–
424
671
–
671
424
87
294
668
–
755
294
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 the Group has 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.
23 Share capital
Following the ten for one subdivision of the Company’s ordinary share capital on 31 August 2018 (refer Note 1), an adjustment
has been made in the 2018 reconciliation of the number of ordinary shares in issue.
In issue ordinary shares
At 1 January
Effect of 10:1 subdivision of shares
Purchase and cancellation of own shares
Amount
£000
2018
Number of
Number of
1 pence shares 0.1 pence shares
Amount
£000
2017
Number of
1 pence shares
933
–
(25)
93,266,207
–
(93,266,207) 932,662,070
(24,977,740)
–
955
–
(22)
95,490,266
–
(2,224,059)
At 31 December
908
–
907,684,330
933
93,266,207
124
rightmove.co.uk
23 Share capital continued
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 2018 was 24,977,740 0.1 pence (2017: 2,224,059 1 pence) shares representing 2.8% (2017: 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 £113,528,000 (2017: £90,809,000). The maximum
and minimum prices paid were £5.30 (2017: £44.50) and £4.15 (2017: £38.48) per share respectively. Share-related expenses
in relation to stamp duty charges and broker expenses were £795,000 (2017: £637,000). Included within shares in issue at
31 December 2018 are 2,248,020 0.1 pence (2017: 263,767 1 pence) shares held by the EBT, 810,095 0.1 pence (2017: 67,700
1 pence) shares held by the SIP and 14,813,304 0.1 pence (2017: 1,892,456 1 pence) shares held in treasury.
24 Reconciliation of movement in capital and reserves
Following the ten for one subdivision of the Company’s ordinary share capital on 31 August 2018 (refer Note 1), an adjustment
has been made in the 2018 reconciliation of the number of ordinary shares in issue.
Group
Own shares held – £000
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
EBT shares
reserve
£000
SIP shares
reserve
£000
(2,291)
(761)
741
333
–
–
(1,352)
–
(741)
–
–
75
Treasury
shares
£000
(10,804)
–
–
1,886
(81)
–
Total
£000
(14,447)
(761)
–
2,219
(81)
75
Own shares held as at 31 December 2017
(1,978)
(2,018)
(8,999)
(12,995)
Own shares held as at 1 January 2018
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
(1,978)
(685)
1,446
104
–
–
(2,018)
–
(1,446)
68
–
411
(8,999)
–
–
2,027
(68)
–
(12,995)
(685)
–
2,199
(68)
411
Own shares held as at 31 December 2018
(1,113)
(2,985)
(7,040)
(11,138)
Own shares held – number of shares
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
Number of shares
EBT shares
reserve
SIP shares
reserve
343,275
17,500
(20,000)
(77,008)
–
–
50,150
–
20,000
–
–
(2,450)
Treasury
shares
2,271,725
–
–
(396,192)
16,923
–
Total
2,665,150
17,500
–
(473,200)
16,923
(2,450)
1 pence own shares held as at 31 December 2017
263,767
67,700
1,892,456
2,223,923
125
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
24 Reconciliation of movement in capital and reserves continued
Own shares held as at 1 January 2018
Effect of 10:1 subdivision of shares
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
EBT shares
reserve
263,767
2,373,903
157,525
(332,525)
(214,650)
–
–
Number of shares
SIP shares
reserve
67,700
609,300
–
332,525
(17,000)
–
(182,430)
Treasury
shares
1,892,456
17,032,104
–
–
(4,254,160)
142,904
–
Total
2,223,923
20,015,307
157,525
–
(4,485,810)
142,904
(182,430)
0.1 pence own shares held as at 31 December 2018
2,248,020
810,095
14,813,304
17,871,419
(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 2018, the EBT held 2,248,020 0.1 pence (2017: 263,767 1 pence) ordinary shares in the Company representing
0.3% (2017: 0.3%) of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held in the
EBT at 31 December 2018 was £9,711,000 (2017: £11,870,000).
(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 500 0.1 pence free shares
shares with effect from 5 January 2018 and 475 0.1 pence free shares with effect from 21 December 2018, split across two different
tax years, (2017: 50 1 pence shares with effect from 3 January 2017), subject to a three year service period. 182,430 0.1 pence
shares were exercised and 17,000 0.1 pence (2017: 2,450 1 pence) shares were released by the SIP during the year in relation to
good leavers and retirees. 332,525 0.1 pence (2017: 20,000 1 pence) shares were transferred to the SIP reserve from the EBT.
At 31 December 2018 the SIP held 810,095 0.1 pence (2017: 67,700 1 pence) ordinary shares in the Company, representing
0.09% (2017: 0.07%) of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held in
the SIP at 31 December 2018 was £3,500,000 (2017: £3,047,000).
(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 per 1 pence share and may be used to satisfy certain share-based incentive awards.
An additional 142,904 0.1 pence (2017: 6,277 1 pence) 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 £25,000
(2017: £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 £1,941,000 (2017: £1,485,000 loss) is the difference between the value
that the shares held by the EBT, SIP and treasury shares were originally acquired at and the exercise price at which share-based
incentives were exercised or released during the year. Details of share buybacks and cancellation of shares are included in Note 23.
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 £2,651,000 (2017: £2,625,000) in respect of the
share-based incentives charge for employees of Rightmove Group Limited.
In addition, other reserves include £386,000 (2017: £361,000) of Capital Redemption Reserve. A movement of £25,000
(2017: £22,000) has been recorded in relation to the nominal value of ordinary shares cancelled during the year.
126
rightmove.co.uk
25 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.
Following the ten for one subdivision of shares effective 31 August 2018, the 2017 comparatives have been restated in order
to aid comparability of information.
NI is being accrued, where applicable, at a rate of 13.8%, which management expects to be the prevailing rate when the awards
are exercised, based on the share price at the reporting date. The total NI charge for the year relating to all awards was £419,000
(2017: £1,228,000). The share price at 31 December 2018 was £4.32 (2017: £4.50).
The Group recognised a total share-based payments charge for the year of £4,320,000 (2017: £4,836,000) with a Company
charge for the year of £1,669,000 (2017: £2,211,000), as set out below:
Sharesave Plan
Performance Share Plan (PSP)
Deferred Share Bonus Plan (DSP)
Share Incentive Plan (SIP)
Group
Company
2018
£000
308
1,766
1,585
661
2017
£000
310
2,297
1,441
788
2018
£000
3
1,289
377
–
2017
£000
–
1,544
667
–
Total share-based payments charge
4,320
4,836
1,669
2,211
NI on applicable share-based incentives at 13.8%
419
1,228
205
876
A 2% reduction or increase in the employee leaver assumption (excluding executive directors) for the DSP and the PSP would
have increased or decreased the share-based payments charge in the year by £34,000 (2017: £34,000).
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
2018
Weighted average
exercise price
(pence)
Number
Restated
2017
Weighted average
exercise price
(pence)
Number
3,317,720
(2,792,190)
29.41
22.40
5,465,270
(2,147,550)
30.74
32.81
Outstanding at 31 December
525,530
66.60
3,317,720
29.41
Exercisable at 31 December
525,530
66.60
3,317,720
29.41
The weighted average market value per ordinary share for options exercised in 2018 was 436.51 pence (2017: 417.70 pence).
The options outstanding at 31 December 2018 have an exercise price of 66.69 pence (2017: in the range of 22.40 to 66.60) in
both years and a weighted average contractual life of 1.2 years (2017: 1.3 years).
127
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
25 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)
404.50
476.35
Exercise
price
(pence)
328.90
389.00
Expected
volatility
(%)
Option
life
(years)
Risk free
rate
(%)
Employee
turnover
before
vesting/
Dividend non-vesting
condition
(%)
yield
(%)
30.1
25.4
3.0
3.0
0.1
0.8
1.3
1.3
25.0
25.0
Fair
value per
option
(pence)
119.50
118.49
Grant date
1 October 2017
1 October 2018
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
2018
Weighted average
exercise price
(pence)
Number
Restated
2017
Weighted average
exercise price
(pence)
Number
971,400
315,208
(117,684)
(214,650)
318.25
385.44
325.92
280.72
1,169,330
369,390
(196,200)
(371,120)
271.27
328.90
293.81
196.16
Outstanding at 31 December
954,274
349.15
971,400
318.25
Exercisable at 31 December
53,340
296.00
32,990
197.20
The weighted average market value per ordinary share for Sharesave options exercised in 2018 was 428.89 pence
(2017: 413.60 pence). The Sharesave options outstanding at 31 December 2018 have an exercise price in the range
of 296.00 pence to 389.00 pence (2017: 197.00 pence to 332.00 pence) and a weighted average contractual life of
2.2 years (2017: 2.4 years).
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.
364,800 PSP awards were made on 28 February 2018 (the Grant Date) subject to Earnings Per Share (EPS) and Total Shareholders
Return (TSR) performance. Performance will be measured over three financial years (1 January 2018 – 31 December 2020). The
vesting in February 2021 (Vesting Date) of 25% of the 2018 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 2018 PSP award will be dependent on the
satisfaction of an EPS growth target measured over a three year performance period.
128
rightmove.co.uk
25 Share-based payments continued
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:
Exercise
price
(pence)
Expected
volatility
(%)
Option
life
(years)
Risk free
rate
(%)
Employee
turnover
before
vesting/
Dividend non-vesting
condition
(%)
yield
(%)
Fair
value per
option
(pence)
nil
nil
nil
nil
nil
nil
30.1
n/a
30.1
n/a
25.4
n/a
3.0
3.0
3.0
3.0
3.0
3.0
0.1
0.1
0.1
0.1
0.8
0.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
211.10
0.0
406.50
0.0
211.10
0.0
406.50
0.0
199.80
0.0
427.70
Share
price at
grant
date
(pence)
406.50
406.50
424.40
424.40
427.70
427.70
Grant date
1 March 2017
(TSR dependent)(1)
1 March 2017
(EPS dependent)(1)
9 May 2017
(TSR dependent)(1)
9 May 2017
(EPS dependent)(1)
28 February 2018
(TSR dependent)(1)
28 February 2018
(EPS dependent)(1)
(1) For details of TSR and EPS performance conditions refer to the Directors’ Remuneration Report on pages 71 to 84.
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
2018
Number
2,423,340
364,800
–
(1,069,070)
Restated
2017
Number
4,029,520
381,770
(236,350)
(1,751,600)
1,719,070
2,423,340
245,562
251,400
The weighted average market value per ordinary share for options exercised in 2018 was 453.33 pence (2017: 412.54 pence).
The weighted average exercise price was nil in both years. The PSP awards outstanding at 31 December 2018 have a weighted
average contractual life of 2.7 years (2017: 2.7 years).
129
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
25 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/
Dividend non-vesting
condition
(%)
yield
(%)
1 March 2018(1)
28 February 2019(2)
406.50
427.70
nil
nil
3.0
3.0
0.1
0.8
1.3
1.3
10.0
10.0
Fair
value per
option
(pence)
391.50
411.80
Grant date
1 March 2017
28 February 2018
(1) Following the achievement of 60% of the 2017 internal performance targets, 432,120 nil cost deferred shares were awarded to executives and senior management
on 1 March 2018 (the Award Date) with the right to the release of the shares deferred until March 2020.
(2) Based on the 2018 internal performance targets, the Remuneration Committee determined that 78% of the maximum award in respect of the year will be made in
March 2019. The number of shares to be awarded will be determined based on the share price at the Award Date in March 2019.
Group
Outstanding at 1 January
Awarded
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2018
Number
711,130
432,120
–
(353,610)
Restated
2017
Number
761,720
384,160
(35,790)
(398,960)
789,640
711,130
–
–
The weighted average market value per ordinary share for deferred shares exercised in 2018 was 450.86 pence
(2017: 410.72 pence). The weighted average exercise price was nil in both years.
The DSP awards outstanding at 31 December 2018 have a weighted average contractual life of 1.7 years (2017: 1.7 years).
130
rightmove.co.uk
25 Share-based payments continued
Share Incentive Plan
In 2014, the Group established the Rightmove Share Incentive Plan Trust (SIP). Employees were offered 500 shares on 1 January
2018 and a further 475 shares on 21 December 2018 across two separate tax years (2017: 500 1 pence shares) 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:
Exercise
price
(pence)
Expected
volatility
(%)
Option
life
(years)
Risk free
rate
(%)
Employee
turnover
before
vesting/
Dividend non-vesting
condition
(%)
yield
(%)
nil
nil
nil
30.1
25.4
25.4
3.0
3.0
3.0
0.1
0.8
0.8
nil
nil
nil
33.0
33.0
33.0
Share
price at
grant
date
(pence)
394.50
456.80
420.90
Grant date
1 January 2017
1 January 2018
21 December 2018
Expected volatility is estimated by considering historic average share price volatility at the grant date.
Fair
value per
option
(pence)
394.50
456.80
420.90
Restated
2017
Number
443,000
236,000
(62,500)
–
(24,500)
2018
Number
592,000
475,400
(77,500)
(182,430)
(17,000)
790,470
592,000
55,570
–
Group
Outstanding at 1 January
Granted
Forfeited
Exercised
Released
Outstanding at 31 December
Exercisable at 31 December
The weighted average market value per ordinary share for SIP awards released and exercised in 2018 was 454.90 pence
(2017: 416.61 pence). 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 SIP.
The SIP options outstanding at 31 December 2018 have a weighted average contractual life of 1.5 years (2017: 0.9 years).
131
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
26 Financial instruments
Credit risk
The carrying amount of financial assets, previously recognised as loans and receivables under IAS 39 now classified as amortised
cost under IFRS 9, represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Group
Net trade receivables
Accrued interest receivable
Contract assets
Other debtors
Cash and cash equivalents
Money market deposits
Note
17
17
5
17
18
18
2018
£000
16,937
24
427
72
15,847
4,090
2017
£000
30,293
16
–
74
20,930
4,045
37,397
55,358
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
2018
£000
16,864
73
2017
£000
29,885
408
17
16,937
30,293
The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was:
Group
Property advertisers
Other
Note
2018
£000
15,688
1,249
2017
£000
29,020
1,273
17
16,937
30,293
The Group’s most significant customer accounts for £791,000 (2017: £1,408,000) of net trade receivables as at 31 December 2018.
Expected credit loss assessment
For the Group’s smaller Estate Agency and Overseas customers, expected credit losses are measured using a provisioning matrix
based on the reason the trade receivable is past due. The provision matrix rates are based on actual credit loss experience over
the past three years and adjusted, when required, to take into account current macro-economic factors. For all other customers
the Group applies experienced credit judgement that is determined to be predictive of the risk of loss to assess the expected
credit loss, taking into account external ratings, financial statements and other available information.
132
rightmove.co.uk
26 Financial instruments continued
The following table provides information about the exposure to credit risk and expected credit losses for trade receivables from
individual customers as at 31 December 2018.
Weighted-average
loss rate
Gross carrying
amount
£000
Loss allowance
£000 Credit-impaired
Current
Past due 1–30 days
Past due 31–60 days
Past due 61–90 days
More than 91 days past due
2.1%
6.4%
10.9%
21.1%
5.6%
11,813
4,064
963
370
445
17,655
Comparative information under IAS 39
The ageing of trade receivables at 31 December 2017 under IAS 39 was as follows:
Group
Not past due
Past due 0–30 days
Past due 30–60 days
Past due 60–90 days
Past due older
(249)
(261)
(105)
(78)
(25)
(718)
Gross
£000
26,725
2,750
659
336
286
30,756
No
No
No
No
No
2017
Impairment
£000
The movement in the allowance for impairment in respect of trade receivables during the year was as follows. Comparative
amounts for 2017 represent the allowance account for impairment losses under IAS 39:
Group
At 1 January
Charged during the year
Utilised during the year
At 31 December
2018
£000
463
819
(564)
718
(4)
(68)
(30)
(75)
(286)
(463)
2017
£000
428
466
(431)
463
133
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements
Notes continued
26 Financial instruments continued
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 2018
Trade payables being non-derivative financial liabilities
At 31 December 2017
Trade payables being non-derivative financial liabilities
Carrying
amount
£000
Contractual
cash flows
£000
6 months
or less
£000
2,653
(2,653)
(2,653)
1,424
(1,424)
(1,424)
The Company had no 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 2018 all the Group’s sales and more than 97.0% (2017: 95.0%) of the Group’s purchases were Sterling denominated
and accordingly it has no significant currency risk.
Interest rate risk
The Group has exposure to interest rate risk on its cash and cash equivalent balances and money market deposit balances.
As at 31 December 2018 the Group had total cash and cash equivalents of £15,847,000 (2017: £20,930,000) and money
market deposits of £4,090,000 (2017: £4,045,000).
Fair values
The fair values of all financial instruments in both years are equal to the carrying values.
134
rightmove.co.uk
27 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 £471,000 (2017: £330,000) under this agreement and at 31 December 2018, the unsecured inter-group loan
balance was £40,657,000 (2017: £20,017,000) including capitalised interest (refer Note 19).
On 26 June 2018 Rightmove Group Limited declared an interim dividend of 60p per ordinary share to the Company. Additionally,
on 20 November 2018, Rightmove Group Limited declared a further interim dividend of 57p per ordinary share to the Company.
The dividends of £151,399,000 (2017: £148,810,000) 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 £1,446,000
(2017: £741,000), representing the cost of the SIP shares transferred from the EBT to the SIP during the year.
The Company grants share options to employees of Rightmove Group Limited. This transaction is recognised as a recharge
arrangement with an increase in the carrying value of the investment of Rightmove Group Limited (refer Note 15).
Inter-group transactions between subsidiaries
During the year Rightmove Rent Services Limited became a related party to the Company following its incorporation on
19 February 2018. During the year, Rightmove Group Limited has settled liabilities on behalf of Rightmove Rent Services Limited
and the balance owing under the inter-group loan agreement dated 28 March 2018 was £365,000 as at 31 December 2018.
Under IFRS 9 this loan has been fully impaired within Rightmove Group Limited as it is not expected to be recovered.
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 unsecured inter-group loan
balance was £31,000 (2017: £25,000) as at 31 December 2018.
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 71 to 84.
During the year, the directors in office in total had gains of £8,157,000 (2017: £5,574,000) arising on the exercise of share-based
incentive awards. The total share-based payments charge in relation to the directors in office was £1,669,000 (2017: £2,211,000).
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 71 to 84.
28 Contingent liabilities
The Group and the Company had no contingent liabilities in either year.
29 Subsequent events
There have been no subsequent events having a material impact on the financial statements between 31 December 2018
and the reporting date.
135
Rightmove plc annual report 2018Strategic reportGovernanceFinancial statements Advisers and shareholder information
Contacts
Chief Executive Officer:
Finance Director:
Company Secretary:
Website:
Peter Brooks-Johnson
Robyn Perriss
Sandra Odell
www.rightmove.co.uk
Financial calendar 2019
2018 full year results
Final dividend record date
Annual General Meeting
Final dividend payment
Half year results
Interim dividend
1 March 2019
3 May 2019
10 May 2019
31 May 2019
26 July 2019
1 November 2019
Registered office
Rightmove plc
2 Caldecotte Lake
Business Park
Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in
England no. 6426485
Corporate advisers
Financial adviser
UBS Investment Bank
Joint brokers
UBS AG London Branch
Numis Securities Limited
Auditor
KPMG LLP
Bankers
Barclays Bank Plc
Santander UK Plc
Solicitors
EMW LLP
Slaughter and May
Herbert Smith Freehills LLP
Registrar
Link Asset Services*
*Shareholder enquiries
The Company’s registrar is Link Asset Services (formerly Capita Asset Services). They will be pleased to deal with any questions
regarding your shareholding or dividends. Please notify them of your change of address or other personal information.
Their address details are:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Link Asset Services is a trading name of Link Market Services Limited.
Shareholder helpline: 0371 664 0391 (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.
136
rightmove.co.uk Rightmove plc | Annual Report 2018
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.
Contents
Strategic report
1
Highlights
2 Chairman’s statement
4 Our strategy
5 Chief Executive’s review
14 Business model
16
19
24 Risk management
Principal risks and
25
uncertainties
28 The EU referendum
28 Viability statement
29
Corporate responsibility
Key performance indicators
Financial review
Corporate governance report
Governance
36 Directors and officers
38
44 Audit Committee report
51 Nomination Committee report
54 Directors’ report
57
Directors’ responsibilities
statement
Directors’ remuneration
report
Auditor’s report
58
85
Financial statements
90
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
91
92
93
94
95
96
Company statement of
changes in shareholders’ equity
Notes forming part of the
financial statements
136 Advisers and shareholder
97
information
Designed and produced by The Team www.theteam.co.uk
Rightmove plc
2 Caldecotte Lake
Business Park
Caldecotte Lake Drive
Milton Keynes
MK7 8LE
Registered in England no. 6426485
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8
Rightmove plc Annual Report 2018
making
home
moving
easier