REG - Rightmove Plc - Final Results <Origin Href="QuoteRef">RMV.L</Origin> - Part 6
23/02/2018 07:05
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movement in the salary, benefits and annual bonus
for the Chief Executive Officer (CEO) between the current and previous
financial year compared to that of the total amounts for all employees of the
Group for each of these elements of pay.
The CEO's base salary increased by 5%, in line with the approved Remuneration
Policy of awarding 3% above the average workforce inflationary increase for
2017. The annual bonus of the CEO decreased by 32% as a result of 60% of the
maximum bonus being achieved in relation to the 2017 bonus targets, compared
with a pay-out of 92% for 2016.
The average salary for all employees increased by 2% due to a universal cost
of living increase in January 2017.
2017 £ 2016 £
% change
Chief Executive Officer Salary((1)) 445,536 424,320
5%
Benefits 1,852 1,973 (6)%
Annual bonus((1)) 334,152 487,968 (32)%
Average of all employees((2))
Salary 45,995 45,148 2%
Benefits 770 834 (8)%
Annual bonus 1,571 2,394 (34)%
Ratio of CEO to average employee pay((3)) 16x 19x (16)%
(1) 2017 pro-forma salary and bonus cost (based on 60% achievement) is for
comparison purposes based on the full year salary payable to the CEO. The
actual salaries earned by Nick McKittrick and Peter Brooks-Johnson in 2017
were pro-rated and are set out in the Directors' remuneration table on page
85.
(2) Based on 477 employees, which excludes the executive directors.
(3) The multiple of the CEO remuneration compared to the average employee's
remuneration.
Relative importance of the spend on pay
The table below shows the total pay for all Rightmove's employees compared to
other key financial indicators. Additional information on the number of
employees, total revenue and underlying operating profit has been provided for
context.
Year ended 31 December 2017 Year ended 31 December 2016
% change
Employee costs (refer Note 7) £28,338,000 £27,423,000 3%
Dividends paid to shareholders (refer Note 12) £49,611,000 £43,206,000 15%
Purchase of own shares (refer Note 22) £90,809,000 £88,083,000 3%
Income tax (refer Note 10) £34,120,000 £32,005,000 7%
Average number of employees (refer Note 7)((2)) 479 469 2%
Revenue £243,273,000 £219,993,000 11%
Underlying operating profit((1)) £184,365,000 £166,240,000 11%
(1) Before share-based payments and NI on share-based incentives.
(2) Average number of employees includes executive directors.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RIGHTMOVE PLC
1 Our opinion is unmodified
We have audited the financial statements of Rightmove plc ("the Company") for
the year ended 31 December 2017 which comprise the Consolidated statement of
comprehensive income, Consolidated statement of financial position, Company
statement of financial position, Consolidated statement of cash flows, Company
statement of cash flows, Consolidated statement of changes in shareholders'
equity, Company statement of changes in shareholders' equity, and the related
notes, including the accounting policies in note 1.
In our opinion:
· the financial statements give a true and fair view of the state
of the Group's and of the parent Company's affairs as at 31 December 2017 and
of the Group's profit for the year then ended;
· the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards as adopted by the
European Union (IFRSs as adopted by the EU);
· the parent Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the EU and as applied in
accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities are described
below. We believe that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion. Our audit opinion is consistent with
our report to the audit committee.
We were appointed as auditor by the directors to the group's previous holding
company, prior to it becoming a public interest entity, for the financial
period ended 31 December 2000. The period of total uninterrupted engagement as
auditor is for the 12 financial years ended 31 December 2017 as a
public-interest entity and 18 years in total.
We have fulfilled our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed public interest entities. No
non-audit services prohibited by that standard were provided.
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. We summarise below the key
audit matters (unchanged from 2016), in decreasing order of audit
significance, in arriving at our audit opinion above, together with our key
audit procedures to address those matters and our findings from those
procedures in order that the Company's members as a body may better understand
the process by which we arrived at our audit opinion. These matters were
addressed, and our findings are based on procedures undertaken, in the context
of, and solely for the purpose of, our audit of the financial statements as a
whole, and in forming our opinion thereon, and consequently are incidental to
that opinion, and we do not provide a separate opinion on these matters.
Revenue recognition £243.3m (2016: £220.0m) Risk vs 2016: Unchanged
Refer to page 47 (Audit Committee Report), page 111 (accounting policy) and
page 116 (financial disclosures)
· The risk:
Processing Error
The key revenue streams, being Agency, New Homes and Overseas, consist of
subscription fees and customer spend on additional advertising products in
respect of properties listed on Rightmove platforms. There is a variety of
packages and membership offers available and customers are able to tailor the
combination of products they receive. The resulting large volume of
non-homogenous transactions creates a risk of processing error. In addition
revenue is the most material figure in the financial statements and is
considered to be a main driver of results, and as such had the greatest effect
on our allocation of resources in planning and completing the audit.
· Our response: Our audit procedures included:
o Control operation: Testing the design, implementation and operating
effectiveness of the Group's controls over the review of monthly revenue
recognised compared to the Group's expectation and controls over the review
and monitoring of membership offers that impact revenue recognition;
o Data comparison: Agreeing billings by individual invoice, for the entire
population, to cash receipts;
o 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;
o Re-performance: For membership offers operated during the year, we
selected a sample of customers from each offer, inspected the underlying
contract and reperformed the revenue recognition calculations;
o Tests of details: We assessed the appropriateness of deferred revenue at
the period end with reference to subscription fee billings in December, and
specific product deferrals where amounts are billed in advance but revenue
recognition deferred until the services are provided;
o Test of details: Inspecting a sample of credit notes raised post year end
to determine whether they related to revenue recognised in the year;
o Tests of details: We obtained 100% of the journals posted in respect of
revenue and, using computer assisted audit techniques, analysed these to
identify and investigate any entries which appeared unusual based upon the
specific characteristics of the journal, considering in particular whether the
debit side of the journal entry was as expected, based on our business
understanding.
· Our findings:
o We found no errors in the Group's calculation of the revenue recognised.
Recoverability of parent Company's investment in subsidiaries £548.7m (2016:
£546.2m) Risk vs 2016: Unchanged
Refer to page 47 (Audit Committee Report), page 109 (accounting policy) and
pages 122 to 123 (financial disclosures)
· The risk:
Low risk, high value
The carrying amount of the parent Company's investment in the subsidiary
company Rightmove Group Limited represents 99% (2016: 99%) of the Company's
total assets. Its recoverability is not at a high risk of significant
misstatement or subject to significant judgement. However, due to its
materiality in the context of the parent Company financial statements, this is
considered to be the area that had the greatest effect on our overall parent
Company audit.
· Our response: 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.
3 Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £7.5m
(2016: £7.0m), determined with reference to a benchmark of group profit
before tax of £178.2m, of which it represents 4.2% (2016: 4.3%).
Materiality for the parent Company financial statements as a whole was set at
£6.0m (2016: £5.6m), determined with reference to a benchmark of Company net
assets, of which it represents 1.1% (2016: 1.1%).
We agreed to report to the Audit Committee any corrected or uncorrected
identified misstatements exceeding £0.37m (2016: £0.35m), in addition to
other identified misstatements that warranted reporting on qualitative
grounds.
Of the group's three (2016: three) reporting components, which includes the
parent Company, we subjected two (2016: three) to full scope audits for Group
purposes. The components within the scope of our work accounted for 100% of
total Group revenue, 100% of Group profit before tax and 99.8% of total Group
assets.
The remaining 0.2% of total Group assets is represented by one reporting
component, which individually is not significant to the Group.
The work on the two reporting components (2016: three components) was
performed by the Group team, which includes the audit of the parent Company,
with materiality for the components set at £6.0m (2016: £5.6m).
4 We have nothing to report on going concern
We are required to report to you if:
· we have anything material to add or draw attention to in relation
to the directors' statement in note 1 to the financial statements on the use
of the going concern basis of accounting with no material uncertainties that
may cast significant doubt over the Group and Company's use of that basis for
a period of at least twelve months from the date of approval of the financial
statements; or
· the related statement under the Listing Rules set out on pages
107 to 108 is materially inconsistent with our audit knowledge.
We have nothing to report in these respects.
5 We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information presented in the
Annual Report together with the financial statements. Our opinion on the
financial statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except as explicitly stated below, any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether, based on our financial statements audit work, the information therein
is materially misstated or inconsistent with the financial statements or our
audit knowledge. Based solely on that work we have not identified material
misstatements in the other information.
Strategic report and directors' report
Based solely on our work on the other information:
· we have not identified material misstatements in the strategic
report and the directors' report;
· in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
· in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors' remuneration report
In our opinion the part of the Directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements audit, we
have nothing material to add or draw attention to in relation to:
· the directors' confirmation within the Viability statement on
page 25 that they have carried out a robust assessment of the principal risks
facing the Group, including those that would threaten its business model,
future performance, solvency and liquidity;
· the Principal risks and uncertainties disclosures describing
these risks and explaining how they are being managed and mitigated; and
· the directors' explanation in the Viability statement of how they
have assessed the prospects of the Group, over what period they have done so
and why they considered that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the
period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Under the Listing Rules we are required to review the Viability statement.
We have nothing to report in this respect.
Corporate governance disclosures
We are required to report to you if:
· we have identified material inconsistencies between the knowledge
we acquired during our financial statements audit and the directors' statement
that they consider that the annual report and financial statements taken as a
whole is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's position and performance,
business model and strategy; or
· the section of the annual report describing the work of the Audit
Committee does not appropriately address matters communicated by us to the
Audit Committee; or
· a corporate governance statement has not been prepared by the
Company.
We are required to report to you if the Corporate governance report does not
properly disclose a departure from the eleven provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review.
We have nothing to report in these respects.
Based solely on our work on the other information described above:
· with respect to the Corporate Governance Statement disclosures
about internal control and risk management systems in relation to financial
reporting processes and about share capital structures:
· we have not identified material misstatements therein; and
· the information therein is consistent with the financial
statements; and
· in our opinion, the Corporate Governance Statement has been
prepared in accordance with relevant rules of the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority.
6 We have nothing to report on the other matters on which we are required to
report by exception
Under the Companies Act 2006, we are required to report to you if, in our
opinion:
· adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent Company financial statements and the part of the
Directors' Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
7 Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 60, the directors
are responsible for: the preparation of the financial statements including
being satisfied that they give a true and fair view; such internal control as
they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error;
assessing the Group and parent Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either intend to
liquidate the Group or the parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or other irregularities (see below), or error, and to issue our opinion
in an auditor's report. Reasonable assurance is a high level of assurance,
but does not guarantee that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can
arise from fraud, other irregularities or error and are considered material
if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) .
Irregularities - ability to detect
We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the financial statements from our sector
experience, through discussion with the directors and other management (as
required by auditing standards).
We had regard to laws and regulations in areas that directly affect the
financial statements including financial reporting (including related company
legislation) and taxation legislation. We considered the extent of compliance
with those laws and regulations as part of our procedures on the related
financial statements items.
We communicated identified laws and regulations throughout our team and
remained alert to any indications of non-compliance throughout the audit.
8 The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and the terms of our
engagement by the company. Our audit work has been undertaken so that we
might state to the Company's members those matters we are required to state to
them in an auditor's report, and the further matters we are required to state
to them in accordance with the terms agreed with the company, and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Karen Wightman (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
23 February 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
31 DECEMBER 2017
2017 2016
Note £000 £000
Revenue 5 243,273 219,993
Administrative expenses (64,972) (58,346)
Underlying operating profit 184,365 166,240
Share-based payments 24 (4,836) (4,142)
NI on share-based incentives 24 (1,228) (451)
Operating profit 6
178,301 161,647
Financial income 8 129 109
Financial expenses 9 (214) (209)
Net financial expense (85) (100)
Profit before tax 178,216 161,547
Income tax expense 10 (34,120) (32,005)
Profit for the year being total comprehensive income
144,096 129,542
Attributable to: Equity holders of the parent
144,096 129,542
Earnings per share (pence)
Basic 11 156.75 137.87
Diluted 11 155.15 136.41
Dividends per share (pence) 12 54.00 46.00
Total dividends 12 49,611 43,206
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017
2017 £000 2016 £000
Note
Non-current assets
Property, plant and equipment 13 2,709 2,288
Intangible assets 14 3,290 3,525
Deferred tax asset 16 5,745 6,942
Total non-current assets 11,744 12,755
Current assets
Trade and other receivables 17 35,094 29,924
Money market deposits 18 4,045 4,026
Cash and cash equivalents 18 20,930 13,749
Total current assets 60,069 47,699
Total assets 71,813 60,454
Current liabilities
Trade and other payables 19 (38,888) (35,796)
Income tax payable (14,693) (16,256)
Provisions 21 (755) (185)
Total current liabilities (54,336) (52,237)
Non-current liabilities
Provisions 21 (294) (175)
Total non-current liabilities (294) (175)
Total liabilities (54,630) (52,412)
Net assets
17,183 8,042
Equity
Share capital 22 933 955
Other reserves 499 477
Retained earnings 15,751 6,610
Total equity attributable to the equity holders of the parent
17,183 8,042
The financial statements were approved by the Board of directors on 23
February 2018 and were signed on its behalf by:
Peter Brooks-Johnson
Director
Robyn Perriss
Director
COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017
Note 2017 £000 2016 £000
Non-current assets
Investments 15 548,827 546,202
Deferred tax asset 16 2,490 3,757
Total non-current assets 551,317 549,959
Total assets 551,317 549,959
Current liabilities
Trade and other payables 19 (23,410) (30,152)
Total current liabilities (23,410) (30,152)
Net assets
527,907 519,807
Equity
Share capital 22 933 955
Other reserves 23 115,698 113,051
Retained earnings 411,276 405,801
Total equity attributable to the equity holders of the parent
527,907 519,807
The financial statements were approved by the Board of directors on 23
February 2018 and were signed on its behalf by:
Peter Brooks-Johnson
Director
Robyn Perriss
Director
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 2017 £000 2016 £000
Cash flows from operating activities
Profit for the year 144,096 129,542
Adjustments for:
Depreciation charges 13 1,311 1,241
Amortisation charges 14 473 378
Financial income 8 (129) (109)
Financial expenses 9 214 209
Loss on disposal of property, plant and equipment 13 20 -
Loss on disposal of intangible assets 14 203 -
Share-based payments 24 4,836 4,142
Transaction costs on acquisition of subsidiary 27 - 42
Income tax expense 10 34,120 32,005
Operating cash flow before changes in working capital 185,144 167,450
Increase in trade and other receivables (5,154) (2,237)
Increase in trade and other payables 3,212 3,913
Increase in provisions 21 689 124
Cash generated from operating activities 183,891 169,250
Financial expenses paid (214) (209)
Income taxes paid (33,187) (27,807)
Net cash from operating activities 150,490 141,234
Cash flows from / (used in) investing activities
Interest received on cash and cash equivalents 94 108
Acquisition of property, plant and equipment 13 (1,755) (1,281)
Proceeds from disposal of property, plant and equipment 13 3 -
Acquisition of intangible assets 14 (441) (478)
Acquisition of subsidiary (net of cash acquired) 27 - (2,088)
Net cash used in investing activities (2,099) (3,739)
Cash flows from / (used in) financing activities
Dividends paid 12 (49,611) (43,206)
Purchase of own shares for cancellation 22 (90,809) (88,083)
Purchase of own shares for share incentive plans 23 (761) (751)
Share-related expenses 22 (757) (497)
Proceeds on exercise of share-based incentives 728 373
Net cash used in financing activities (141,210) (132,164)
Net increase in cash and cash equivalents 7,181 5,331
Cash and cash equivalents at 1 January 13,749 8,418
Cash and cash equivalents at 31 December 18
20,930 13,749
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2017
Note 2017 £000 2016 £000
Cash flows from operating activities
Profit for the year 144,476 136,648
Adjustments for:
Dividend income 28 (149,551) (141,563)
Financial expenses 28 330 527
Share-based payments 24 2,211 2,404
Income tax credit (1,136) (1,074)
Operating cash flow before changes in working capital (3,670) (3,058)
Increase in trade and other payables 19 3,670 3,058
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 18
- -
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED
31 DECEMBER 2017
Note Own shares held Other reserves Reverse acquisition reserve Retained earnings
Share capital £000 £000 £000 £000 £000 Total equity
£000
At 1 January 2016 977 (14,062) 317 138 19,267 6,637
Total comprehensive income
Profit for the year - - - - 129,542 129,542
Transactions with owners recorded directly in equity
Share-based payments 24 - - - - 4,142 4,142
Tax credit in respect of share-based incentives recognised directly in equity
10
- - - - 5 5
Dividends to shareholders 12 - - - - (43,206) (43,206)
Exercise of share-based incentives
23 - 366 - - 7 373
Purchase of shares for SIP 23 - (751) - - - (751)
Cancellation of own shares
22 (22) - 22 - (88,083) (88,083)
Share-related expenses 22 - - - - (617) (617)
At 31 December 2016
955 (14,447) 339 138 21,057 8,042
At 1 January 2017 955 (14,447) 339 138 21,057 8,042
Total comprehensive income
Profit for the year - - - - 144,096 144,096
Transactions with owners recorded directly in equity
Share-based payments 24 - - - - 4,836 4,836
Tax credit in respect of share-based incentives recognised directly in equity
10
- - - - 1,299 1,299
Dividends to shareholders 12 - - - - (49,611) (49,611)
Exercise of share-based incentives
23 - 2,213 - - (1,485) 728
Purchase of shares for SIP 23 - (761) - - - (761)
Cancellation of own shares
22 (22) - 22 - (90,809) (90,809)
Share-related expenses 22 - - - - (637) (637)
At 31 December 2017
933 (12,995) 361 138 28,746 17,183
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED
31 DECEMBER 2017
Note Own shares held £000 Other Reverse acquisition reserve Retained earnings £000
Share capital reserves £000 Total equity
£000 £000 £000
At 1 January 2016 977 (11,897) 7,771 103,520 411,045 511,416
Total comprehensive income
Profit for the year - - - - 136,648 136,648
Transactions with owners recorded directly in equity
Share-based payments 24 - - - - 2,404 2,404
Tax credit in respect of share-based incentives recognised directly in equity
10 - - - - 24 24
Capital contribution 23 - - 1,738 - - 1,738
Dividends to shareholders 12 - - - - (43,206) (43,206)
Transfer of shares to SIP - (517) - - - (517)
Exercise of share-based incentives
- 258 - - (258) -
Cancellation of own shares 22 (22) - 22 - (88,083) (88,083)
Share-related expenses 22 - - - - (617) (617)
At 31 December 2016
955 (12,156) 9,531 103,520 417,957 519,807
At 1 January 2017 955 (12,156) 9,531 103,520 417,957 519,807
Total comprehensive income
Profit for the year - - - - 144,476 144,476
Transactions with owners recorded directly in equity
Share-based payments 24 - - - - 2,211 2,211
Tax credit in respect of share-based incentives recognised directly in equity 10
- - - - 586 586
Capital contribution 23 - - 2,625 - - 2,625
Dividends to shareholders 12 - - - - (49,611) (49,611)
Transfer of shares to SIP - (741) - - - (741)
Exercise of share-based incentives
- 1,880 - - (1,880) -
Cancellation of own shares 22 (22) - 22 - (90,809) (90,809)
Share-related expenses 22 - - - - (637) (637)
At 31 December 2017
933 (11,017) 12,178 103,520 422,293 527,907
NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1 General information
Rightmove plc (the Company) is a company registered in England
(Company no. 6426485) domiciled in the United Kingdom (UK). The consolidated
financial statements of the Company as at and for the year ended
31 December 2017 comprise the Company and its interest in its subsidiaries
(together referred to as the Group).
The consolidated financial statements of the Group as at and for the year
ended 31 December 2017 are available upon request to the Company Secretary
from the Company's registered office at Turnberry House, 30 Caldecotte Lake
Drive, Caldecotte, Milton Keynes, MK7 8LE or are available on
the corporate website at plc.rightmove.co.uk.
Statement of compliance The Group and Company financial statements have been
prepared and approved by the Board of directors in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union (Adopted IFRSs).
The consolidated financial statements were authorised for issue by the Board
of directors on 23 February 2018.
Basis of preparation On publishing the Company financial statements here
together with the Group financial statements, the Company is taking advantage
of the exemption in s408 of the Companies Act 2006 not to present its
individual statement of comprehensive income and related notes that form a
part of these approved financial statements.
The accounting policies set out below have been consistently applied to both
years presented, unless otherwise stated.
The financial statements have been prepared on an historical cost basis.
Basis of consolidation Subsidiaries are entities controlled by the Group.
Control exists when the Group has existing rights that give it the ability to
direct the relevant activities of an entity and has the ability to affect the
returns the Group will receive as a result of its involvement with the entity.
In assessing control, potential voting rights that are currently exercisable
or convertible are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases.
On 31 May 2016 the Group acquired The Outside View Analytics Ltd ("Outside
View") from which date the results of Outside View have been consolidated.
Details of the acquisition are set out in Note 27.
Changes in accounting policies The accounting policies applied by the Group
in these consolidated financial statements are in accordance with Adopted
IFRSs and are the same as those applied by the Group in its consolidated
financial statements as at and for the year ended 31 December 2016.
There have been no significant changes to accounting under IFRS which have
affected the Group's results for the current financial year. The only changes
to the IFRS that are effective for the first time in this financial year, and
are applicable for the Group, are the Annual Improvements to IFRSs: 2014-2016
cycle. These have not had a material impact on the Group.
Going concern Throughout 2017, the Group was debt free and has continued to
generate significant cash and has an overall positive net asset position. The
Group had cash balances of £20,930,000 at 31 December 2017
(2016: £13,749,000). The Group also had £4,045,000 of money market deposits
(2016: £4,026,000).
During the year £140,420,000 (2016: £131,289,000) of cash was returned to
shareholders via dividends and discretionary share buy backs.
The Group agreed to extend a 12 month agreement with Barclays Bank plc for a
£10,000,000 committed revolving loan facility. This agreement will expire on
12 February 2019.
The Board of directors is confident that with the existing cash resources and
banking facilities in place, coupled with the strength of the underlying
business model, the Group and the Company will remain cash positive and will
have adequate resources to continue in operational existence for a period of
12 months from the date of signing these accounts.
1 General information (continued)
Further information regarding the Group's business activities, together with
the factors likely to affect its future development, performance and position
are set out in the Strategic Report on pages 1 to 32. The financial position
of the Group, its cash flows, liquidity position and borrowing facilities are
described on pages 17 to 19. In addition Note 4 to the financial statements
includes the Group's objectives, policies and processes for managing its
capital; its financial risk management objectives; details of its financial
instruments and its exposures to credit risk and liquidity risk.
Capital structure The Company was incorporated and registered in England and
Wales on 14 November 2007 under the Companies Act 1985 as a private
company limited by shares with the name Rightmove Group Limited,
registered no. 6426485. The Company was re-registered as a public limited
company under the name Rightmove Group plc on 29 November 2007. On
28 January 2008 the Company became the holding company of Rightmove Group
Limited (formerly Rightmove plc, Company no. 3997679) and its subsidiaries
pursuant to a Scheme of Arrangement under s425 of the Companies Act 1985.
The shares in the Company were admitted to trading on the Official List of the
London Stock Exchange on 28 January 2008 and the Company immediately changed
its name to Rightmove plc. Details of the share capital of the Company are
disclosed in Note 22.
Judgements and estimates The preparation of the consolidated and Company
financial statements in conformity with Adopted IFRSs requires management to
make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods, if applicable.
In particular, information about significant areas of estimation uncertainty
and critical judgements in applying accounting policies that have the most
significant effect on the amounts recognised in the consolidated and Company
financial statements are included in the following notes:
Notes 16 and 24 The choice of valuation methodology and the inputs
and assumptions used to calculate the initial fair value for new share-based
incentives granted and the rate at which the related deferred tax asset is
measured. The key estimates used in calculating the fair value of the options
are the fair value of the Company's shares at the grant date, expected share
price volatility, risk-free interest rate, expected dividends, and weighted
average expected life of the instrument. In respect of share-based incentives
granted to employees, the number of share-based incentives that are expected
to vest is based upon estimates of the number of employees that will forfeit
their awards through leaving the Group and the likelihood of any non-market
performance conditions being satisfied. Management regularly performs a
true-up of the estimate of the number of shares that are expected to vest;
this is dependent on the anticipated number of leavers.
Non-GAAP (Generally Accepted Accounting Principles) performance measures
In the analysis of the Group's financial performance certain information
disclosed in the financial statements may be prepared on a non-GAAP basis or
has been derived from amounts calculated in accordance with IFRS but is not
itself an expressly permitted GAAP measure. These measures are reported in
line with how financial information is analysed by management. The key
non-GAAP measures presented by the Group are:
· Underlying operating profit - which is defined as operating
profit before share-based payments and National Insurance on share-based
incentives; and
· Underlying basic earnings per share (EPS) - which is defined as
profit for the year before share-based payments and National Insurance on
share-based incentives, with no related adjustment for tax, divided by the
weighted average number of shares in issue for the year.
The Directors believe that these non-GAAP measures provide a more appropriate
measure of the Group's business performance as share-based payments are a
significant non-cash charge and are driven by a valuation model, and NI on
share-based incentives is driven by reference to the Rightmove plc share price
and so subject to volatility, rather than reflecting operational activity. The
directors therefore consider underlying operating profit to be the most
appropriate indicator of the performance of the business and year-on-year
trends. For simplicity no adjustment for tax is made within the calculation of
underlying basic EPS. The non-GAAP measures are designed to increase
comparability of the Group's financial performance year-on-year.
2 Significant accounting policies (a) Investments Investments in
subsidiaries are held at cost less any provision for impairment in the parent
Company financial statements. (b) Intangible assets
(i) Goodwill
Goodwill arising on a business combination represents the difference between
the fair value of the consideration paid and the fair value of the net
identifiable assets acquired and is included in intangible assets.
In respect of acquisitions prior to 1 January 2004, goodwill is included on
the basis of its deemed cost, which represents the amount previously recorded
under UK GAAP. The classification and accounting treatment of business that
occurred prior to 1 January 2004 was not reconsidered in preparing the Group's
opening IFRS statement of financial position at 1 January 2004.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
tested annually for impairment. This applies to all goodwill arising both
before and after 1 January 2004.
(ii) Research and development
The Group undertakes research and development expenditure in view of
developing new products and improving the existing property platforms.
Expenditure on research activities, undertaken with the prospect of gaining
new technical knowledge and understanding, is recognised in profit or loss as
incurred.
Expenditure on development activities, whereby research findings are applied
to a plan or design for the production of a new product or substantially
enhanced website, is capitalised if the new product or the enhanced website is
technically and commercially feasible, the Group has sufficient resources to
complete development, future economic benefits are probable and the Group can
measure reliably the expenditure attributable to the intangible asset during
its development. Capitalised costs are held as an asset in progress until such
point that the asset is brought into use, at which point it is transferred to
the appropriate intangible asset category and amortisation is charged.
The expenditure capitalised includes subcontractors and direct labour.
Capitalised development expenditure is stated at cost less accumulated
amortisation and accumulated impairment losses. Subsequent expenditure on
capitalised intangible assets is capitalised only when it increases the
economic benefits embodied in the specific asset to which it relates. All
other expenditure is expensed when incurred.
(iii) Computer software and licences
Computer software and externally acquired software licences are capitalised
and stated at cost less accumulated amortisation and impairment losses.
Amortisation is charged from the date the asset is available for use.
Amortisation is provided to write off the cost less the estimated residual
value of the computer software or licence by equal annual instalments over its
estimated useful economic life as follows:
Computer
software
20.0% - 33.3% per annum Software
licences
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
(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
20.0% per annum Computer
equipment
20.0% - 33.3% per annum Leasehold
improvements
remaining life of the lease
2 Significant accounting policies (continued)
(d) Impairment The carrying value of property, plant and equipment is
reviewed at each reporting date to determine whether there is any indication
of impairment. If any such indication exists, the asset's recoverable amount
is estimated. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable amount
of non-financial assets is the greater of their fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely independent
cash flows, the recoverable amount is determined for the cash generating unit
to which the asset belongs.
Goodwill and intangible assets that have an indefinite useful life are not
subject to amortisation but are tested for impairment annually and whenever
there is an indication that they might be impaired. An impairment loss is
recognised for the amount by which the carrying value of the asset exceeds its
recoverable amount.
Investments are assessed for possible impairment when there is an indication
that the fair value of the investments may be below the Company's carrying
value. When such a condition is deemed to be other than temporary, the
carrying value of the investment is written down to its fair value and the
amount written off is included in profit or loss. In making the determination
as to whether a decline is other than temporary, the Company considers such
factors as the duration and extent of the decline, the investee's financial
performance and the Company's ability and intention to retain its investment
for a period that will be sufficient to allow for any anticipated recovery in
the investment's market value.
(e) Financial instruments Trade receivables do not carry any interest and
are initially recognised at fair value and subsequently measured at amortised
cost less any impairment loss. A provision for impairment of trade receivables
is established when there is objective evidence that the Group will not be
able to collect all amounts due according to the receivables' original terms.
Trade payables are not interest bearing and are initially recognised at fair
value and subsequently measured at amortised cost. Trade payables are
classified as current liabilities unless the Group has an unconditional right
to defer settlement of the liability for at least 12 months after the
reporting date.
Money market deposits are initially recorded at fair value and subsequently
measured at amortised cost. They represent deposits with a maturity of over
three months.
Inter-group balances and transactions, and any unrealised income and expenses
arising from inter-group transactions, are eliminated in preparing the
consolidated financial statements.
(f) Cash and cash equivalents Cash and cash equivalents comprise cash
balances and call deposits with original maturities of three months
- More to follow, for following part double click ID:nRSW7131Fg ise 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.
Pension and other benefits
The Group operates a stakeholder pension plan for all employees under which the employer contributes 6% of base salary,
subject to the employee contributing a minimum of 3% of base salary. Peter Brooks-Johnson and Robyn Perriss elected not to
participate in the pension plan during the year. The Company does not contribute to any personal pension arrangements.
The executive directors are enrolled in the Group's private medical insurance scheme and receive life assurance cover equal
to four times base salary. Additionally, the executive directors are members of the Group's medical cash plan.
Annual bonus
The annual bonus for the 2018 financial year will be consistent with the policy detailed on pages 68 to 69 of the
Remuneration Policy section of this report in terms of maximum bonus opportunity, deferral and clawback provisions. The
mechanism through which the clawback can be implemented (enabling both the recovery and withholding of incentive pay)
enables the Committee to (i) reduce the cash bonus earned in a subsequent year and/or reduce outstanding DSP/PSP share
awards (i.e. withholding provisions may be used to effect a recovery) or (ii) for the Committee to require that a net of
tax balancing cash payment be made to the Company. The performance measures have been selected to reflect a range of
financial and strategic targets that continue to support the key objectives of the Group.
The performance measures and weightings will be as follows:
Measure As a % of maximum bonus opportunity
Financial targetsUnderlying operating profit (1) 65%
Strategic targetsTraffic market share(2)Other revenue(3)Employee engagement(4) 15%15%5%
(1) Operating profit before share-based payments and NI on share-based incentives.
(2) Measured on a time on site basis by reference to comScore.
(3) Revenue excluding Agency and New Homes.
(4) Based on the results of the annual employee survey.
In relation to the financial target a challenging sliding scale will operate with 25% of the maximum bonus opportunity
payable at the threshold underlying operating profit target relative to the 2018 business plan through to 100% becoming
payable for significant outperformance relative to the plan. A greater proportion of the award will be paid for exceeding
threshold performance.
The weighting of all performance measures are unchanged from 2017.
The targets themselves, as they relate to the 2018 financial year, are deemed to be commercially sensitive. However,
retrospective disclosure of the targets and performance against them will be provided in next year's Annual Report on
Remuneration to the extent that they do not remain commercially sensitive at that time.
Long-term incentives
The award levels under the PSP, approved in 2017, remain at 200% of base salary for both executive directors.
Consistent with current market practice and previous years, awards to the executive directors under the PSP in 2018 will be
subject to a mixture of EPS (75% of awards) and relative TSR (25% of the awards) performance conditions. The 2018 targets
are as follows:
EPS performance condition
The Group's EPS growth will be measured over the period of three financial years (2018 to 2020). The EPS figure used will
be equivalent to the Group's basic underlying EPS (before share-based payments, National Insurance on share-based
incentives and no related adjustment for tax). With a view to ensuring appropriately stretching but achievable targets are
set in light of market expectations for the Group, the following range of targets will apply to the 2018 awards:
Underlying basic EPS growth from 2018 to 2020(1) % of award vesting(maximum 75%)
Less than 20% 0%
20% 18.75%
50% 75%
Between 20% and 50% Straight-line vesting
(1) The benchmark underlying basic EPS for the financial year 2017 from which these targets will be measured is 163.3p.
As in prior years, the targets that are intended to operate for the 2018 PSP awards were set to be appropriately demanding
in light of the Group's internal planning, external market expectations for future growth and the current trading
environment, the targets are considered to provide a realistic incentive at the lower end of the performance range but
require exceptional performance to achieve full vesting. On this basis, the Committee is satisfied that the range of
targets are appropriately demanding, and no less challenging than the range of targets set for the 2017 awards.
Relative TSR performance condition
The vesting schedule for the relative TSR element of executive directors' 2018 PSP awards is set out below. Relative TSR
will be assessed against the FTSE 350 Index, reflecting the Company's size in terms of market capitalisation. Performance
will be measured over three financial years.
TSR performance of the Company relative to the FTSE 350 Index(1) % of award vesting(maximum 25%)
Less than the Index 0%
Equal to the Index 6.25%
25% higher than the Index 25%
Intermediate performance Straight-line vesting
(1) If the FTSE 350 Index's TSR was 50% over the three-year performance period, then the Company's TSR would have to be at
least 75% for all 25% of the PSP shares to vest.
Chairman and non-executive directors' fees
The Chairman and non-executive directors' fees were last reviewed in a market context in 2015 and increased to current
levels. In line with our Policy they are benchmarked and reviewed periodically, usually every three years. The next review
is scheduled for 2018 with any increase taking effect in 2019.
The basic non-executive fee is £50,000 with an additional £10,000 fee per annum paid for the chairing of the Audit and
Remuneration Committees and a further £5,000 fee paid to the Senior Independent Director as detailed in the table below:
Annual fee 1 January 2018 Annual fee 31 December 2017
Scott Forbes (Chairman) £170,000 £170,000
Ashley Martin £60,000 £60,000
Peter Williams £65,000 £65,000
Rakhi Goss-Custard £50,000 £50,000
Jacqueline de Rojas £50,000 £50,000
Andrew Findlay £50,000 £29,166(1)
(1) Fee for seven months, from 1 June 2017.
Statement of shareholder voting at AGM
At the AGM on 9 May 2017, shareholders overwhelmingly voted in favour of the Directors' Remuneration Report and the new
Directors' Remuneration Policy. The Committee believes this illustrates the strong level of shareholder support for the
remuneration framework. The table below shows full details of the voting outcomes for the Directors' Remuneration Report
and the Policy:
Votes for % Votes for Votes against % Votes against Votes withheld(1)
Directors' Remuneration Report 72,340,405 98.54 1,075,197 1.46 17,491
Directors' Remuneration Policy 70,332,275 95.83 3,064,143 4.17 36,674
(1) A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast 'For' and
'Against' a resolution.
In line with the Company's commitment to ongoing dialogue with its shareholders, the Committee corresponds with major
shareholders and meetings are offered, where appropriate, to understand the reasons for any potential or actual opposition
to the Company's Remuneration Policy. Changes are made to our Policy where it is considered appropriate to do so.
Review of past performance
Share price performance
In 2017, the Company's share price ended the year at £45.00 up 15% year on year (the FTSE 250 Index was up 18% and the FTSE
350 Index was up 13%). On a three-year basis the share price has increased by 100% and has continued to outperform both the
FTSE 250 and FTSE 350 Indices over that period as shown in the graphs on page 83.
Total shareholder return (TSR)
The first graph below compares the TSR of Rightmove's shares against the FTSE 250 Index and the FTSE 350 Index for the
three-year period from 1 January 2015 to 31 December 2017. TSR is the product of movements in the share price plus
dividends reinvested on the ex-dividend date. TSR provides a useful, widely used benchmark to illustrate the Company's
performance over the last three years. Specifically, it illustrates the value of £100 invested in Rightmove's shares and in
the FTSE 250 Index and the FTSE 350 Index over that period.
As required by the Act, the Company's TSR performance is required to be shown against a recognised broad-based share index.
Since 2016, as Rightmove continues to be ranked towards the top of the FTSE 250 Index in terms of market capitalisation,
the FTSE 350 Index is felt to be more appropriate for the purpose of comparing TSR performance and therefore this will be
used as the criteria applied to 25% of the PSP awards to be granted in February 2018.
The graphs below illustrate, for statutory purposes, the TSR of Rightmove's shares against the FTSE 250 Index and the FTSE
350 Index for the three and nine years to 31 December 2017.
TSR Graph - three years
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
TSR Graph - nine years
http://www.rns-pdf.londonstockexchange.com/rns/7131F_1-2018-2-22.pdf
Total remuneration for the Chief Executive Officer
The table below shows the total remuneration figure for the Chief Executive Officer over a nine-year performance period.
The total remuneration figure includes the annual bonus and long-term incentive awards that vested based on performance in
those years.
Year Executive Total single figure£ Annual bonus outturn (% of maximum) Long-term incentive outturn
(% of maximum)
2017 Peter Brooks-Johnson(1)Nick McKittrick(1) 504,557 60% 100%
1,223,443 n/a 100%
2016 Nick McKittrick 2,126,923 92% 100%
2015 Nick McKittrick 2,300,349 100% 100%
2014 Nick McKittrick 1,599,610 70% 92%
2013 Nick McKittrick 531,3711,531,515 85%n/a 100%100%
Ed Williams(2)
2012 Ed Williams 2,219,882 90% 100%
2011 Ed Williams 4,934,942 100% 100%
2010 Ed Williams 652,800 100% -(3)
2009 Ed Williams 627,641 100% -(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.
Directors' remuneration (audited)
The information included below up to and including page 94 is audited.
The remuneration of the directors of the Company during 2017 for time served as a director is as follows:
Fixed Pay Performance-related pay
Salary/Fee Benefits(1) Fixed pay subtotal Annual Long-term incentives (3) Performance-related pay Total remuneration in 2017
£ £ £ bonus(2) £ subtotal £
£ £
Executive directors
Nick McKittrick(4) 159,120 666 159,786 - 1,063,657 1,063,657 1,223,443
Peter Brooks-Johnson(5) 420,103 1,852 421,955 315,077 1,155,196 1,470,273 1,892,228
Robyn Perriss 320,000 1,406 321,406 240,000 925,763 1,165,763 1,487,169
Non-executive directors
Scott Forbes 170,000 - 170,000 - - - 170,000
Colin Kemp 18,012 - 18,012 - - - 18,012
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 50,000 - 50,000 - - - 50,000
Andrew Findlay(6) 29,166 - 29,166 - - - 29,166
(1) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.
(2) The annual bonus amount relates to the accrued payment in respect of the full year results for the year ended 31
December 2017 including the deferred element (60% of annual bonus).
(3) The value of the long-term incentives includes:
· nil cost PSPs where vesting is calculated by taking the number of nil cost options expected to vest in March 2018
(including dividend roll up), which are dependent on the three-year performance period ended 31 December 2017 and
multiplying by the year end closing share price of £45.00; and
· the notional capital gain on Sharesave options exercisable on 1 November 2017 which reflects the difference between
the option grant price of £19.72 and £41.39, being the market value of shares on the date they vested.
(4) Reflects base salary through to resignation as Chief Executive Officer and director on 9 May 2017 together with pro
rata vesting of PSPs awarded in March 2015.
(5) Reflects base salary of £373,136 as Chief Operating Officer to 9 May 2017 and increased annual salary of £445,536 as
Chief Executive Officer from 10 May 2017.
(6) Fee for seven months from 1 June 2017 to 31 December 2017.
The remuneration of the directors of the Company during 2016 was:
Fixed pay Performance related pay
Salary/Fee Benefits(1) Pension Fixed pay subtotal Annual Long-term incentives (3) Performance- related pay Total remuneration in 2016
£ £ £ £ 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.
Defined contribution pension
The Group operates a stakeholder pension plan for employees under which the employer contributes 6% of base salary, subject
to the employee contributing a minimum of 3% of base salary. None of the directors elected to participate in the pension
plan during 2017. The Company does not contribute to any personal pension arrangements.
How was pay linked to performance in 2017?
Annual bonus plan
The incentive for the financial year ended 31 December 2017 was in the form of a cash bonus of up to 50% of salary and a
DSP bonus of up to 75% of salary (i.e. 125% in total). The bonus (both cash and DSP elements) was determined by a mixture
of underlying operating profit performance (65%) and key performance indicators (35%) relating to underlying drivers of
long-term revenue growth.
When comparing performance against the 2017 bonus targets set, the Committee determined that 60% of the maximum achievable
cash and DSP bonus should be paid to the executive directors. Accordingly, a cash bonus of 30% of base salary will be paid
to the executives and 45% of base salary will be granted to the executive directors under the DSP, which will be deferred
until March 2020. More details are provided in the table below:
Measure Hurdle As a % of maximum bonus opportunity Actual performance achieved Resulting bonus % achieved
Financial targets
Underlying operating profit (1) Targets:· £175.2m: 25% payout· £185.7m: 100% payout 65% Underlying operating profit achieved: £184.4m The 2017 underlying operating profit represented growth of 11% on 2016 59%
Strategic targets
Traffic market share 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% There was a lower growth in time in minutes spent on Rightmove platforms year on year than our nearest competitors 0%
Other revenue(2) · Growth of 16%: 25% payout · Growth of 24%: 100% payout 15% Revenue increased from £17.8m to £18.6m, an increase below the minimum threshold 0%
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% 90% of respondents say 'Rightmove is a great place to work' 1%
Total 100% 60%
(1) Operating profit before share-based payments and NI on share-based incentives.
(2) The targets relate to all revenue streams except Agency and New Homes.
(3) Based on the results of the annual employee survey.
Long-term incentives vesting during the year
The PSP awards granted in March 2015 were subject to EPS (75% of the awards) and relative TSR (25% of the awards)
performance conditions that related to the three-year period ended 31 December 2017.
The vesting schedule for the relative TSR element of executive directors' 2015 PSP awards is set out below:
Relative TSR condition % 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 109.2% compared to 39.2% for the FTSE 250 Index. As this level of
outperformance is 70% higher than the Index, these options will vest in full on 2 March 2018.
Rightmove's EPS growth is measured over a period of three financial years (2015 to 2017). The EPS figure used is equivalent
to Rightmove's reported underlying basic EPS (before share-based payments, NI on share-based incentives and no related
adjustment for tax) and the vesting schedule is set out below:
Underlying basic EPS growth from 2015 to 2017 % of award vesting(maximum 75%)
Less than 30% 0%
30% 18.75%
60% 75%
Between 30% and 60% Straight-line vesting
At the end of the performance period, underlying basic EPS was 163.3p which from an underlying basic EPS base of 100.3p
results in growth of 63%, exceeding the maximum 60% EPS growth target and will result in full vesting of this part of the
award (maximum of 75%) from 2 March 2018.
Share awards granted during the year
On 1 March 2017 Peter Brooks-Johnson and Robyn Perriss were awarded shares under the PSP, which vest in March 2020, and are
subject to a mixture of EPS (75% of the awards) and TSR relative to the FTSE 350 Index (25% of the awards) performance with
the greater weighting on EPS to reflect its particular relevance to the performance of the business.
Executive director Basis of grant Number of shares Face value of award(1)
Peter Brooks-Johnson 200% of base salary 18,691 746,273
Robyn Perriss 200% of base salary 16,029 640,000
(1) Based on the average mid-market share price for the three consecutive days prior to grant, taken from the Daily
Official List, of £39.93.
On 9 May 2017, the Committee approved a top-up award of performance shares for Peter Brooks-Johnson, following his
promotion to CEO. The award was over 3,457 ordinary shares of 1p each, reflecting the increase in his base salary from
£373,136 to £445,536. The performance shares are exercisable for a period of 2 years from 9 May 2020 and are subject to
the same performance criteria as the original award granted on 1 March 2017. The number of additional shares was based on
the average mid-market share price for the three consecutive days prior to grant, taken from the Daily Official List, of
£41.90.
The vesting schedule for the relative TSR element of executive directors' 2017 PSP awards is set out below. It is
consistent with the TSR condition used for previous grants under the share option scheme. Performance will be measured over
three financial years.
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 (2017-2019). The EPS figure used will be
equivalent to the Group's underlying basic EPS (before share-based payments, NI on share-based incentives and no related
adjustments for tax).
The following vesting schedule will apply for executive directors' awards granted in 2017:
Underlying basic EPS growth from 2017 to 2019 % of award vesting(maximum 75%)
Less than 20% 0%
20% 18.75%
50% 75%
Between 20% and 50% Straight-line vesting
The benchmark underlying basic EPS for the financial year 2016 from which these targets will be measured is 142.8p.
Retirement arrangements for Nick McKittrick
Nick McKittrick retired as a director and Chief Executive Officer following the AGM on 9 May 2017. His employment with the
Group ended on 30 June 2017.
The Committee determined that he should continue to be paid his salary and normal package of benefits up to 30 June 2017
and receive a bonus in respect of the 2016 financial year as detailed below. In line with the Remuneration Policy, 40% of
the 2016 bonus was paid in cash with the balance deferred in shares for a period of two years. Nick did not receive a bonus
for the six months to 30 June 2017 and was not awarded performance shares under the PSP in March 2017.
The Committee also determined that Nick would be treated as a good leaver in relation to his outstanding PSP and DSP
awards, with these awards vesting in line with the relevant plan rules and the Remuneration Policy set out on pages 66 to
71. Outstanding PSP awards would also be subject to the achievement of performance conditions and vest pro-rata in
accordance with the plan rules.
Full details of the remuneration arrangements were published on the Company's website in accordance with Section 430(2B) of
the Companies Act following the AGM and details of share awards are set out below.
Rightmove Performance Share Plan
In accordance with our Policy, unvested PSP awards were pro-rated to 30 June 2017 and vest on the original vesting dates,
subject to the achievement of TSR and EPS performance criteria. These awards will be exercisable for 12 months from the
original vesting dates. PSP awards which have already vested but remain unexercised will be exercisable until 30 June
2018, being 12 months from Nick's leaving date.
Details of unexercised PSP awards as at the date of Nick's retirement (based on the maximum possible vesting if EPS and TSR
performance conditions are fully met) are set out in the table below:
Award Date Performance Period Normal Vesting Date Award (number of shares) Pro-rated award (number of shares)
8 March 2013 1 January 2013 to 31 December 2015 8 March 2016 33,465(1) 33,465(1)
3 March 2014 1 January 2014 to 31 December 2016 3 March 2017 31,070(2) 31,070(2)
2 March 2015 1 January 2015 to 31 December 2017 2 March 2018 29,321 22,805(3)
1 March 2016 1 January 2016 to 31 December 2018 1 March 2019 21,912 9,739(3)
(1) No pro-rating applies; includes rolled up dividend of 1,186 shares.
(2) No pro-rating applies; includes rolled up dividend of 1,052 shares.
(3) Pro-rated to 30 June 2017 and subject to TSR and EPS related performance conditions.
Rightmove Deferred Share Bonus Plan
In accordance with our Policy, DSP awards granted in respect of prior years' performance remain capable of vesting in
full:
· vested but unexercised DSP awards may be exercisable for 12 months from 30 June 2017; and
· unvested DSP awards will vest on the original vesting dates and be exercisable for 12 months from vesting.
Award Date Performance Period Normal Vesting Date Award (number of shares)
2 March 2015 1 January 2014 to 31 December 2014 2 March 2017 7,546
1 March 2016 1 January 2015 to 31 December 2015 1 March 2018 7,901
1 March 2017 1 January 2016 to 31 December 2016 1 March 2019 7,333
Rightmove Sharesave Plan (SAYE)
Nick held options over 760 shares in total under the all-employee SAYE, which lapsed following his retirement in accordance
with the SAYE rules.
Share-based incentives held by the directors and not exercised as at 31 December 2017
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 2017 Vesting date Expiry date
1 January 2017 in year
Executive directors
PeterBrooks-Johnson 10/10/2007(Unapproved) 75,000 - £5.22 75,000(8) £41.03 - 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
8/3/2013 24,210 889 £0.00 25,099(1) £41.03 - 8/3/2016 7/3/2018
(PSP)
3/3/2014(PSP) 25,140 - £0.00 - - 25,140 3/3/2017 2/3/2019
1/10/2014(Sharesave) 456(6) - £19.72 456(10) £40.15 - 1/11/2017 30/4/2018
2/3/2015(DSP) 6,320 - £0.00 6,320(7) £41.20 - 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 - £0.00 - - 6,617 1/3/2018 28/2/2019
1/3/2016(PSP) 18,351 - £0.00 - - 18,351 1/3/2019 28/2/2021
1/3/2017(DSP) - 6,141(3) £0.00 - - 6,141 1/3/2019 29/2/2020
1/3/2017(PSP) - 18,691(4) £0.00 - - 18,691 1/3/2020 28/2/2022
9/5/2017(PSP) - 3,457(5) £0.00 - - 3,457 9/5/2020 8/5/2022
1/10/2017(Sharesave) - 273(9) £32.89 - - 273 1/11/2020 30/4/2021
Total 372,793 29,451 106,875 295,369
Robyn Perriss 8/3/2013 14,928 548 £0.00 15,476(1) £40.62 - 8/3/2016 7/3/2018
(PSP)
3/3/2014(DSP) 4,353 - £0.00 4,353(2) £40.61 - 3/3/2016 2/3/2017
3/3/2014(PSP) 19,887 697 £0.00 20,584(6) £43.26 - 3/3/2017 2/3/2019
1/10/2014(Sharesave) 912 - £19.72 912(10) £40.15 - 1/11/2017 30/4/2018
2/3/2015(DSP) 4,999 - £0.00 4,999(7) £43.12 - 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 - £0.00 - - 5,234 1/3/2018 28/2/2019
1/3/2016(PSP) 14,516 - £0.00 - - 14,516 1/3/2019 28/2/2021
1/3/2017(DSP) - 4,858(3) £0.00 - - 4,858 1/3/2019 29/2/2020
1/3/2017(PSP) - 16,029(4) £0.00 - - 16,029 1/3/2020 28/2/2022
1/10/2017(Sharesave) - 547(9) £32.89 - - 547 1/11/2020 30/4/2021
Total 84,254 22,679 46,324 60,609
(1) On 8 March 2013, the executive directors were awarded nil cost options under the PSP which vested in 2016 subject
to EPS and relative TSR performance measures, which were met in full.
Robyn Perriss exercised the nil cost option over 15,476 shares (which included a dividend roll-up of 548 shares) on 27
February 2017, sold 11,375 upon exercise at an average market price of £40.62 and retained the balance of 4,101 shares.
Peter Brooks-Johnson exercised the nil cost option over 25,099 shares (which included a dividend roll-up of 889 shares) on
31 October 2017 and sold all the shares at an average market price of £41.03 per share.
(2) The nil cost deferred shares granted under the DSP on 3 March 2014, were exercisable from 3 March 2016 subject to
annual bonus targets which were met in full. Robyn Perriss exercised the nil cost option over 4,353 shares on 27 February
2017 and sold 3,199 shares at an average market price of £40.61 per share to satisfy the resulting tax liability and
retained the balance of 1,154 shares.
(3) On 1 March 2017, the executive directors were awarded nil cost options under the DSP, which vest in March 2019.
The average mid-market share price for the three consecutive preceding days, used to calculate the number of shares
awarded, was £39.93.
(4) On 1 March 2017, the executive directors were awarded nil cost shares under the PSP, which vest in March 2020.
Further details are set out on pages 88 to 89.
(5) On 9 May 2017, a top-up award of nil cost shares under the PSP was made to Peter Brooks-Johnson, which vest in May
2020. Further details are set out on page 88.
(6) On 3 March 2014, the executive directors were awarded nil cost options under the PSP which vested in 2017 subject
to EPS and relative TSR performance measures, which were met in full. Robyn Perriss exercised the nil cost option over
20,584 shares (which included a dividend roll-up of 697 shares) on 31 May 2017, sold 15,129 upon exercise at an average
market price of £43.26 and retained the balance of 5,455 shares.
(7) The nil cost deferred share awards granted under the DSP on 2 March 2015, were exercisable from 2 March 2017
subject to annual bonus targets which were met in full.
Robyn Perriss exercised the nil cost option over 4,999 shares on 31 May 2017 and sold 3,674 shares at an average market
price of £43.12 per share and retained the balance of 1,325 shares.
Peter Brooks-Johnson exercised the nil cost option over 6,320 shares on 3 October 2017 and sold all the shares at an
average market price of £41.20 per share.
(8) Peter Brooks-Johnson was granted an unapproved option over 75,000 shares at an exercise price of £5.22 which vested
in 2011. On 3 October 2017, he exercised the option, which the Company net settled, he sold 30,907 shares at an average
market price of £41.03 per share to satisfy the resulting tax liability and retained the balance of 34,574 shares.
(9) On 29 September 2017, Peter Brooks-Johnson and Robyn Perriss were granted Sharesave options over 273 and 547 shares
respectively at an exercise price of £32.89. The options will be exercisable from November 2020.
(10) In October 2014, Peter Brooks-Johnson and Robyn Perriss were granted Sharesave options over 456 and 912 shares
respectively, which vested in November 2017 at an exercise price of £19.72. On 28 November 2017, both directors exercised
their options in full and retained the shares.
Dilution
All existing executive share-based incentives can be satisfied from shares held in the Rightmove Employees' Share Trust
(EBT) and shares held in treasury. It is intended that the 2017 share-based incentive awards will also be settled from
shares currently held in the EBT or from shares held in treasury without any requirement to issue further shares.
During 2017, treasury shares were used to satisfy vested PSP awards and unapproved options over 379,269 shares,
representing 0.42% of issued share capital (less treasury shares) as at 31 December 2017.
Directors' interests in shares
The interests (both beneficial and family interests) of the directors in office at the date of this report in the share
capital of the Company were as follows:
Interests in Interests in
ordinary shares of £0.01 share-based incentives
At31 December 2017 At 1 January 2017 PSP & DSP awards (unvested) PSP & DSP awards (vested but unexercised) Options (unvested) Options (vested but unexercised)
Executive directors
Peter Brooks-Johnson 90,716 55,146 77,813 25,140 577 191,839
Robyn Perriss 18,780 5,833 60,062 - 547 -
Non-executive directors
Scott Forbes 219,300 319,300 - - - -
Ashley Martin 2,060 2,060 - - - -
Peter Williams 3,728 3,728 - - - -
Rakhi Goss-Custard 544 544 - - - -
Jacqueline de Rojas 188 188 - - - -
Andrew Findlay - - - - - -
Total 335,316 386,799 137,875 25,140 1,124 191,839
· The Company's shares in issue (including 1,892,456 shares held in treasury) as at 31 December 2017 comprised
93,266,207 (2016: 95,490,266) ordinary shares of £0.01 each.
· The closing share price of the Company was £45.00 as at 29 December 2017 (the last day of trading in 2017). The
lowest and highest share prices during the year were £38.89 and £45.25 respectively.
· The executive directors are regarded as being interested, for the purposes of the Companies Act 2006, in 263,767
(2016: 343,275) ordinary shares of £0.01 each in the Company currently held by the EBT at 31 December 2017 as they are,
together with other employees, potential beneficiaries of the EBT.
· The directors' beneficial holdings represent 0.4% of the Company's shares in issue as at 31 December 2017 (2016:
0.6%) (excluding shares held in treasury).
· There have been no changes to the above interests between the year end and the date of this report.
Executive director share ownership guidelines are set out in the Remuneration Policy Report on page 70. The interests of
the executive directors in office at 31 December 2017 in the share capital of the Company as a percentage of base salary
were as follows:
Base salary Number of shares held at Value of Value of shares as a % of base salary
1 January 2018 31 December 2017 shares at
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