REG - Rightmove Plc - Final Results <Origin Href="QuoteRef">RMV.L</Origin> - Part 6
24/02/2017 07:06
- Part 6: For the preceding part double click ID:nRSX7347Xe
£ £ £ bonus(2) £ subtotal £
£ £
Executive directors
Nick McKittrick 424,320 1,973 - 426,293 487,968 1,212,662 1,700,630 2,126,923
Peter Brooks-Johnson 355,368 1,973 15,849 373,190 408,673 1,015,601 1,424,274 1,797,464
Robyn Perriss 281,112 1,240 13,233 295,585 323,279 803,392 1,126,671 1,422,256
Non-executive directors
Scott Forbes 170,000 - - 170,000 - - - 170,000
Colin Kemp 50,000 - - 50,000 - - - 50,000
Ashley Martin 60,000 - - 60,000 - - - 60,000
Peter Williams 65,000 - - 65,000 - - - 65,000
Rakhi Goss-Custard 50,000 - - 50,000 - - - 50,000
Jacqueline de Rojas 274(4) - - 274 - - - 274
(1) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in respect of the full year results for the year ended 31
December 2016 including the deferred element of 60%.
(3) The value of the nil cost PSPs vesting is calculated by taking the number of nil cost options expected to vest in
March 2017 (including dividend roll up), which are dependent on the three-year performance period ended 31 December 2016
and multiplying by the year end closing share price of £39.03.
(4) Fee for two days from appointment on 30 December 2016 to year end.
The remuneration of the directors of the Company during 2015 was:
Fixed pay Performance related pay
Salary/Fee Benefits(1) Pension Fixed pay subtotal Annual bonus(2) Long-term incentives (PSPs)(3) Performance related pay subtotal Total remuneration in 2015
£ £ £ £ £ £ £ £
Executive directors
Nick McKittrick 408,000 1,931 - 409,931 510,000 1,380,418 1,890,418 2,300,349
Peter Brooks-Johnson 341,700 1,835 22,860 366,395 427,125 1,035,345 1,462,470 1,828,865
Robyn Perriss 270,300 1,834 21,816 293,950 337,875 638,399(6) 976,274 1,270,224
Non-executive directors
Scott Forbes 117,042 - - 117,042 - - - 117,042
Jonathan Agnew 20,632(4) - - 20,632 - - - 20,632
Colin Kemp 46,817 - - 46,817 - - - 46,817
Ashley Martin 52,669 - - 52,669 - - - 52,669
Judy Vezmar 16,506(4) - - 16,506 - - - 16,506
Peter Williams 54,410(5) - - 54,410 - - - 54,410
Rakhi Goss-Custard 46,817 - - 46,817 - - - 46,817
(1) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in respect of the full year results for the year ended 31
December 2015 including the deferred element of 60%.
(3) The value of the nil cost PSPs vesting is calculated by taking the number of nil cost options expected to vest in
March 2016 (including dividend roll up), which are dependent on the three-year performance period ended 31 December 2015
and multiplying by the year end closing share price of £41.25.
(4) Fee for the year up to retirement from the Board and Committees at the AGM on 7 May 2015.
(5) Fee includes a pro-rated increase from 7 May 2015 for appointment as Remuneration Committee Chairman and Senior
Independent Director.
(6) These relate to nil cost PSPs granted to Robyn Perriss prior to her appointment as director.
Defined contribution pension
The Group operates a stakeholder pension plan for employees under which the employer contributes 6% of base salary, subject
to the employee contributing a minimum of 3% of base salary. Nick McKittrick chose not to participate in this arrangement.
Peter Brooks-Johnson and Robyn Perriss were members of the stakeholder pension plan during 2015 and the Company contributed
£22,860 and £21,816 that year respectively; both directors elected to withdraw from the pension plan during 2016 with
contributions made of £15,849 and £13,233 respectively. The Company does not contribute to any personal pension
arrangements.
How was pay linked to performance in 2016?
Annual bonus plan
The incentive for the financial year ended 31 December 2016 was in the form of a cash bonus of up to 50% of salary and a
DSP bonus of up to 75% of salary (i.e. 125% in total). The bonus (both cash and DSP elements) was determined by a mixture
of underlying operating profit performance (65%) and key performance indicators (35%) relating to underlying drivers of
long-term revenue growth.
When comparing performance against the 2016 bonus targets set, the Committee determined that 92% of the maximum achievable
cash and DSP bonus should be paid to the executive directors. Accordingly, a cash bonus of 46% of base salary will be paid
to the executives and 69% of base salary will be granted to the executives under the DSP, which will be deferred until
March 2019. More details are provided in the table below:
Measure Hurdle As a % of maximum bonus opportunity Actual performance achieved Resulting bonus % achieved
Financial targets
Underlying operating profit before tax(1) Targets:· £153.3m: 25% payout· £163.8m: 100% payout 65% Underlying operating profit achieved: £166.2m The 2016 profit represented growth of 15% on 2015 65%
Strategic targets
Traffic market share Growth in absolute visits on 2015 compared to nearest competitor: · Same absolute growth: 25% payout· 50% higher absolute growth: 100% payout 15% Growth in absolute visits was 17.75 times higher than our nearest competitor 15%
Other revenue(2) · Growth of 20%: 25% payout · Growth of 30%: 100% payout 15% Revenue increased from £14.5m to £17.8m, an increase of 23% 7%
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% 95% of respondents say 'Rightmove is a great place to work' 5%
Total 100% 92%
(1) Operating profit before share-based payments and NI on share-based incentives.
(2) The targets relate to all revenue streams except Agency and New Homes.
(3) Based on the results of the annual employee survey.
Long-term incentives
The PSP awards granted in March 2014 were subject to EPS (75% of the awards) and relative TSR (25% of the awards)
performance conditions that related to the three-year period ended 31 December 2016.
The vesting schedule for the relative TSR element of executive directors' 2014 PSP awards is set out below:
Relative TSR condition % of award vesting (maximum 25%)
Less than the Index 0%
Equal to the Index 6.25%
25% higher than the Index 25%
Intermediate performance Straight-line vesting
At the end of the performance period, Rightmove's TSR was 53% compared to 24% for the FTSE 250 Index. As this level of
outperformance is 29% higher than the Index, these options will vest in full from 3 March 2017.
Rightmove's EPS growth is measured over a period of three financial years (2014 to 2016). The EPS figure used is equivalent
to Rightmove's reported underlying basic EPS (before share-based payments, NI on share-based incentives and no related
adjustments for tax) and the vesting schedule is set out below:
Underlying basic EPS growth from 2014 to 2016 % of award vesting(maximum 75%)
Less than 40% 0%
40% 18.75%
70% 75%
Between 40% and 70% Straight-line vesting
At the end of the performance period, Underlying EPS was 142.8p which from an Underlying basic EPS base of 81.0p results in
growth of 76%, exceeding the maximum 70% EPS growth target and will result in full vesting of this part of the award
(maximum of 75%) from 3 March 2017.
Share awards granted during the year
On 1 March 2016 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded shares under the PSP, which vest in
March 2019, and are subject to a mixture of EPS (75% of the awards) and relative TSR (25% of the awards) performance with
the greater weighting on EPS to reflect its particular relevance to the performance of the business.
Executive Basis of grant Number of shares Face value of award(1)
Nick McKittrick 200% of base salary 21,912 £848,640
Peter Brooks-Johnson 200% of base salary 18,351 £710,736
Robyn Perriss 200% of base salary 14,516 £562,224
(1) Based on the average mid-market share price for the three consecutive days prior to grant, taken from the Daily
Official List, of £38.73.
The vesting schedule for the relative TSR element of executive directors' 2016 PSP awards is set out below. It is
consistent with the TSR condition used for previous grants under the share option scheme. Performance will be measured over
three financial years.
Relative TSR condition % of award vesting (maximum 25%)
Less than the Index 0%
Equal to the Index 6.25%
25% higher than the Index 25%
Intermediate performance Straight-line vesting
Rightmove's EPS growth will be measured over a period of three financial years (2016-2018). The EPS figure used will be
equivalent to the Group's underlying basic EPS (before share-based payments, NI on share-based incentives and no related
adjustments for tax).
The following vesting schedule will apply for executive directors' awards granted in 2016:
Underlying basic EPS growth from 2016 to 2018 % of award vesting(maximum 75%)
Less than 25% 0%
Equal to 25% 18.75%
Equal to or greater than 55% 75%
Between 25% and 55% Straight-line vesting
The benchmark underlying basic EPS for the financial year 2015 from which these targets will be measured is 121.4p.
Share-based incentives held by the directors and not exercised as at 31 December 2016
Date granted Share-based incentives held Grantedin year/ dividend roll-up Exercise price Exercised Average share price at date of exercise Share-based incentives held at 31 December 2016 Vesting date Expiry date
1 January 2016 in year
Executive directors
Nick McKittrick 5/3/2009(Unapproved) 279,755 - £2.24 - - 279,755 5/3/2012 4/3/2019
1/10/2012 694 - £12.95 (694)(5) £41.93 - 1/11/2015 30/4/2016
(Sharesave)
8/3/2013 32,279 - £0.00 - - 32,279 8/3/2016 7/3/2018
(PSP)
3/3/2014(DSP) 9,224 - £0.00 (9,224)(3) £37.49 - 3/3/2016 2/3/2017
3/3/2014(PSP) 30,018 - £0.00 - - 30,018 3/3/2017 2/3/2019
1/10/2014(Sharesave) 456 - £19.72 - - 456 1/11/2017 30/4/2018
2/3/2015(DSP) 7,546 - £0.00 - - 7,546 2/3/2017 1/3/2018
2/3/2015(PSP) 29,321 - £0.00 - - 29,321 2/3/2018 1/3/2020
1/10/2015(Sharesave) 304 - £29.60 - - 304 1/11/2018 30/4/2019
1/3/2016(DSP) - 7,901(1) £0.00 - - 7,901 1/3/2018 28/2/2019
1/3/2016(PSP) - 21,912(2) £0.00 - - 21,912 1/3/2019 28/2/2021
Total 389,597 29,813 (9,918) 409,492
PeterBrooks-Johnson 10/10/2007(Unapproved) 75,000 - £5.22 - - 75,000 15/3/2011 9/10/2017
5/3/2009(Unapproved) 139,286 - £2.24 - - 139,286 5/3/2012 4/3/2019
5/3/2010(Unapproved) 52,553 - £6.66 - - 52,553 5/3/2013 4/3/2020
2/3/2012 23,951 928 £0.00 (24,879)(4) £37.49 - 2/3/2015 1/3/2017
(PSP)
8/3/2013 24,210 - £0.00 - - 24,210 8/3/2016 7/3/2018
(PSP)
3/3/2014(DSP) 6,918 - £0.00 (6,918)(3) £37.44 - 3/3/2016 2/3/2017
3/3/2014(PSP) 25,140 - £0.00 - - 25,140 3/3/2017 2/3/2019
1/10/2014(Sharesave) 456 - £19.72 - - 456 1/11/2017 30/4/2018
2/3/2015(DSP) 6,320 - £0.00 - - 6,320 2/3/2017 1/3/2018
2/3/2015(PSP) 24,556 - £0.00 - - 24,556 2/3/2018 1/3/2020
1/10/2015(Sharesave) 304 - £29.60 - - 304 1/11/2018 30/4/2019
1/3/2016(DSP) - 6,617(1) £0.00 - - 6,617 1/3/2018 28/2/2019
1/3/2016(PSP) - 18,351(2) £0.00 - - 18,351 1/3/2019 28/2/2021
Total 378,694 25,896 (31,797) 372,793
Robyn Perriss 8/3/2013 14,928 - £0.00 - - 14,928 8/3/2016 7/3/2018
(PSP)
3/3/2014(DSP) 4,353 - £0.00 - - 4,353 3/3/2016 2/3/2017
3/3/2014(PSP) 19,887 - £0.00 - - 19,887 3/3/2017 2/3/2019
1/10/2014(Sharesave) 912 - £19.72 - - 912 1/11/2017 30/4/2018
2/3/2015(DSP) 4,999 - £0.00 - - 4,999 2/3/2017 1/3/2018
2/3/2015(PSP) 19,425 - £0.00 - - 19,425 2/3/2018 1/3/2020
1/3/2016(DSP) - 5,234(1) £0.00 - - 5,234 1/3/2018 28/2/2019
1/3/2016(PSP) - 14,516(2) £0.00 - - 14,516 1/3/2019 28/2/2021
Total 64,504 19,750 - 84,254
(1) On 2 March 2016, the executive directors were awarded nil cost options under the DSP, which vest in March 2018. The
average mid-market share price for the three consecutive preceding days, used to calculate the number of shares awarded,
was £38.73.
(2) On 2 March 2016, the executive directors were awarded nil cost shares under the PSP, which vest in March 2019.
Further details are set out on pages 78 to 79.
(3) The nil cost deferred shares granted under the DSP on 3 March 2014, were exercisable from 3 March 2016 subject to
annual bonus targets which were met in full.
Nick McKittrick exercised 9,224 shares on 16 December 2016 and sold 4,353 shares at an average market price of £37.49 per
share to satisfy the resulting tax liability and retained the balance of 4,871 shares.
Peter Brooks-Johnson exercised 6,918 shares on 16 December 2016 and sold 3,266 shares at an average market price of £37.49
per share to satisfy the resulting tax liability and retained the balance of 3,652 shares.
(4) On 2 March 2012, the executive directors were awarded nil cost options under the PSP which vested in 2015 subject to
EPS and relative TSR performance measures, which were met in full. Peter Brooks-Johnson exercised 24,879 shares (which
included a dividend roll-up of 928 shares) in December 2016, sold 11,743 upon exercise at an average market price of £37.44
to satisfy the resulting tax liability and retained the balance of 13,136 shares.
(5) In October 2012, Nick McKittrick was granted a Sharesave option over 694 shares which vested in November 2015 at an
exercise price of £12.95. In April 2016, Nick exercised the option in full and retained the shares.
Dilution
All existing executive share-based incentives can be satisfied from shares held in the Rightmove Employees' Share Trust
(EBT) and shares held in treasury. It is intended that the 2017 share-based incentive awards will also be settled from
shares currently held in the EBT or from shares held in treasury without any requirement to issue further shares.
Directors' interests in shares
The interests (both beneficial and family interests) of the directors in office at the date of this report in the share
capital of the Company were as follows:
Interests in Interests in
ordinary shares of £0.01 share-based incentives
At31 December 2016 At 1 January 2016 PSP & DSP awards (unvested) PSP & DSP awards (vested but unexercised) Options (unvested) Options (vested but unexercised)
Executive directors
Nick McKittrick 146,592 141,027 96,698 32,279 760 279,755
Peter Brooks-Johnson 55,146 38,358 80,984 24,210 760 266,839
Robyn Perriss 5,833 5,833 64,061 19,281 912 -
Non-executive directors
Scott Forbes 319,300 319,300 - - - -
Ashley Martin 2,060 2,060 - - - -
Peter Williams 3,728 3,728 - - - -
Colin Kemp 2,500 2,500 - - - -
Rakhi Goss-Custard 544 - - - - -
Jacqueline de Rojas - - - - - -
Total 535,703 512,806 241,743 75,770 2,432 546,594
· The Company's shares in issue (including 2,271,725 shares held in treasury) as at 31 December 2016 comprised
95,490,266 (2015: 97,741,977) ordinary shares of £0.01 each.
· The closing share price of the Company was £39.03 as at 30 December 2016 (the last day of trading in 2016). The
lowest and highest share prices during the year were £31.73 and £43.02 respectively.
· The executive directors are regarded as being interested, for the purposes of the Companies Act 2006, in 343,275
(2015: 386,057) ordinary shares of £0.01 each in the Company currently held by the EBT as they are, together with other
employees, potential beneficiaries of the EBT.
· The directors' beneficial holdings represent 0.6% of the Company's shares in issue as at 31 December 2016 (2015:
0.5%) (excluding shares held in treasury).
· There have been no changes to the above interests between the year-end and the date of this report.
Executive director share ownership guidelines are set out in the Remuneration Policy Report on page 61. The interests of
the executive directors in office at 31 December 2016 in the share capital of the Company as a percentage of base salary
were as follows:
Base salary Number of shares held at Value of Value of shares as a % of base salary
1 January 2017 31 December 2016 shares at
31 December 2016
Executive directors
Nick McKittrick £445,536 146,592 £5,721,486 1284%
Peter Brooks-Johnson £373,136 55,146 £2,152,348 576%
Robyn Perriss £320,000 5,833 £227,662 71%
Percentage increase in the remuneration of the Chief Executive Officer
The table below shows the movement in the salary, benefits and annual bonus for the Chief Executive Officer (CEO) between
the current and previous financial year compared to that of the total amounts for all employees of the Group for each of
these elements of pay.
The CEO's salary increased by 4%, in line with the average workforce inflationary increase in 2016. The annual bonus of the
CEO decreased by 4% as a result of 92% of the maximum bonus being achieved in relation to the 2016 bonus targets, compared
with a pay-out of 100% in 2015.
The average salary for all employees increased by 5% due to a 4% universal cost of living increase in January 2016,
together with the investment in new heads in 2016, primarily being in sales and technology roles at higher than average
salary levels. The increase in average employee benefits relates to an increase in the cost of private healthcare from 1
March 2016, together with increased take-up of BUPA health checks throughout the year.
2016 2015 % change
£ £
Chief Executive Officer 424,320 408,000 4%
Salary
Benefits 1,973 1,931 2%
Annual bonus 487,968 510,000 (4)%
Average of all employees(1)Salary 45,148 42,883 5%
Benefits 834 734 14%
Annual bonus 2,394 2,364 1%
(1) Excludes the executive directors.
Relative importance of the spend on pay
The table below shows the total pay for all of Rightmove's employees compared to other key financial indicators. Additional
information on the number of employees, total revenue and underlying operating profit has been provided for context.
Year ended Year ended % change
31 December 2016 31 December 2015
Employee costs (refer Note 7) £27,423,000 £23,464,000 17%
Dividends to shareholders (refer Note 12) £43,206,000 £36,469,000 18%
Purchase of own shares (refer Note 22) £88,083,000 £76,071,000 16%
Income tax (refer Note 10) £32,005,000 £27,636,000 16%
Average number of employees (refer Note 7) 469 412 14%
Revenue £219,993,000 £192,129,000 15%
Underlying operating profit(1) £166,240,000 £144,271,000 15%
(1) Before share-based payments and NI on share-based incentives.
Retirement arrangements for Nick McKittrick
On 23 February 2017, Nick McKittrick notified the Board of his intention to retire as a director and Chief Executive
Officer following the AGM on 9 May 2017. His employment with the Group will end on 30 June 2017 following a handover period
to ensure a smooth transition process.
The Committee determined that he will continue to be paid his salary and normal package of benefits up to the date of his
departure. He will not receive any bonus for the part of the 2017 financial year worked or be eligible for a PSP award in
March 2017, but will receive a bonus in respect of the 2016 financial year as set out on page 75. In line with our Policy,
40% of his bonus will be paid in cash with the balance deferred in shares for a period of two years.
The Committee also determined that Nick McKittrick will be treated as a good leaver in relation to his outstanding PSP and
DSP awards, with these awards vesting in line with the relevant plan rules and the Remuneration Policy set out on pages 57
to 67. Outstanding PSP awards will also be subject to the achievement of performance conditions and vest pro-rata in
accordance with the plan rules.
Full details of the remuneration arrangements will be disclosed in the 2017 Annual Report and the Company will publish a
statement in accordance with Section 430(2B) of the Companies Act following the AGM.
The remuneration arrangements for Peter Brooks-Johnson who will replace Nick McKittrick as
Chief Executive Officer will be in line with our Policy and our recently concluded executive remuneration review. The
Committee has recommended that Peter Brooks-Johnson's basic salary is increased to £445,536 with effect from 9 May 2017 to
reflect his role and responsibilities as Chief Executive Officer. The Committee also agreed that a further PSP award will
be made on 9 May 2017 to bring his 2017 PSP award in line with his Chief Executive Officer salary.
GOVERNANCE: Independent auditor's report to the members of Rightmove plc only
Opinions and conclusions arising from our audit
1 Our opinion on the financial statements is unmodified
We have audited the financial statements of Rightmove plc for the year ended 31 December 2016 set out on pages 89 to 124.
In our opinion:
· the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as
at 31 December 2016 and of the Group's profit for the year then ended;
· the Group financial statements have been properly prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the EU);
· the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and
as applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS Regulation.
2 Our assessment of risks of material misstatement
We summarise below the risks of material misstatement (unchanged from 2015) that had the greatest effect on our audit, our
key audit procedures to address those risks and our findings from those procedures in order that the Company's members as a
body may better understand the process by which we arrived at our audit opinion. Our findings are based on procedures
undertaken in the context of and solely for the purpose of our statutory audit opinion on the financial statements as a
whole and consequently are incidental to that opinion, and we do not express discrete opinions on separate elements of the
financial statements.
Revenue recognition £220.0m (2015: £192.1m) Risk vs 2015: Unchanged
Refer to page 40 (Audit Committee report), page 100 (accounting policy) and page 105 (financial disclosures)
· The risk: Revenue primarily consists of subscription fees and customer spend on additional advertising products in
respect of properties listed on Rightmove platforms and is recognised over the period of subscription or as additional
advertising products are used. Individual contracts exist with each customer, which include a variety of differing terms
and conditions. Given the variety of individual contract terms, membership offers some of which include discounted periods,
and that revenue is the most material figure in the financial statements, we consider a significant risk exists in relation
to revenue recognition; specifically that the billing of customers is not in line with the contract terms, with resulting
revenue not being recognised appropriately.
· Our response: Our audit procedures included:
o Revenue controls: Testing the design, implementation and operating effectiveness of the Group's controls over the billing
of customers in line with contract terms and product usage;
o Analysis of amounts billed: For Agency, New Homes and Overseas, which covers 95% of revenue recognised in the year, we
performed detailed procedures using computer assisted audit techniques to analyse the amounts invoiced to customers by
product in order to identify and investigate any anomalies and outliers. We considered whether amounts invoiced had been
recognised as revenue in the correct accounting period by comparing the period of subscription or usage of additional
advertising products to the timing of revenue recognition;
o Inspection of significant contracts: For a sample of the highest revenue generating customers, as well as new customers
in growing revenue streams, we inspected contracts signed in the year, to assess whether revenue has been recognised in
accordance with the specific contract terms and conditions and relevant accounting standards;
o Membership campaigns: For new membership offers operated during the year, we selected a sample of customers from each new
membership offer, inspected the underlying contract and reperformed the revenue recognition calculations;
o Assessment of deferred revenue: We assessed the appropriateness of deferred revenue at the period end with reference to
subscription fee billings in December, and specific product deferrals where amounts are billed in advance but revenue
recognition deferred until use or expiry;
o Inspection of journal entries: We obtained 100% of the journals posted in respect of revenue and, using computer assisted
audit techniques, analysed these to identify and investigate any entries which appeared unusual based upon the specific
characteristics of the journal, considering in particular whether the debit side of the journal entry was as expected,
based on our business understanding; and
o Adequacy of revenue disclosures: We also considered the adequacy of the Group's accounting policy and disclosures (see
Notes 1, 2 and 5) in respect of revenue recognition, and whether disclosures properly reflect the risks inherent in
recognising revenue.
· Our findings:
o Our procedures did not identify weaknesses in the design and operation of controls that would have required us to expand
the extent of our planned detailed testing;
o Our computer assisted audit techniques did not reveal any material anomalies or outliers which we were unable to
corroborate and we found that revenue was recognised in line with the period of subscription or usage of additional
advertising products;
o We found that revenue was recognised in line with the underlying contractual terms in respect of the newly-signed
contracts and membership campaigns selected for testing;
o We found no errors in the Group's calculation of deferred revenue at the year end;
o Our analysis of unusual journal entries did not reveal any material anomalies or outliers which we were unable to
corroborate; and
o We found the Group's disclosures to be proportionate in their description of the judgements made by the Group.
3 Our application of materiality and an overview of the scope of our audit
The materiality for the Group financial statements as a whole was set at £7.0m (2015: £6.7m), determined with reference to
a benchmark of Group profit before tax of which it represents 4.3% (2015: 4.9%).
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.35m (2015: £0.34m),
in addition to other identified misstatements that warranted reporting on qualitative grounds. We report misstatements
corrected by management where we believe these will assist the Audit Committee in fulfilling its governance
responsibilities.
The Group audit team also audits the two (2015: one) wholly owned subsidiaries, Rightmove Group Limited with a component
materiality of £5.6m (2015: £5.0m) and the wholly owned subsidiary The Outside View Analytics Limited, acquired in the
year, with a component materiality of £25,000. The Group procedures covered all of the operations of the Group, and
accordingly 100% of total Group revenue; 100% of Group profit before taxation and 100% of total Group assets were audited.
4 Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion:
· the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006;
· the information given in the Strategic Report and the Directors' Report for the financial year is consistent with the
financial statements; and
· the information given in the Corporate Governance Report set out on pages 43 to 44 with respect to internal control
and risk management systems in relation to financial reporting processes and about share capital structures ("the specified
Corporate Governance information") is consistent with the financial statements.
Based solely on the work required to be undertaken in the course of the audit of the financial statements and from reading
the Strategic Report, the Directors' Report and the Corporate Governance Report:
· we have not identified material misstatements in the Strategic Report, the Directors' Report, or the specified
Corporate Governance information;
· in our opinion, the Strategic Report and the Directors' Report have been prepared in accordance with the Companies Act
2006; and
· in our opinion, the Corporate Governance Report has been prepared in accordance with rules 7.2.2, 7.2.3, 7.2.5,
7.2.6 and 7.2.7 of the Disclosure Rules and Transparency Rules of the Financial Conduct Authority.
5 We have nothing to report on the disclosures of principal risks
Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to:
· the directors' viability statement on page 21, concerning the principal risks, their management, and, based on that,
the directors' assessment and expectations of the Group's continuing in operation over the three years to 31 December 2019;
or
· the disclosures in note 1 of the financial statements concerning the use of the going concern basis of accounting.
6 We have nothing to report in respect of the matters on which we are required to report by exception
Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we
have identified other information in the annual report that contains a material inconsistency with either that knowledge or
the financial statements, a material misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
· we have identified material inconsistencies between the knowledge we acquired during our audit and the directors'
statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Group's position and performance,
business model and strategy; or
· the Audit Committee report does not appropriately address matters communicated by us to the Audit Committee.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
· adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
· the Parent Company financial statements and the part of the Directors' Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit; or
· a Corporate Governance Statement has not been prepared by the Company.
Under the Listing Rules we are required to review:
· the directors' statements, set out on pages 21 and 96 to 97, in relation to going concern and longer-term viability;
and
· the part of the Corporate Governance Statement on pages 31 to 38 relating to the Company's compliance with the
eleven provisions of the 2014 UK Corporate Governance Code specified for our review.
We have nothing to report in respect of the above responsibilities.
Scope and responsibilities
As explained more fully in the Directors' Responsibilities Statement set out on page 52, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view. A description of
the scope of an audit of financial statements is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate. This report is made solely to the Company's members as a body and is subject to
important explanations and disclaimers regarding our responsibilities, published on our website at
www.kpmg.com/uk/auditscopeukco2014b, which are incorporated into this report as if set out in full and should be read to
provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.
Karen Wightman (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
24 February 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
2016 2015
Note £000 £000
Revenue 5 219,993 192,129
Administrative expenses (58,346) (54,954)
Underlying operating profit 166,240 144,271
Share-based payments 24 (4,142) (3,765)
NI on share-based incentives 24 (451) (3,331)
Operating profit 6 161,647 137,175
Financial income 8 109 112
Financial expenses 9 (209) (183)
Net financial expense (100) (71)
Profit before tax 161,547 137,104
Income tax expense 10 (32,005) (27,636)
Profit for the year being total comprehensive income 129,542 109,468
Attributable to: 129,542 109,468
Equity holders of the parent
Earnings per share (pence)
Basic 11 137.87 114.01
Diluted 11 136.41 112.74
Dividends per share (pence) 12 46.00 38.00
Total dividends 12 43,206 36,469
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
Note 2016 2015
£000 £000
Non-current assets
Property, plant and equipment 13 2,288 2,239
Intangible assets 14 3,525 1,383
Deferred tax asset 16 6,942 6,791
Total non-current assets 12,755 10,413
Current assets
Trade and other receivables 17 29,924 27,523
Money market deposits 18 4,026 4,000
Cash and cash equivalents 18 13,749 8,418
Total current assets 47,699 39,941
Total assets 60,454 50,354
Current liabilities
Trade and other payables 19 (35,796) (31,618)
Income tax payable (16,256) (11,863)
Provisions 21 (185) -
Total current liabilities (52,237) (43,481)
Non-current liabilities
Provisions 21 (175) (236)
Total non-current liabilities (175) (236)
Total liabilities (52,412) (43,717)
Net assets 8,042 6,637
Equity
Share capital 22 955 977
Other reserves 23 477 455
Retained earnings 23 6,610 5,205
Total equity attributable to the equity holders of the parent 8,042 6,637
The financial statements were approved by the Board of directors on 24 February 2017 and were signed on its behalf by:
Nick McKittrick
Director
Robyn Perriss
Director
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
Note 2016 2015
£000 £000
Non-current assets
Investments 15 546,202 544,464
Deferred tax asset 16 3,757 3,581
Total non-current assets 549,959 548,045
Total assets 549,959 548,045
Current liabilities
Trade and other payables 19 (30,152) (36,629)
Total current liabilities (30,152) (36,629)
Net assets 519,807 511,416
Equity
Share capital 22 955 977
Other reserves 23 113,051 109,631
Retained earnings 23 405,801 400,808
Total equity attributable to the equity holders of the parent 519,807 511,416
The financial statements were approved by the Board of directors on 24 February 2017 and were signed on its behalf by:
Nick McKittrick
Director
Robyn Perriss
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Note 2016 2015
£000 £000
Cash flows from operating activities
Profit for the year 129,542 109,468
Adjustments for:
Depreciation charges 13 1,241 934
Amortisation charges 14 378 361
Financial income 8 (109) (112)
Financial expenses 9 209 183
Share-based payments 24 4,142 3,765
Transaction costs on acquisition of subsidiary 27 42 -
Income tax expense 10 32,005 27,636
Operating cash flow before changes in working capital 167,450 142,235
Increase in trade and other receivables (2,237) (3,230)
Increase in trade and other payables 3,913 4,140
Increase in provisions 21 124 36
Cash generated from operating activities 169,250 143,181
Financial expenses paid (209) (183)
Income taxes paid (27,807) (26,869)
Net cash from operating activities 141,234 116,129
Cash flows from investing activities
Interest received 134 117
Acquisition of property, plant and equipment 13 (1,281) (1,593)
Acquisition of intangible assets 14 (478) (179)
Acquisition of subsidiary (net of cash acquired) 27 (2,088) -
Money market deposits 18 (26) (4,000)
Net cash used in investing activities (3,739) (5,655)
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