REG - Rightmove Plc - Final Results <Origin Href="QuoteRef">RMV.L</Origin> - Part 3
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At least three members who should be independent non-executive directors Two 53 - 84
directors and senior managers;· long-term incentive arrangements;· the design and
determination of targets under any performance-related pay scheme; and · any major changes in
employee benefit structures with the objective of ensuring that directors and employees are
incentivised and fairly rewarded for their individual contributions to the Group's overall
performance. Careful consideration is given to the interests of the shareholders and to the financial
and commercial health of the Group
Nomination Undertakes an annual review of organisation and succession planning and ensures that the membership At least three members, the majority of whom should be independent non-executive directors Two 45 - 47
and composition of the Board, including the balance of skills, remains appropriate Makes
recommendations for the membership of the Board, Audit and Remuneration Committees
Board composition
The Board at the date of this report comprises three executive directors and six non-executive directors, including the
Chairman. The three executive directors are Nick McKittrick (Chief Executive Officer), Peter Brooks-Johnson (Chief
Operating Officer) and Robyn Perriss (Finance Director). The non-executive directors are Scott Forbes (Chairman), Peter
Williams (Senior Independent Director), Ashley Martin, Colin Kemp, Rakhi Goss-Custard and Jacqueline de Rojas.
Biographical details of all directors at the date of this report appear on pages 27 to 30 and details of Committee
membership appear on page 37.
Consideration of the Board size and composition is kept under regular review by the Nomination Committee.
Board changes
As part of the organisational changes announced on 24 February 2017, Nick McKittrick, Chief Executive Officer, will retire
from the Board at the next AGM being 9 May 2017, and Peter Brooks-Johnson (currently Chief Operating Officer) will become
the Chief Executive Officer from that date. Nick McKittrick will remain with the Company through to 30 June 2017 to ensure
a smooth transition process.
Colin Kemp will also retire from the Board and relevant Committees with effect from the AGM date, having served nine years
as a non-executive director.
Jacqueline de Rojas joined the Board on 30 December 2016. All other directors served throughout the year.
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 shareholders; and· with the assistance of the Company Secretary, setting the Board's agenda and ensuring that adequate time is available for discussion and effective decision making, and that directors
receive sufficient, pertinent, timely and clear information.
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 execution of strategy;·
effective and ongoing communication with shareholders; and· chairing the Executive Committee.
Non-executive directors The role of the non-executive directors is to:· constructively challenge the executive directors; and· monitor the delivery of the strategy within the risk and control framework set by the Board. The non-executive directors bring wide and varied
commercial experience and independent judgement to the Board and the Committees' deliberations. The breadth of management, financial and listed company experience of the non-executive directors is described in the biographical details on pages 27 to 30
and demonstrates a range of business expertise that provides the right mix of skills and experience given the size of the Group.
Senior Independent Director 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.
Company Secretary The Company Secretary:· monitors compliance with appropriate Board procedures; · advises the Board on corporate governance matters;· assists the Chairman in ensuring that all the directors have full and timely access to relevant information;
and· assists the Chairman by organising directors' induction and training programmes. The Company Secretary also acts as Secretary to the Audit, Remuneration and Nomination Committees. The appointment and removal of the Company Secretary is a matter
for Board approval.
Board diversity
We are committed to a Board comprised of directors from different backgrounds with diverse and relevant experience,
perspectives, skills and knowledge. We believe that diversity, including gender diversity, amongst directors contributes
towards a high performing and effective Board and business, so we strive to maintain the optimal balance. We endorse both a
meritocratic Board appointment process and balanced gender representation on the Board. As at 31 December 2016, 33% of
Board members were female and following the retirement of Nick McKittrick and Colin Kemp as Board directors in May 2017,
this will rise to 43% with 50:50 representation at an executive director level. We remain committed to recruiting the best
people and appropriate talent for the business and will seek to recruit qualified directors with an ideal of achieving as
near equivalent gender balance on the Board as possible.
Board independence
The Code provides that the Board should identify in the Annual Report each non-executive director that it considers to be
independent. That is, to determine whether the director is independent in character and judgement and whether there are
relationships or circumstances which are likely to affect, or could appear to affect, the director's judgement.
The Board reviews non-executive director independence on an annual basis taking into account such factors as their
contribution to unbiased and independent debate during meetings. The Board considers that there is an appropriate balance
between the executive and non-executive directors and that all non-executive directors are fully independent of management
and independent in character and judgement. Colin Kemp completed nine years' service as a non-executive director in July
2016 and will retire following the 2017 AGM. The Board does not believe that the period from his nine-year anniversary to
his retirement date will impair Colin Kemp's independence in character or judgement.
To safeguard their independence, a director is not entitled to vote on any matter in which they may be conflicted or have a
personal interest. Where necessary, directors are required to absent themselves from a meeting of the Board while such
matters are being discussed. In cases of doubt, the Chairman of the Board is responsible for determining whether a conflict
of interest exists.
The Chairman is also the Chairman of another publically listed company. The executive directors do not hold any other
non-executive directorships or commitments requiring disclosure under the Code.
Board tenure as at 31 December 2016 Balance of directors as at 31 December 2016
Please refer to the pdf
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Re-election to the Board
Directors are appointed and may be removed in accordance with the Articles of Association of the Company and the provisions
of the Companies Act. All directors are subject to election at the first AGM following their appointment and in accordance
with the Code, all directors will seek re-election at the 2017 AGM with the exception of Nick McKittrick and Colin Kemp,
who have notified the Company of their retirement from the Board as at this date.
Board and Committee membership and attendance
The membership of the Committees of the Board and attendance at Board and Committee meetings for the year under review are
set out in the table below:
Board Remuneration Audit Nomination
Committee Committee Committee
Total meetings 7 6 5 2
Scott Forbes 7 4(1) - 2
Nick McKittrick 7 - - -
Peter Brooks-Johnson 7 - - -
Robyn Perriss 7 - - -
Colin Kemp 7 6 - 2
Ashley Martin 7 1(2) 5 2
Peter Williams 7 6 5 2
Rakhi Goss-Custard 7 6 5 2(3)
(1) The Remuneration Committee Chairman invited the Chairman of the Board to attend all Remuneration Committee meetings.
(2) The Remuneration Committee Chairman invited Ashley Martin to attend one Remuneration Committee meeting as a guest for
consideration of bonus and long-term incentive plan performance targets.
(3) Rakhi Goss-Custard was invited to attend two Nomination Committee meetings on a guest basis.
In addition to the above meetings, the Chairman conducts meetings with the non-executive directors without the executive
directors being present when required. Peter Williams, the Senior Independent Director, chaired a meeting of the
non-executive directors at which the performance of the Chairman was also reviewed, without the presence of the Chairman.
Indemnification of directors
The Articles of Association of the Company allow for a qualifying third party indemnity provision between the Company and
its directors and officers, which remains in force at the date of this report. The Group has also arranged directors' and
officers' insurance cover in respect of legal action against the directors. Neither our indemnity nor the insurance
provides cover in the event that a director is proven to have acted dishonestly or fraudulently.
The Group has a Dealing Code setting out the process and timing for dealing in shares, which is compliant with the Market
Abuse Regulation. The Dealing Code applies to all directors, who are persons discharging managerial responsibility, and
other insiders.
Shareholder relations
The Board is accountable to shareholders for the performance and activities of the Group and welcomes opportunities to
engage with shareholders.
Within the terms of the regulatory framework, the directors have conducted regular dialogue with shareholders through
ongoing meetings with institutional investors and research firms to discuss strategy and operational and financial
performance. Contact in the UK is principally with the Chief Executive Officer and the Finance Director. The Chairman
attends selected investor meetings in the UK and the USA. The Senior Independent Director is also available to shareholders
if they wish to supplement their communication, or if contact through the normal channels is inappropriate.
The Board is kept informed of the views and opinions of those with an interest in the Company's investors through reports
from the Chief Executive Officer and the Finance Director, as well as reports from the Company's joint brokers, UBS and
Numis.
Shareholders are also kept up to date with the Group's activities through the half year results statement and Annual Report
and the investor relations section of its website, at plc.rightmove.co.uk, which provides details of all the directors, the
financial calendar, latest news including financial results, investor presentations and Stock Exchange announcements.
Annual General Meeting
The AGM provides an opportunity for shareholders to vote on aspects of the Company's business, meet the directors and ask
them questions. The AGM will be held on 9 May 2017 at the offices of UBS Limited at 5 Broadgate, London EC2M 2QS.
The Company will arrange for the Annual Report and related papers to be available on the Company's corporate website at
plc.rightmove.co.uk or posted to shareholders (where requested) at least 20 working days before the AGM.
The Company continues to comply with the Code with the separation of all resolutions put to shareholders. The Company
proactively encourages shareholders to vote at general meetings by providing electronic voting for shareholders who wish to
vote online and personalised proxy cards to all shareholders, ensuring that all votes are clearly identifiable. The
Company presently takes votes at general meetings on a show of hands on the grounds of practicality, owing to the limited
number of shareholders in attendance. All proxy votes are counted and the level of proxy votes, including abstentions,
lodged for each resolution are reported after each resolution and published on the Company's website.
GOVERNANCE- Corporate governance
Audit Committee report
Dear shareholder
I am pleased to present the 2016 report of the Audit Committee (the Committee).
This report provides an overview of the principal activities of the Committee and details how it has discharged its
responsibilities during the year.
The Committee is an essential part of Rightmove's governance framework to which the Board has delegated oversight of the
accounting, financial reporting and internal control processes, the outsourced internal audit function and the relationship
with the external auditors. The key responsibilities are set out on page 33 of the Corporate Governance Report.
The Committee has completed a detailed programme of work in 2016 in relation to its remit, including challenge and debate
in relation to the outsourced risk and assurance programme delivered by PricewaterhouseCoopers LLP (PwC), known as
Rightmove Assurance, and ensuring it is embedded throughout the business.
The Committee has also considered a number of new and emerging business risks and regulatory requirements. These included a
review of the potential impact on Rightmove of changes in the housing market environment following the UK's decision to
leave the EU, and a review of the requirements of the Finance Bill 2016 in relation to the Group's tax strategy together
with compliance with the Senior Accounting Officer Regime, and the reporting requirements under the Modern Slavery Act
2015.
This report also outlines the significant accounting matters which received our particular focus during the year. It seeks
to explain why the issues are considered significant and together with the external auditors' report provides additional
context for understanding the Group's accounting policies and financial statements for the year.
We were delighted to receive communication from the Financial Reporting Council (FRC) that following a review of our 2015
Annual Report and financial statements, there were no queries or issues arising.
Looking forward to the next 12 months, the Committee will continue to focus on the audit, assurance and risk processes
within the Group, including specific reviews in relation to cyber security risk, quality of member data and data privacy.
I will be available at the AGM to answer any questions about the work of the Committee.
A copy of the terms of reference of the Committee can be found on the Company's website at: plc.rightmove.co.uk.
Ashley Martin
Chairman of the Audit Committee
Composition and attendance at meetings
Committee members Number of meetings attended
Ashley Martin (Chairman of the Committee) 5
Peter Williams 5
Rakhi Goss-Custard 5
The Committee consists entirely of independent non-executive directors, the biographical details of whom can be found on
pages 27 to 30. There has been no change to the composition of the Committee during the year. The Board is satisfied that
both Ashley Martin and Peter Williams have recent and relevant financial skills and experience. Both have professional
qualifications with the Institute of Chartered Accountants of England and Wales. We consider that every member of the
Committee has competence relevant to Rightmove's business and the sector in which we operate.
The quorum for meetings of the Committee is two members. Appointments to the Committee are for a period of up to three
years, extendable by no more than two additional three-year periods, so long as members continue to be independent.
The Finance Director and the Head of Finance are normally invited to attend the meetings as well as the external auditor,
KPMG and the internal auditor, PwC. Other relevant people from the business are also invited to attend certain meetings in
order to provide a deeper level of insight into certain key issues and developments. The Committee regularly meets
separately with the external and internal auditors without others being present.
The Committee Chairman briefs the Board on the matters discussed at each meeting and minutes of the Committee meetings are
circulated to the Board once approved. The effectiveness of the operation of the Committee was reviewed as part of the
effectiveness review of the Board and its committees in December 2016, details of which can be found in the Nomination
Committee report on pages 45 to 47. Each Board member responded to key questions on Board performance and commented
generally on the performance of Board Committees. The Board received positive feedback on the Committee's performance, in
particular, noting the improved engagement between Rightmove Assurance and the business during the year.
Financial reporting
The primary role of the Committee in relation to financial reporting is to review with the assistance of both management
and the external auditor the half year results statement and the Annual Report and financial statements relating to the
Group's financial performance.
The key significant area of judgement considered by the Committee in relation to the 2016 Annual Report is revenue
recognition; details of how this was addressed by the Committee are provided below.
Revenue recognition
The key area of judgement is the timing of revenue recognition in relation to the billing of subscription fees and
additional products and services and the accounting for any membership offers to customers with discounted or free periods.
This was a prime area of audit focus with KPMG performing detailed analytical procedures, including using computer assisted
audit techniques, throughout the year on amounts billed to the two largest customer groups (Agency and New Homes), together
with the billing of Overseas customers. KPMG investigated anomalies and outliers identified and provided detailed reporting
to the Committee in this regard. The Committee discussed any reported anomalies highlighted by KPMG ensuring that adequate
explanations were received from management in line with their business understanding. A separate review of billing and
controls within the non-core revenue streams was also undertaken by Rightmove Assurance. In addition, the Committee
received regular updates from management discussing current customer offers and their impact on revenue recognition.
The Committee was satisfied with the explanations provided and conclusions reached.
Fair balanced and understandable
At the request of the Board, the Committee was asked to consider whether the 2016 Annual Report and accounts, taken as a
whole, is fair, balanced and understandable and provides the necessary information for shareholders to assess the Group's
performance, business model and strategy.
The Committee was provided with an early draft of the Annual Report in order to assess the strategic direction and key
messages being communicated. Feedback was provided by the Committee in advance of the February Board meeting, highlighting
any areas where the Committee believed further clarity was required. The draft report was then amended to incorporate this
feedback prior to being tabled at the Board meeting for final comment and approval.
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 what should have been included?· Are key messages in the narrative aligned with the KPIs and are they reflected in the financial reporting?· Is the reporting on the
business areas in the narrative reporting consistent with the financial reporting in the financial statements?
Is the report balanced? · Do you get the same messages when reading the front end and back end of the Annual Report independently?· Are the alternative performance measures explained clearly with appropriate prominence?· Are the key judgements referred to in the
narrative reporting and significant issues reported in this Committee Report consistent with disclosures of key estimation uncertainties and critical judgements set out in the financial statements?· How do these compare with the risks that KPMG are
planning to include in their Auditors' Report?
Is the report understandable? · Is there a clear and cohesive framework for the Annual Report?· Are the important messages highlighted appropriately throughout the Annual Report?· Is the Annual Report written in easy to understand language and are the key messages
clearly drawn out?· Is the Annual Report free of unnecessary clutter?
Following its review, the Committee is of the opinion that the 2016 Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Group's position, performance,
business model and strategy.
Financial Reporting Council
During the year, Rightmove received a letter from the FRC to confirm that the Annual Report for the year ended 31 December
2015 had been subject to review by its Conduct Committee, which is responsible for reviewing and investigating the annual
accounts, directors' and strategic reports of UK public companies. The letter from the FRC communicated that following this
review, no questions or queries have been raised. The FRC noted that its role was not to verify information, but to
consider compliance with reporting requirements, and it did not take responsibility for reliance on its letter by any
party.
Internal audit
The Group established an internal audit function during 2015 known as Rightmove Assurance which is outsourced to PwC. The
aim of Rightmove Assurance is to provide independent and objective assurance on the effectiveness of internal control, risk
management and governance processes. This includes assurance that underlying controls and processes are working
effectively, as well as specialist reviews that focus on emerging risks in new and evolving areas of the business.
During the year and in accordance with the approved internal audit plan, Rightmove Assurance carried out work in the
following areas:
· financial controls: review of the risks and controls in relation to the revenue and billing processes within our other
revenue streams, being all business units other than Agency and New Homes;
· business continuity planning and Crisis Response: a comprehensive review and update of plans for the Milton Keynes and
London offices, and testing of business continuity readiness;
· review of non-financial reporting KPIs: including comparisons with public reporting by other quoted peers;
· reward and incentivisation: an assessment of the structure and philosophy of reward within the Group for employees
excluding directors; and
· Senior Accounting Officer (SAO) regime: review of Rightmove's tax risk framework in advance of Rightmove entering the
SAO regime in 2017.
Reports setting out the principal findings of the Rightmove Assurance reviews and agreed management actions were discussed
by the Committee.
Effectiveness of the internal audit process
The work of Rightmove Assurance has provided a key additional source of assurance and support to management and the Audit
Committee on the effectiveness of internal controls as well as providing guidance and recommendations to further enhance
the internal control environment, and provide specialist insight into areas of change in the business.
The first review by the Committee of the effectiveness of the Rightmove Assurance function took place in early 2016. The
evaluation was led by the Committee Chairman and included consideration of stakeholder feedback on the quality of Rightmove
Assurance activity, including from PwC themselves. The evaluation concluded that Rightmove Assurance had added value to the
business in its first year in providing further assurance on financial controls and increasing the robustness of the risk
review process. It was also seen as helpful in setting priorities for management and allowing access to specialist input
that Rightmove does not have in-house. The evaluation had a number of recommendations for PwC and Rightmove that were
incorporated into the 2016 Rightmove Assurance plan.
External audit
The Committee has primary responsibility for overseeing the relationship with, and performance of, the external auditor.
KPMG LLP was re-appointed as the Group's auditor in 2013 following an audit tender and in accordance with the EU Audit
Directive implemented in 2016, the Group will be required to put the external audit contract out to tender by 2023. The
external auditor is required to rotate the audit partner responsible for the Group audit every five years. The current lead
partner, Karen Wightman, has been in place for four years, and therefore the Committee and management will work with KPMG
to ensure a smooth transition to a new audit partner, commencing during the 2017 audit process.
The Committee approved the fees of KPMG for the year as set out in Note 6 of the financial statements.
Effectiveness of the external audit process
The effectiveness of the external audit process is dependent on a number of factors. These include the quality, continuity,
experience and training of audit personnel, business understanding, technical knowledge and the degree of rigour applied in
the review processes of the work undertaken, together with appropriate audit risk identification at the start of the audit
cycle.
The Committee evaluated the effectiveness of the audit process in addressing these matters together with input from
management. Areas the Committee considered in this review included the quality of audit planning and execution, engagement
with the Committee and management, quality of reporting and capability and experience of the audit team. For the 2016
financial year, the Committee was satisfied that there had been appropriate focus and challenge on the primary areas of
audit risk and concluded that the performance of KPMG remained efficient and effective.
Non-audit services
The Committee discussed its responsibilities to safeguard audit objectivity and independence as well as the needs of the
business and agreed that it was practical in certain limited cases for the auditor to be assigned to other non-audit
project work due to their knowledge and expertise of the business.
The Committee approved an updated non-audit fee policy in November 2015 in advance of the EU Audit Directive implemented in
June 2016, and adopted by the FRC in its Revised Ethical Standard 2016. Following the introduction of updated FRC
guidelines, the non-audit fee policy has been updated to give management the authority to incur permitted non-audit fees of
up to £15,000 in any financial year without the prior approval of the Committee. Thereafter all additional fees will be
referred to the Committee in advance, subject to a cap on permitted non-audit fees of 70% of the average audit fees over
the three preceding financial years. Permitted non-audit services are any services which are not identified as prohibited
services in the FRC Revised Ethical Standard 2016.
The level of non-audit fees as a proportion of the audit fee has typically been very low at Rightmove. The non-audit
services provided by KPMG have historically related to tax advisory services which are now prohibited, and as a result, PwC
were appointed as Rightmove's tax advisors in 2016. Details of the non-audit fee services provided by KPMG can be found in
Note 6 of the financial statements.
Additional areas of focus of the Committee during 2016
The Committee considers new and emerging risks as the business and regulatory environment evolves. This resulted in the
following items being discussed by the Committee during 2016:
· housing market: consideration of the potential impact on Rightmove of the greater level of uncertainty in the housing
market following the vote to leave the EU;
· data protection, and use of consumer personal data;
· Modern Slavery Act 2015: review of the proposed steps to be taken prior to the publication of a Modern Slavery Act
statement and approval of the draft statement; and
· consideration of the adoption of IFRS 15 Revenue from Contracts with Customers on the Group's financial statements.
Internal controls
The Board has overall responsibility for the Group's system of internal controls and has established a framework of
financial and other controls which is periodically reviewed in accordance with the FRC Internal Control: Guidance to
Directors publication for its effectiveness.
The Board has taken, and will continue to take, appropriate measures to ensure that the chances of financial irregularities
occurring are reduced as far as reasonably possible by improving the quality of information at all levels in the Group,
fostering an open environment and ensuring that financial analysis is rigorously undertaken. Any system of internal control
is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide
reasonable and not absolute assurance against material misstatement or loss.
The Group's management has established the procedures necessary to ensure that there is an ongoing process for identifying,
evaluating and managing the significant risks to the Group. These procedures have been in place for the whole of the
financial year ended 31 December 2016 and up to the date of the approval of these financial statements and they are
reviewed regularly.
The key elements of the system of internal control are:
· major commercial, strategic, competitive and financial risks are formally identified, quantified and assessed and
discussed with the executive directors, after which they are considered by the Board;
· a comprehensive system of planning, budgeting and monitoring Group results. This includes monthly management reporting
and monitoring of performance against both budgets and forecasts with explanations for all significant variances;
· an organisational structure with clearly defined lines of responsibility and delegation of authority;
· clearly defined policies for capital expenditure and investment, including appropriate authorisation levels, with
larger capital projects, acquisitions and disposals requiring Board approval;
· a comprehensive disaster recovery and business continuity plan based upon:
· co-hosting of the rightmove.co.uk platforms across three separate locations which is regularly tested and reviewed;
and
· the capability for employees to remote work from home or a third party location in the event of a loss of one of our
premises which has been tested for the Milton Keynes office during the year;
· regular testing of the security of the IT systems and platforms, regular backups of key data and ongoing threat
monitoring to protect against the risk of cyber attack;
· a treasury function which manages cash flow forecasts and cash on deposit and counterparty risk; and
· whistleblowing and bribery policies of which all employees are made aware, to enable concerns to be raised either with
line management or, if appropriate, confidentially outside their line management.
Through the procedures outlined above, the Board, with advice from the Committee, has considered all significant aspects of
internal control for the year and up to the date of this Annual Report. No significant failings or weaknesses were
identified during this review. However, had there been any such failings or weaknesses, the Board confirms that necessary
actions would have been taken to remedy them.
GOVERNANCE - Corporate governance report
Nomination Committee report
Dear shareholder
I am pleased to present the 2016 report of the Nomination Committee (the Committee).
The Committee's role is to regularly review the structure, size and composition of the Board with the objective of matching
the evolving skills, knowledge and experience required by the business. The Committee seeks to optimise the Board's
performance and ensure the continued ability of the Group to compete effectively in the marketplace, and make
recommendations to the Board with regard to any changes.
A copy of the terms of reference of the Committee can be found on the Company's website at: plc.rightmove.co.uk. These were
updated during the year with the key responsibilities as follows:
Board composition and appointments · Review the structure, size and composition of the Board and make recommendations on any changes · Identify and nominate suitable candidates to fill Board vacancies · Recommend the membership of the Audit and Remuneration Committees
Organisation and succession planning · Review the organisation and succession plan in order to identify skills and expertise for the Group to meet its strategic objectives · Make recommendations to the Board concerning plans for succession for both executive and non-executive directors and, in particular, for the key roles of Chairman and Chief Executive Officer
Board evaluation · Evaluate the performance of the Board both collectively and individually against agreed performance criteria · Determine the level of Board effectiveness based on the assessment and recommend any actions to improve performance
In 2016 the Committee reviewed the organisation and succession plans, recommended the appointment of a new non-executive
director and conducted an internal Board and Committee evaluation. Further details of the Board evaluation can be found on
pages 46 to 47 of this report.
Jacqueline de Rojas was appointed as a non-executive director on 30 December 2016, following an external search by Korn
Ferry International (Korn Ferry). The Board currently consists of nine directors including six non-executive directors,
five of which are considered to be independent.
Following the retirement of Nick McKittrick (Chief Executive Officer) and Colin Kemp (non-executive director) at the 2017
AGM, the Board will comprise seven directors (two executive directors and five non-executive directors).
I will be available at the AGM to answer any questions about the work of the Committee.
Scott Forbes
Chairman of the Nomination Committee
Composition and attendance at meetings
The following non-executive directors are members of the Committee. The Committee met twice during the year and attendance
at the meetings is shown below:
Committee members Number of meetings attended
Scott Forbes (Chairman of the Committee) 2
Peter Williams 2
Ashley Martin 2
Colin Kemp 2
Rakhi Goss-Custard and Nick McKittrick attended both meetings by invitation.
Membership
The Committee is comprised entirely of non-executive directors, whose biographical details can be found on pages 27 to 30.
As at 31 December 2016 three out of the four members of the Committee were considered by the Board to be independent. The
quorum for meetings of the Committee is two members. At the request of the Committee Chairman, the Chief Executive Officer
is normally invited to attend the meeting to discuss the annual organisation and succession plan.
The Chairman of the Company may not chair the Committee in connection with any discussion about the appointment of his
successor. In these circumstances, the Senior Independent Director will take the chair.
Appointments are for a period of up to three years, extendable by no more than two additional three-year periods, so long
as Committee members continue to be independent.
Principal activities of the Committee during 2016
During the year the Committee has:
· reviewed the Board composition;
· reviewed the Board committees' composition;
· approved the plans for the organisation and succession of the executive directors and senior management;
· agreed the process for and considered actions based upon the findings of the Board evaluation;
· recommended the appointment of a non-executive director;
· considered the diversity of the Board and updated the policy regarding gender diversity on the Board; and
· conducted an annual review of its terms of reference.
Board induction and training
All new non-executive directors joining the Board undertake a tailored induction programme to meet their individual needs.
This covers for example: the strategic challenges and opportunities facing the Group, financial performance, operational
activities (including meeting with members of the senior management team and spending a day on the road with a sales
director meeting our customers), the role of the Board including the matters reserved to it for approval, and the
responsibilities of the Board Committees. New directors receive a comprehensive induction pack of corporate information
and a briefing from the Company Secretary covering corporate governance, Group policies and relevant regulations.
Individual Board members have access to training and can seek the advice from independent professional advisers, at the
Group's expense, where specific expertise or training is required in furtherance of their duties.
Board effectiveness and evaluation
The Board is committed to undertaking annual reviews of its own performance and also the performance of its Committees and
individual directors.
The Committee considered the conclusions of the Board Strategy Review externally facilitated by Korn Ferry in 2015, and
agreed a candidate profile for a new non-executive director to join the Board in advance of Colin Kemp's retirement
following the 2017 AGM. The Committee recommended the appointment of Jacqueline de Rojas as a recognised technology leader
with relevant customer engagement experience and an advocate for increased opportunities for women and diversity in both
the boardroom and technology workplace. The Committee has also agreed a candidate profile and initiated a search by Korn
Ferry for a non-executive director with suitable skills and experience to replace Ashley Martin, when he retires from the
Board and as Audit Committee Chairman in May 2018.
The Board has undertaken an internal self-assessment during 2016. Directors were invited to provide feedback via the
Company Secretary on Board and Committee performance and answer key questions relating to the Board's strengths,
improvements during the year and which business risks and development opportunities should receive more focus. The
Committee and Board discussed the feedback at the Committee meeting in December 2016 and recommended a number of actions
and areas of focus for the Board during 2017. It was agreed that the Board has benefited from access to members of senior
management and such interaction should continue at future board meetings. Additionally, the Board seeks more opportunities
to enhance its understanding of the customer perspective.
The evaluation concluded that the Board and its Committees continue to operate effectively with strong individual
contributions from executive directors, open, constructive debate and a good balance of support and challenge from the
non-executive directors.
An internally facilitated review of the performance of the Board and its Committees will again be conducted during 2017.
GOVERNANCE - Directors' report
The directors submit their report together with the audited financial statements for the Company and its subsidiary
companies (the Group) for the year ended 31 December 2016.
Rightmove plc (the Company) is incorporated as a public limited company registered in England number 6426485 with a
registered office at Turnberry House, 30 Caldecotte Lake Drive, Caldecotte, Milton Keynes MK7 8LE.
Pages 48 to 51, comprise the Directors' Report that has been drawn up and presented in accordance with English company law
and the liabilities of the directors in connection with the report shall be subject to the limitations and restrictions
provided by such law.
Strategic Report
The Strategic Report can be found on pages 1 to 26. This report sets out the development and performance of the Group's
business during the financial year, the position of the Group at the end of the year and a description of the principal
risks and uncertainties facing the Group.
Dividend
An interim dividend of 19.0p (2015: 16.0p) per ordinary share was paid in respect of the half year period on 4 November
2016, to shareholders on the register of members at the close of business on
7 October 2016. The directors are recommending a final dividend for the year of 32.0p (2015: 27.0p) per ordinary share,
which together with the interim dividend, makes a total for the year of 51.0p (2015: 43.0p), amounting to £29,696,000
(2015: £25,547,000). Subject to shareholders' approval at the Annual General Meeting (AGM) on 9 May 2017, the final
dividend will be paid on 2 June 2017 to shareholders on the register of members at the close of business on 5 May 2017.
Share capital
The shares in issue, including 2,271,725 shares held in treasury (2015: 2,322,314) at the year-end amounted to 95,490,266
(2015: 97,741,977) ordinary shares of £0.01, with a nominal value of £954,902 (2015: £977,419). The holders of ordinary
shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at general
meetings of the Company. Movements in the Company's share capital and reserves in the year are shown in Note 22 and Note 23
to the financial statements. Information on the Group's share-based incentive schemes is set out in Note 24 to the
financial statements. Details of the share-based incentive schemes for directors are set out in the Directors' Remuneration
Report on pages 53 to 84.
Share buyback
The Company's share buyback programme continued during 2016. Of the 15% authority given by shareholders at the 2016 AGM, a
total of 2,251,711 (2015: 2,251,340) ordinary shares of £0.01 each were purchased in the year to 31 December 2016, being
2.4% (2015: 2.3%) of the shares in issue (excluding shares held in treasury) at the time the authority was granted. The
average price paid per share was £39.12 (2015: £33.79) with a total consideration paid (excluding all costs) of £88,083,000
(2015: £76,071,000). Since the introduction of the new parent company in January 2008, a total of 36,415,142 shares have
been purchased of which 2,271,725 are held in treasury with the remainder having been cancelled. A resolution seeking to
renew this authority will be put to shareholders at the AGM on 9 May 2017.
Shares held in trust
As at 31 December 2016, 343,275 (2015: 386,057) ordinary shares of £0.01 each in the Company were held by The Rightmove
Employees' Share Trust (EBT) for the benefit of Group employees. These shares had a nominal value at 31 December 2016 of
£3,433 (2015: £3,861) and a market value of £13,398,000 (2015: £15,925,000). The shares held by the EBT may be used to
satisfy share-based incentives for the Group's employee share plans. During the year, 50,082 (2015: 184,842) shares were
transferred to Group employees following the exercise of share-based incentives. Additionally, 20,250 shares were purchased
by the EBT for transfer to the Rightmove Share Incentive Plan Trust (SIP). The terms of the EBT provide that dividends
payable on the shares held by the EBT are waived.
As at 31 December 2016, 50,150 (2015: 37,800) ordinary shares of £0.01 each in the Company were held by the SIP for the
benefit of Group employees. These shares had a nominal value at 31 December 2016 of £502 (2015: £378) and a market value of
£1,957,000 (2015: £1,559,000). The shares held by the SIP are awarded as free shares to eligible employees in January of
each year and are held in trust for a period of three years before an employee is entitled to take ownership of the shares.
During the year, 600 (2015: 500) shares were released early from the SIP in relation to good leavers and retirees under the
SIP rules.
Substantial shareholdings
As at the date of this report, the following beneficial interests in 3% or more of the Company's issued ordinary share
capital (excluding shares held in treasury) on behalf of the organisations shown in the table below, had been notified to
the Company pursuant to Rule 5.1 of the Disclosure Guidance and Transparency Rules. The information provided below was
correct as at the date of notification, where indicated this was not in the current financial year. It should be noted that
these holdings are likely to have changed since notified to the Company. However, notification of any change is not
required until the next applicable threshold is crossed.
Shareholder Nature of holding Total voting rights % of total voting rights(1)
BlackRock Inc(2) IndirectContracts for difference(CFD)Stock Lending 7,761,2411,844,685702,740 8.3%
2.0%
0.8%
Marathon Asset Management LLP(3) Indirect 5,930,755 6.4%
Baillie Gifford & Co(3) Indirect 5,873,614 6.3%
Axa Investment Managers SA(3) Indirect 5,510,468 5.9%
Standard Life Investments(3) Direct 831,055 0.9%
Indirect 4,000,946 4.3%
Caledonia (Private) Investments Pty Limited(3) Direct 2,905,192 3.1%
(1) The above percentages are based upon the voting rights share capital (being the shares in issue less shares held in
treasury) of 93,119,831 as at 24 February 2017.
(2) Date of notification was 13 February 2017.
(3) Date of notification preceded the 2016 financial year.
Directors
The directors of the Company as at the date of this report are named on pages 27 to 30 together with their profiles.
The Articles of Association of the Company require directors to submit themselves for re-appointment where they have been a
director at each of the preceding two AGMs and were not appointed or re-appointed by the Company at, or since, either such
meeting. Following the provisions of the UK Corporate Governance Code, all directors who have served during the year and
remain a director as at 31 December 2016 will retire and offer themselves for re-election at the forthcoming AGM with the
exception of Nick McKittrick and Colin Kemp, who have notified the Company of their retirement from the Board as at this
date.
Jacqueline de Rojas will offer herself for election, this being her first AGM following her appointment to the Board as
non-executive director on 30 December 2016.
The Board is satisfied that the directors retiring and standing for re-election are qualified for re-appointment by virtue
of their skills, experience and contribution to the Board. The executive directors have service contracts with the Company
which can be terminated on 12 months' notice. The appointments for the non-executive directors can be terminated on three
months' notice.
The interests of the directors in the share capital of the Company as at the date of this report, the directors' total
remuneration for the year and details of their service contracts and Letters of Appointment are set out in the Directors'
Remuneration Report on pages 53 to 84. At the date of this report all of the executive directors were deemed to have a
non-beneficial interest in 343,275 ordinary shares of £0.01 each held by the EBT.
Research and development
The Group undertakes research and development activity in order to develop new products and to continually improve the
existing property platforms. Further details are disclosed in Note 2 to the financial statements on page 98.
Political donations
During the year the Group did not make any donations to any political party or other political organisation and did not
incur any political expenditure within the meanings of sections 362 to 379 of the Companies Act 2006.
Annual General Meeting
The AGM of the Company will be held at the offices of UBS Limited at 5 Broadgate, London, EC2M 2QS on 9 May 2017 at 10am.
The Notice of Annual General Meeting will be published in March 2017.
The resolutions being proposed at the 2017 AGM are general in nature, including the renewal for a further year of the
limited authority of the directors to allot the unissued share capital of the Company and to issue shares for cash other
than to existing shareholders (in line with the Pre-Emption Group's Statement of Principles). A resolution will also be
proposed to renew the directors' authority to purchase a proportion of the Company's own shares. The Company will again
seek shareholder approval to hold general meetings (other than AGMs) at 14 days' notice. Resolutions will be proposed to
renew these authorities, which would otherwise expire at the 2017 AGM.
Additional items of special business for the 2017 AGM are resolutions seeking shareholder approval for the Rightmove 2017
Deferred Share Bonus Plan (DSP) and amendment and renewal of the Rightmove 2008 Sharesave Plan (Sharesave). The DSP has
operated since 2009 as an incentive for executive directors and certain senior employees, using shares purchased by EBT in
the market. Shareholder approval is required to allow the use of Treasury or new issue shares. The Sharesave has operated
since 2008 and enables all Rightmove employees to save for three years and purchase shares in the Company at a discounted
price under HMRC approved rules. Shareholder approval is required to amend and renew the Sharesave for a further ten
years.
Auditor
KPMG LLP has confirmed its willingness to continue in office as auditor of the Group. In accordance with section 489 of the
Companies Act 2006, separate resolutions for the re-appointment of KPMG LLP as auditor of the Group and for the Audit
Committee to determine the auditor's remuneration will be proposed at the 2017 AGM.
Audit information
So far as the directors in office at the date of signing of the report are aware, there is no relevant audit information of
which the auditor is unaware and each such director has taken all reasonable steps to make themselves aware of any relevant
audit information and to establish that the auditor is aware of that information.
Greenhouse gas emissions
Our report of greenhouse gas emissions in line with UK mandatory reporting regulation is provided in the Corporate
Responsibility section of the Strategic Report on pages 25 to 26.
Fair, balanced and understandable
The Board has concluded that the 2016 Annual Report is fair, balanced and understandable and provides the necessary
information for shareholders and other readers of the accounts to assess the Group's position and performance, business
model and strategy.
Responsibility statement of the directors in respect of the annual financial report
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the
consolidation taken as a whole; and
· the management report required by DTR 4.1.8R (contained in the Strategic Report and the Directors' Report) includes a
fair review of the development and performance of the business and the position of the Company and the undertakings
included in the Group taken as a whole, together with a description of the principal risks and uncertainties they face.
Signed on behalf of the Board:
Nick McKittrick Robyn Perriss
Chief Executive Officer Finance Director
24 February 2017
GOVERNANCE- Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under
that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and
applicable law and have elected to prepare the parent company financial statements on the same basis.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In
preparing each of the Group and parent Company financial statements, the
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