REG - Rightmove Plc - Final Results <Origin Href="QuoteRef">RMV.L</Origin> - Part 7
23/02/2018 07:05
- Part 7: For the preceding part double click ID:nRSW7131Ff
or less.
(g) Provisions A provision is recognised if, as a result of a past event,
the Group has a present legal or constructive obligation that can be estimated
reliably and it is probable that an outflow of economic benefits will be
required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessment of the time value of
money and the risks specific to the liability. The unwinding of the discount
is recognised as a finance cost.
(h) Employee benefits (i) Pensions
The Group provides access to a stakeholder pension scheme (a defined
contribution pension plan) into which employees may elect to contribute via
salary exchange. Obligations for contributions to defined contribution pension
plans are recognised as an employee benefit expense in profit or loss when
they are incurred.
(ii) Employee share schemes
The Group provides share-based incentive plans allowing executive directors
and other employees to acquire shares in the Company. An expense is recognised
in profit or loss, with a corresponding increase in equity, over the period
during which the employees become unconditionally entitled to acquire equity
settled share-based incentives.
Fair value at the grant date is measured using either the Monte Carlo or Black
Scholes pricing model as is most appropriate for each scheme. Measurement
inputs include share price on measurement date, exercise price of the
instrument, expected volatility (based on weighted average historic volatility
adjusted for changes expected due to publicly available information), weighted
average expected life of the instruments (based on historical experience and
general option behaviour), expected dividends, and risk-free interest rates
(based on government bonds). Service and non-market performance conditions
attached to the awards are not taken into account in determining the fair
value.
2 Significant accounting policies (continued)
For share-based incentive awards with non-vesting conditions, the grant date
fair value of the share-based incentives is measured to reflect such
conditions and there is no true-up for differences between expected and actual
outcomes. When either the employee or the Company chooses not to meet the
non-vesting condition, the failure to meet the non-vesting condition is
treated as a cancellation and the cost that would have been recognised over
the remainder of the vesting period is recognised immediately in profit or
loss.
(iii) Own shares held by The Rightmove Employees' Share Trust (EBT)
The EBT is treated as an agent of Rightmove Group Limited, and as such EBT
transactions are treated as being those of Rightmove Group Limited and are
therefore reflected in the Group's consolidated financial statements. In
particular, at a consolidated level, the EBT's purchases of shares in the
Company are charged directly to equity.
(iv) Own shares held by The Rightmove Share Incentive Plan Trust (SIP)
The SIP is treated as an agent of Rightmove plc, and as such SIP transactions
are treated as being those of Rightmove plc and are therefore reflected in the
Group's consolidated financial statements. In particular, at a consolidated
level, the SIP's purchases of shares in the Company are charged directly to
equity.
(v) National Insurance (NI) on share-based incentives Employer's NI
is accrued, where applicable, at a rate of 13.8%, which management expects to
be the prevailing rate when share-based incentives are exercised. In the case
of share options, it is provided on the difference between the share price at
the reporting date and the average exercise price of share options. In the
case of nil cost performance shares and deferred shares, it is provided based
on the share price at the reporting date.
(i) Treasury shares and shares purchased for cancellation When share
capital recognised as equity is repurchased, the amount of the consideration
paid, including directly attributable costs, is recognised as a deduction from
equity. Repurchased shares are either held in treasury or cancelled.
(j) Revenue Revenue principally represents the amounts receivable from
customers in respect of membership of the Rightmove platforms. Agency, New
Homes, Overseas and Commercial revenue comprises subscriptions for core
listing fees and amounts paid for additional advertising products. Contracts
for these services are per branch location or branch equivalent for Agency and
per development for New Homes. They vary in length from one month to five
years, but are typically for periods of six to 12 months. Revenue is
recognised over the period of the contract or as advertising products are
used. Membership offers take place from time to time and may include
discounted products and free periods. These are recognised on a monthly basis
over the contract term.
Agency, Overseas and Commercial services are typically billed in advance with
revenue deferred until the service commencement date. New Homes developers are
billed monthly in arrears. Where invoices are raised on other than a monthly
basis, the amounts are recognised as deferred or accrued revenue and released
to the profit or loss on a monthly basis in line with the provision of
services as stipulated in the contract terms.
Data Services revenue relates to fees generated for data and valuation
services under a variety of contractual arrangements. Revenue is recognised
when the service has been provided. Third party advertising revenue represents
amounts paid in respect of non-property advertising on the Rightmove platforms
and is recognised in the month in which the service is provided. Consumer
Services revenue principally relates to payment for leads and is recognised
when the lead is generated. Data Services, third party advertising and
Consumer Services revenue is typically billed in arrears.
(k) Segmental reporting An operating segment is a component of the Group
that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any
of the Group's other components. An operating segment's operating results are
reviewed regularly by the Group's Chief Executive Officer to make decisions
about resources to be allocated to the segment and assess its performance and
for which discrete financial information is available.
(l) Leases Operating lease rentals are charged to profit or loss on a
straight-line basis over the period of the lease. The value of any lease
incentive received, for example a rent-free period, is deferred and released
on a straight-line basis over the lease term.
(m) Financial income and expenses Financial income comprises interest
receivable on cash balances and money market deposits and dividend income.
Interest income is recognised as it accrues, using the effective interest
method. Dividend income is recognised on the date that the Company's right to
receive payment is established.
Financial expenses comprise banking facility fees and bank charges and the
unwinding of the discount on provisions.
2 Significant accounting policies (continued)
(n) Taxation Income tax on the results for the year comprises current and
deferred tax. Income tax is recognised in profit or loss except to the extent
that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the period
net of any charge or credit posted directly to equity, using tax rates enacted
or substantially enacted at the reporting date and any adjustment to tax
payable in respect of previous periods.
Deferred tax is provided in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary
differences are not provided for: the initial recognition of goodwill; the
initial recognition of assets or liabilities that affect neither accounting
nor taxable profit other than in a business combination, and the differences
relating to investments in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantially
enacted by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.
In accordance with IAS 12, the Group policy in relation to the recognition of
deferred tax on share-based incentives is to include the income tax effect of
the tax deduction in profit or loss to the value of the income tax charge on
the cumulative IFRS 2 charge. The remainder of the income tax effect of the
tax deduction is recognised in equity.
(o) Dividends Dividends unpaid at the reporting date are only recognised as
a liability (and deduction to equity) at that date to the extent that they are
appropriately authorised and are no longer at the discretion of the Company.
Unpaid dividends that do not meet these criteria are disclosed in the notes to
the financial statements.
(p) Earnings per share (EPS) The Group presents basic, diluted and
underlying basic and diluted EPS data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to equity holders of
the Company by the weighted average number of ordinary shares outstanding
during the year, adjusted for own shares held. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding, adjusted for own
shares held, for the effects of all potential dilutive instruments, which
comprise share-based incentives granted to employees. The calculation of
underlying basic and diluted EPS is disclosed in Note 11.
3 IFRSs not yet applied A number of new standards, amendments to standards
and interpretations have been issued but are not yet effective for the year
ended 31 December 2017 and have not been applied in preparing these
consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from Contracts with Customers was issued in 2014 and was
endorsed by the EU in 2016. IFRS 15 establishes a comprehensive framework for
determining whether, how much and when revenue is recognised. It replaces
existing revenue recognition guidance, including IAS 18 Revenue. IFRS 15 is
effective for annual periods beginning on or after 1 January 2018, with early
adoption permitted. The Group plans to adopt IFRS 15 in its financial
statements for the year ending 31 December 2018 and to use the practical
expedients for completed contracts.
At present revenue is recognised either over time where there is continuing
service provided by Rightmove to the customer or at the point in time when the
risks and rewards of ownership transfer to the customer. Under IFRS 15 revenue
will be recognised when performance obligations are satisfied. For the Group
the transfer of control under IFRS 15 and satisfaction of performance
obligations is over time. We have undertaken a detailed analysis of the impact
of IFRS 15 on the Group which has shown that the recognition of revenue will
be consistent with the transfer of risks and rewards to the customer under IAS
18. We have concluded following this assessment that the implementation of
IFRS 15 will not have a significant impact on the Group's consolidated
financial statements.
IFRS 16 Leases
IFRS 16 Leases was issued in January 2016, and was endorsed by the EU in 2017.
IFRS 16 introduces a single on-balance sheet lease accounting model for
lessees. A lessee recognises a right-of-use asset representing its right to
use the underlying asset and a corresponding lease liability representing its
obligation to make lease payments. There are optional exemptions for
short-term leases and leases of low value items.
IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4
Determining whether an Arrangement contains a Lease, SIC-15 Operating
Leases-Incentives and SIC-27 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease. The standard is effective for annual
periods beginning on or after 1 January 2019. Early adoption is permitted for
entities that apply IFRS 15 Revenue from Contracts with Customers at or before
the date of initial application of IFRS 16.
The Group has completed a detailed assessment to quantify the impact on its
reported assets and liabilities of adoption of IFRS 16. The Group will
transition to IFRS 16 using the modified retrospective application approach
with no restatement of prior year comparatives. On 1 January 2018 the Group
expects to recognise new right-of-use assets of £10,730,000 and lease
liabilities of £10,824,000 for its operating leases in respect of office
premises and company cars. The nature of expenses related to those leases will
also change as the straight-line operating lease expense will be replaced with
a depreciation charge for right-of-use assets and interest expense on lease
liabilities, in the first year of adoption these are expected to be
approximately £1,775,000 and £301,000 respectively.
IFRS 9 Financial Instruments
IFRS 9 Financial Instruments was issued in July 2014 and was endorsed by the
EU in 2016. It replaces existing financial instruments guidance, including IAS
39 Financial Instruments: Recognition and Measurement. IFRS 9 is effective for
annual periods beginning on or after 1 January 2018 and the Group plans to
adopt IFRS 9 in its financial statements for the year ending 31 December 2018.
IFRS 9 will simplify the classification of financial assets for measurement
purposes, but is not anticipated to have a significant impact on the financial
statements.
Other amendments
There are no other new or amended standards expected to have a significant
impact on the Group's consolidated financial statements.
4 Risk and capital management Overview The Group has exposure to the following
risks from its use of financial instruments:
· credit risk
· liquidity risk
· market risk
This note presents information about the Group and Company's exposure to each
of the above risks, the Group's objectives, policies and processes for
measuring and managing risk and the Group's management of capital. Further
quantitative disclosures are included throughout these consolidated financial
statements.
The Board of directors has overall responsibility for the establishment and
oversight of the Group's risk management framework. The primary method by
which risks are monitored and managed by the Group is through the monthly
Executive Management Committee, where any significant new risks or change in
status to existing risks will be discussed and actions taken as appropriate.
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls and
to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's
activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Audit Committee oversees how management monitors compliance with the
Group's internal controls and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
Credit risk Credit risk is the risk of financial loss to the Group if a
customer or banking institution fails to meet its contractual obligations.
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer. The Group provides credit to customers in
the normal course of business. The Group provides its services to a wide range
of customers in the UK and overseas and therefore believes it has no material
concentration of credit risk.
More than 88.0% (2016: 90.0%) of the Group's Agency and New Homes customers
pay via monthly direct debit, minimising the risk of non-payment. The Group
establishes an allowance for impairment that represents its estimate of
incurred losses in respect of trade and other receivables based on
individually identified loss exposures.
The Group's treasury policy is to monitor cash and deposit balances on a daily
basis to ensure that no more than £30 million is held with any single
institution.
4 Risk and capital management (continued)
Liquidity risk Liquidity risk is the risk that the Group will encounter
difficulties in meeting the obligations associated with its financial
liabilities that are settled by delivering cash. The Group and Company's
approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due, under both
normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation.
The Group's revenue model is largely subscription-based, which results in a
regular level of cash conversion allowing it to service working capital
requirements.
The Group and Company ensure that they have sufficient cash on demand to meet
expected operational expenses excluding the potential impact of extreme
circumstances that cannot reasonably be predicted, such as natural disasters.
Throughout the year, the Group typically had sufficient cash on demand to meet
operational expenses, before financing activities, for a period of 107 days
(2016: 95 days).
The Group agreed to extend a 12 month agreement with Barclays Bank plc for a
£10,000,000 committed revolving loan facility. This agreement will expire on
12 February 2019.
Market risk Market risk is the risk that changes in market prices such as
foreign exchange and interest rates will affect the Group's income. The
objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
(i) Currency risk
All of the Group's sales and more than 95.0% (2016: 97.0%) of the Group's
purchases are Sterling denominated, accordingly it has no significant currency
risk.
(ii) Interest rate risk
The Group and Company have no interest bearing financial liabilities. The
Group is exposed to interest rate risk on cash and money market deposit
balances.
Capital management The Board of directors' policy is to maintain an efficient
statement of financial position so as to maintain investor, creditor and
market confidence and to sustain future development of the business. The Board
of directors considers that the future working capital and capital expenditure
requirements of the Group will continue to be low and accordingly return on
capital measures are not key performance targets. The Board of directors
monitors the spread of the Company's shareholders as well as underlying basic
EPS.
The Board's policy is to return surplus capital to shareholders through a
combination of dividends and share buybacks.
(i) Dividend policy
The Board of directors has a progressive dividend policy and monitors the
level of dividends to ordinary shareholders in relation to the growth in
underlying basic EPS. The Board has adopted this policy in order to align
shareholder returns with the underlying growth achieved in the profitability
in the Group.
The capacity of the Group to make dividend payments is primarily determined by
the level of available retained earnings in the Company, after deduction of
own shares held, and the cash resources of the Group. The retained earnings of
the Company, after deduction of own shares held, are £411,276,000 (2016:
£405,801,000) as set out in the Company statement of changes in shareholders'
equity on page 106. The Group has cash and money market deposits at 31
December 2017 of £24,975,000 (2016: £17,775,000), the majority of which are
held by the principal operating subsidiary Rightmove Group Limited. The Group
is well positioned to fund its future dividends given the strong cash
generative nature of the business and in 2017 cash generated from operating
activities was £183,891,000 (2016: £169,250,000) representing an operating
cash conversion in excess of 100%.
(ii) Share buybacks
The Company purchases its own shares in the market; the timing of these
purchases depends on available free cash flow and market conditions. In 2017,
2,224,059 (2016: 2,251,711) shares were bought back and were cancelled at an
average price of £40.83 (2016: £39.12).
There were no changes in the Group's approach to capital management during the
year. Neither the Company nor any of its subsidiaries are subject to
externally imposed capital requirements.
4 Risk and capital management (continued)
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide
variety of causes associated with the Group's processes, personnel, technology
and infrastructure, and from external factors other than credit, market and
liquidity risks such as those arising from legal and regulatory requirements
and generally accepted standards of corporate behaviour. Operational risks
arise from all of the Group's operations.
The Group's objective is to manage operational risk so as to balance the
avoidance of financial losses and damage to the Group's reputation with
overall cost effectiveness and to avoid control procedures that restrict
initiative and creativity.
The primary responsibility for the development and implementation of controls
to address operational risk is assigned to senior
management within each business unit. This responsibility is supported by the
development of overall Group standards for the management of operational risk
in the following areas:
· requirements for appropriate segregation of duties, including the
independent authorisation of transactions;
· requirements for the reconciliation and monitoring of
transactions;
· compliance with regulatory and other legal requirements;
· documentation of controls and procedures;
· requirements for the periodic assessment of operational risks
faced and the adequacy of controls and procedures to address the risks
identified;
· requirements for reporting of operational losses and proposed
remedial action;
· development and regular testing of business continuity and
disaster recovery plans;
· regular testing of the security of the IT systems and platforms,
regular backups of key data and ongoing threat monitoring to protect against
the risk of cyber attack;
· training and professional development; and
· risk mitigation, including insurance where this is effective.
5 Operating segments The Group determines and presents operating segments
based on internal information that is provided to the Chief Executive Officer,
who is the Group's Chief Operating Decision Maker.
The Group's reportable segments are as follows:
· The Agency segment which provides resale and lettings
property advertising services on Rightmove's platforms; and
· The New Homes segment which provides property advertising
services to new home developers and housing associations on Rightmove's
(http://www.rightmove.co.uk) platforms.
The Other segment which represents activities under the reportable segments
threshold, comprises Overseas and Commercial property advertising services and
non-property advertising services which include our third party advertising
and Consumer Services as well as Data Services. Management monitors the
business segments at a revenue and trade receivables level separately for the
purpose of making decisions about resources to be allocated and of assessing
performance. All revenue in both years is derived from third parties and there
is no inter-segment revenue.
Operating costs, financial income, financial expenses and income taxes in
relation to the Agency, New Homes and the Other segment are managed on a
centralised basis at a Rightmove Group Limited level and as there are no
internal measures of individual segment profitability, relevant disclosures
have been shown under the heading of Central in the table below. The Company
has no reportable segments.
Agency £000 New Homes £000 Subtotal £000 Other £000 Central £000 Adjustments £000 Total £000
Year ended 31 December 2017
Revenue 185,217 39,478 224,695 18,578 - - 243,273
Operating profit((1)) - - - - 184,365((2)) (6,064)((2)) 178,301
Depreciation and amortisation
- - - - (1,784) - (1,784)
Financial income - - - - 129 - 129
Financial expenses - - - - (214) - (214)
Trade receivables((3)) 21,282 6,610 27,892 2,283 - 118((4)) 30,293
Other segment assets - - - - 41,501 19((4)) 41,520
Segment liabilities - - - - (54,493) (137)((4)) (54,630)
Capital expenditure - - - - 2,196 - 2,196
Year ended 31 December 2016
Revenue 168,311 33,893 202,204 17,789 - - 219,993
Operating profit((1)) - - - - 166,240((2)) (4,593)((2)) 161,647
Depreciation and amortisation
- - - - (1,619) - (1,619)
Financial income - - - - 109 - 109
Financial expenses - - - - (209) - (209)
Trade receivables((3)) 19,040 5,266 24,306 2,188 - 139((4)) 26,633
Other segment assets - - - - 33,753 68((4)) 33,821
Segment liabilities - - - - (52,205) (207)((4)) (52,412)
Capital expenditure - - - - 1,759 - 1,759
(1) Operating profit is stated after the charge for depreciation and
amortisation.
(2) Central operating profit does not include share-based payments charge of
£4,836,000 (2016: £4,142,000) and NI on share-based incentives charge of
£1,228,000 (2016: £451,000).
(3) The only segment assets that are separately monitored by the Chief
Operating Decision Maker relate to trade receivables net of any associated
provision for impairment. All other segment assets are reported on a
centralised basis.
(4) The adjustments column reflects the reclassification of credit balances in
accounts receivable and debit balances in accounts payable made on
consolidation for statutory accounts purposes.
Geographic information In presenting information on the basis of geography,
revenue and assets are based on the geographical location of customers.
2017 2016
Revenue £000 Trade receivables £000 Revenue £000 Trade receivables £000
Group
UK 236,718 29,885 214,536 26,124
Rest of the world 6,555 408 5,457 509
243,273 30,293 219,993 26,633
6 Operating profit
2017 £000 2016 £000
Operating profit is stated after charging:
Employee benefit expense 28,338 27,423
Depreciation of property, plant and equipment 1,311 1,241
Amortisation of intangibles 473 378
Bad debt impairment charge 466 437
Operating lease rentals
Land and buildings 1,361 898
Other 547 549
Auditor's remuneration
2017 £000 2016 £000
Fees payable to the Company's auditor in respect of the audit
Audit of the Company's financial statements 19 18
Audit of the Company's subsidiaries pursuant to legislation 122 131
Total audit remuneration 141 149
Fees payable to the Company's auditor in respect of non-audit related services
Half year review of the condensed financial statements 18 18
Tax compliance services and advisory - 1
All other services 12 2
Total non-audit remuneration 30 21
7 Employee numbers and costs The average number of persons employed
(including executive directors) during the year, analysed by category, was as
follows:
2017 Number of employees 2016 Number of employees
Administration 449 440
Management 30 29
479 469
The aggregate payroll costs of these persons were as follows:
2017 £000 2016 £000
Wages and salaries 24,249 23,760
Social security costs 3,168 2,793
Pension costs 921 870
28,338 27,423
Social security costs do not include a charge of £1,228,000 (2016: £451,000)
relating to NI on share-based incentives which has been disclosed in the
Statement of Comprehensive Income.
8 Financial income
2017 £000 2016 £000
Interest income on cash and cash equivalents 110 83
Interest income on money market deposits 19 26
129 109
9 Financial expenses
2017 £000 2016 £000
Financial expenses 214 209
10 Income tax expense
2017 £000 2016 £000
Current tax expense
Current year 34,582 33,048
Adjustment to current tax charge in respect of prior years (292) (407)
34,290 32,641
Deferred tax credit
Origination and reversal of temporary differences (170) (636)
(170) (636)
Total income tax expense 34,120 32,005
Income tax credit recognised directly in equity
2017 £000 2016 £000
Current tax
Share-based incentives (2,666) (441)
Deferred tax
Share-based incentives (refer Note 16) 1,367 436
Total income tax credit recognised directly in equity (1,299) (5)
Total income tax recognised directly in equity in respect of the Company was a
credit of £586,000 (2016: £24,000 credit).
Reconciliation of effective tax rate The Group's income tax expense for
the year is lower in both years than the standard rate of corporation tax in
the UK of 19.3% (2016: 20.0%). The differences are explained below:
2017 £000 2016 £000
Profit before tax 178,216 161,547
Current tax at 19.3% (2016: 20.0%)
34,307 32,309
Non-deductible expenses 103 70
Share-based incentives 2 33
Adjustment to current tax charge in respect of prior years (292) (407)
34,120 32,005
The Group's consolidated effective tax rate on the profit of £178,216,000 for
the year ended 31 December 2017 is 19.1%
(2016: 19.8%).
The difference between the standard rate and effective rate at
31 December 2017 of 0.2% (2016: 0.2%) is primarily attributable to an
adjustment in respect of prior periods for research and development tax
relief.
11 Earnings per share (EPS)
Pence per share
£000 Basic Diluted
Year ended 31 December 2017
Earnings 144,096 156.75 155.15
Underlying earnings 150,160 163.34 161.67
Year ended 31 December 2016
Earnings 129,542 137.87 136.41
Underlying earnings 134,135 142.76 141.24
Weighted average number of ordinary shares (basic)
2017 Number of shares 2016 Number of shares
Issued ordinary shares at 1 January less ordinary shares held by the EBT and
SIP Trust
95,096,841 97,318,120
Less own shares held in treasury at the beginning of the year (2,271,725) (2,322,314)
Effect of own shares purchased for cancellation (1,034,015) (1,069,275)
Effect of share-based incentives exercised 139,011 34,560
Effect of shares purchased by the EBT (911) (738)
Issued ordinary shares at 31 December less ordinary shares held by the EBT and
SIP Trust
91,929,201 93,960,353
Weighted average number of ordinary shares (diluted) For diluted EPS,
the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all potentially dilutive shares. The Group's potential dilutive
instruments are in respect of share-based incentives granted to employees,
which will be settled by ordinary shares held by the EBT, the SIP and shares
held in treasury.
2017 Number of shares 2016 Number of shares
Weighted average number of ordinary shares (basic) 91,929,201 93,960,353
Dilutive impact of share-based incentives outstanding 948,184 1,007,190
92,877,385 94,967,543
The average market value of the Group's shares for the purposes of calculating
the dilutive effect of share-based incentives was based on quoted market
prices for the period during which the share-based incentives were
outstanding.
Underlying EPS Underlying EPS is calculated by taking basic earnings for the
year and adding back the charge for share-based payments and the charge for NI
on share-based incentives but without any adjustment to the tax charge in
respect of these items. A reconciliation of the basic earnings for the year to
the underlying earnings is presented below:
2017 £000 2016 £000
Basic earnings for the year 144,096 129,542
Share-based payments 4,836 4,142
NI on share-based incentives 1,228 451
Underlying earnings for the year 150,160 134,135
12 Dividends Dividends declared and paid by the Company were as follows:
2017 2016
Pence per share £000 Pence per share £000
2015 final dividend paid - - 27.0 25,442
2016 interim dividend paid - - 19.0 17,764
2016 final dividend paid 32.0 29,507 - -
2017 interim dividend paid 22.0 20,104 - -
54.0 49,611 46.0 43,206
After the reporting date a final dividend of 36.0p (2016: 32.0p) per
qualifying ordinary share being £32,758,000 (2016: £29,696,000) was
proposed by the Board of directors.
The 2016 final dividend paid on 2 June 2017 was £29,507,000 being £189,000
lower than that reported in the 2016 Annual Report, which was due to a
decrease in the ordinary shares entitled to a dividend between
31 December 2016 and the final dividend record date of 5 May 2017.
The 2017 interim dividend paid on 3 November 2017 was £20,104,000 being
£115,000 lower than that reported in the 2017 Half Year Report, which was due
to a decrease in the ordinary shares entitled to a dividend between
30 June 2017 and the interim dividend record date of 6 October 2017.
The terms of the EBT provide that dividends payable on the ordinary shares
held by the EBT are waived. No provision was made for the final dividend in
either year and there are no income tax consequences.
13 Property, plant and equipment
Group Office equipment, fixtures & fittings £000 Computer equipment £000 Leasehold improvements £000 Assets in progress Total £000
£000
Cost
At 1 January 2017 829 7,053 451 - 8,333
Additions 232 906 430 187 1,755
Disposals (204) (135) (47) - (386)
At 31 December 2017 857 7,824 834 187 9,702
Depreciation
At 1 January 2017 (678) (5,101) (266) - (6,045)
Charge for year (88) (1,159) (64) - (1,311)
Disposals 199 117 47 - 363
At 31 December 2017 (567) (6,143) (283) - (6,993)
Net book value
At 31 December 2017 290 1,681 551 187 2,709
At 1 January 2017
151 1,952 185 - 2,288
The assets in progress consist of capitalised costs relating to the leasehold
improvements for the London office that are yet to be brought into use.
Leasehold improvements include capitalised costs relating to the renovation of
leased properties. Full details are disclosed in Note 2.
13 Property, plant and equipment (continued)
Group Office equipment, fixtures & fittings £000 Computer equipment £000 Leasehold improvements £000 Total £000
Cost
At 1 January 2016 769 5,823 451 7,043
Additions 58 1,223 - 1,281
Acquired through a business combination
2 7 - 9
At 31 December 2016 829 7,053 451 8,333
Depreciation
At 1 January 2016 (586) (4,010) (208) (4,804)
Charge for year (92) (1,091) (58) (1,241)
At 31 December 2016 (678) (5,101) (266) (6,045)
Net book value
At 31 December 2016 151 1,952 185 2,288
At 1 January 2016 183 1,813 243 2,239
The Company had no property, plant or equipment in either year.
14 Intangible assets
Group Market appraisal
Computer software £000 Asset in progress algorithm
Goodwill £000 £000 £000 Total
£000
Cost
At 1 January 2017 2,465 4,639 203 309 7,616
Additions - 441 - - 441
Disposals - - (203) - (203)
At 31 December 2017 2,465 5,080 - 309 7,854
Amortisation
At 1 January 2017 - (4,031) - (60) (4,091)
Charge for year - (370) - (103) (473)
At 31 December 2017 - (4,401) - (163) (4,564)
Net book value
At 31 December 2017 2,465 679 - 146 3,290
At 1 January 2017
2,465 608 203 249 3,525
14 Intangible assets (continued)
Group Computer software £000 Market appraisal
Goodwill £000 Asset in progress £000 algorithm
£000 Total
£000
Cost
At 1 January 2016 732 4,364 - - 5,096
Additions - 275 - - 275
Internally generated - - 203 - 203
Acquired through a business combination 1,733 - - 309 2,042
At 31 December 2016 2,465 4,639 203 309 7,616
Amortisation
At 1 January 2016 - (3,713) - - (3,713)
Charge for year - (318) - (60) (378)
At 31 December 2016 - (4,031) - (60) (4,091)
Net book value
At 31 December 2016 2,465 608 203 249 3,525
At 1 January 2016
732 651 - - 1,383
Goodwill acquired in 2016 of £1,733,000 relates to the goodwill recognised on
the acquisition of The Outside View Analytics Ltd ('Outside View'), being
intangible assets that were not separately identifiable under IFRS 3. The
market appraisal algorithm relates to the intangible asset recognised on the
acquisition of Outside View.
The Company had no intangible assets in either year.
Impairment testing for cash generating units containing goodwill For
the purpose of impairment testing, goodwill is allocated to the Group's Agency
segment which represents the lowest level within the Group at which goodwill
is monitored for internal management purposes, which is not higher than the
Group's operating segments as reported in Note 5.
The carrying value of £2,465,000 goodwill, comprises £732,000 of purchased
goodwill arising pre-transition to IFRS and £1,733,000 on acquisition of the
Outside View. Goodwill arising from the acquisition of the Outside View has
been allocated to the Agency segment as the revenue expected from the Outside
View product is attributable to Agency customers.
Given the low level of significance of the total goodwill balance and strong
growth in the Agency segment revenue in the year, with no impairment
indicators present, the disclosures as required by IAS 36 Impairment of Assets
have not been made.
15 Investments The subsidiaries of the Group as at 31 December 2017 are
as follows:
Company Nature of business Country of incorporation Holding Class of shares
Online property advertising
Rightmove Group Limited England and Wales 100% Ordinary
Property analytics services
The Outside View Analytics Ltd England and Wales 100% Ordinary
Rightmove.co.uk Limited Dormant England and Wales 100% Ordinary
Rightmove Home Information Packs Limited Dormant England and Wales 100% Ordinary
All the above subsidiaries are included in the Group consolidated financial
statements. The registered office for all subsidiaries
of the Group is Turnberry House, 30 Caldecotte Lake Drive, Caldecotte, Milton
Keynes, MK7 8LE.
Company 2017 £000 2016 £000
Investment in subsidiary undertakings
At 1 January 546,202 544,464
Additions - subsidiary share-based payments charge (refer Note 23) 2,625 1,738
At 31 December 548,827 546,202
15 Investments (continued)
In 2008, the Company became the holding company of Rightmove Group Limited
(formerly Rightmove plc, Company no. 3997679) and its subsidiaries pursuant to
a Scheme of Arrangement under s425 of the Companies Act 1985 by way of a
share-for-share exchange. Following the Scheme of Arrangement, the Company
underwent a court-approved capital reduction. The consolidated assets and
liabilities of the Group immediately after the Scheme were substantially the
same as the consolidated assets and liabilities of the Group immediately prior
to the Scheme.
Following the capital reconstruction in 2008 all employees' share-based
incentives were transferred to the new holding company, Rightmove plc. In
addition certain directors' contracts of employment were transferred from
Rightmove Group Limited to Rightmove plc, whilst all other employees remained
employed by Rightmove Group Limited. Accordingly the share-based payments
charge has been split between the Company and Rightmove Group Limited with
£2,625,000 (2016: £1,738,000) being recognised in the Company accounts as a
capital contribution to its subsidiary.
16 Deferred tax asset Deferred tax is presented net on the balance sheet in so
far as a right of offset exists. The net deferred tax asset is attributable to
the following:
Group Company
Share-based incentives Property, plant and equipment Market appraisal algorithm Share-based incentives
£000 £000 £000 £000
Provisions Total
£000 £000
At 1 January 2017 6,604 252 125 (39) 6,942 3,757
Recognised in income (15) 63 106 16 170 (142)
Recognised directly in equity (1,367) - - - (1,367) (1,125)
At 31 December 2017 5,222 315 231 (23) 5,745 2,490
At 1 January 2016 6,509 179 103 - 6,791 3,581
Arising on business combination
- - - (49) (49) -
Recognised in income 531 73 22 10 636 346
Recognised directly in equity (436) - - - (436) (170)
At 31 December 2016 6,604 252 125 (39) 6,942 3,757
The decrease in the deferred tax asset relating to share-based incentives at
31 December 2017 is due to increased exercises of shares options in 2017 which
has outweighed the number of new share scheme awards and the increase in the
Company's share price from £39.03 at 31 December 2016 to £45.00 at 31
December 2017.
A reduction in the UK corporation tax rate from 20% to 19% (effective from 1
April 2017) and to 18% (effective 1 April 2020) was substantively enacted on
26 October 2015, and an additional reduction to 17% (effective 1 April 2020)
was substantively enacted on 6 September 2016. This will reduce the Group's
future tax charge accordingly. The deferred tax asset at 31 December 2017 has
been calculated at the rate of 19% which represents the average expected rate
at which the net deferred tax asset will reverse in the future.
17 Trade and other receivables
Group 2017 £000 2016 £000
Trade receivables 30,756 27,061
Less provision for impairment of trade receivables (463) (428)
Net trade receivables 30,293 26,633
Prepayments 4,545 2,826
Accrued income 166 338
Interest receivable 16 -
Other debtors 74 127
35,094 29,924
Exposure to credit and currency risks and impairment losses relating to trade
and other receivables are disclosed in Note 26. The Company has no trade and
other receivables in either year.
18 Cash and deposits
Group 2017 £000 2016 £000
Cash and cash equivalents 20,930 13,749
Money market deposits 4,045 4,026
24,975 17,775
Cash balances with an original maturity of less than three months were held in
current accounts during the year and attracted interest at a weighted average
rate of 0.3% (2016: 0.4%).
The cash at bank balance includes £1,803,000 (2016: £1,848,000) which is
restricted to use in accordance with the deeds of the EBT.
Money market deposits with an original maturity of more than three months and
less than a year, attracted interest at a weighted average rate of 1.1% (2016:
0.7%).
19 Trade and other payables
Group Company
2017 £000 2016 £000 2017 £000 2016 £000
Trade payables 1,424 1,266 - -
Trade accruals 6,867 7,644 3,393 4,835
Other creditors 99 46 - -
Other taxation and social security 11,105 9,172 - -
Deferred revenue 19,393 17,668 - -
Inter-group payables - - 20,017 25,317
38,888 35,796 23,410 30,152
Exposure to currency and liquidity risk relating to trade and other payables
is disclosed in Note 26.
20 Loans and borrowings
The Group agreed to extend a 12 month agreement with Barclays Bank plc for a
£10,000,000 committed revolving loan facility. This agreement will expire on
12 February 2019.
The Company had no loans and borrowings in either year.
21 Provisions
2017 2016
Dilapidations provision Employee provisions Dilapidations provision
£000 £000 Total £000 Other Total
£000 £000 £000
At 1 January 272 88 360 236 - 236
Charged in the year 109 580 689 36 88 124
At 31 December 381 668 1,049 272 88 360
Current 87 668 755 185 - 185
Non-current 294 - 294 87 88 175
The dilapidations provision is in respect of a number of the Group's leased
properties where the Group has obligations to make good dilapidations. The
non-current liabilities are estimated to be payable over periods from one to
ten years. Where appropriate the provision may form part of the cost of the
asset.
During the year we have accrued amounts in relation to a number of employee
related provisions, principally holiday pay. The provisions are based on the
estimated future payroll cost to the Group and have not been discounted as the
time value of money is not significant.
The Company had no provisions in either year.
22 Share capital
2017 2016
Amount Number of shares Amount Number of shares
£000 £000
In issue ordinary shares of £0.01 each
At 1 January 955 95,490,266 977 97,741,977
Purchase and cancellation of own shares (22) (2,224,059) (22) (2,251,711)
At 31 December 933 93,266,207 955 95,490,266
The authorised share capital is 300,000,000 ordinary £0.01 shares in both
years.
All issued shares are fully paid. The holders of ordinary shares are entitled
to receive dividends as declared from time to time and are entitled to one
vote per ordinary share at general meetings of the Company.
In June 2007, the Company commenced a share buyback programme to purchase its
own ordinary shares. The total number of shares bought back in 2017 was
2,224,059 (2016: 2,251,711) representing 2.4% (2016: 2.4%) of the ordinary
shares in issue (excluding shares held in treasury). All of the shares bought
back in both years were cancelled. The shares were acquired on the open market
at a total consideration (excluding costs) of £90,809,000
(2016: £88,083,000). The maximum and minimum prices paid were £44.50
(2016: £42.50) and £38.48 (2016: £33.11) per share respectively.
Share-related expenses in relation to stamp duty charges and broker expenses
were £637,000 (2016: £617,000). Included within shares in issue at
31 December 2017 are 263,767 (2016: 343,275) shares held by the EBT, 67,700
(2016: 50,150) shares held by the SIP and 1,892,456 (2016: 2,271,725) shares
held in treasury.
23 Reconciliation of movement in capital and reserves
Group
Own shares held - £000
EBT shares reserve SIP shares reserve Treasury
£000 £000 shares Total
£000 £000
Own shares held as at 1 January 2016 (2,165) (852) (11,045) (14,062)
Shares purchased for SIP (751) - - (751)
Shares transferred to
- More to follow, for following part double click ID:nRSW7131Fh pared 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.
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: 144,096 129,542
Equity holders of the parent
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
Note 2017 2016
£000 £000
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 2016
£000 £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 2016
£000 £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 2016
£000 £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 Share capital £000 Own shares held £000 Other reserves £000 Reverse acquisition reserve £000 Retained earnings £000 Total equity £000
At 1 January 2016 977 (14,062) 317 138 19,267 6,637
Total comprehensive income
Profit for the year - - - - 129,542 129,542
Transactions with owners recorded directly in equity
Share-based payments 24 - - - - 4,142 4,142
Tax credit in respect of 10 - - - - 5 5
share-based incentives recognised directly in equity
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 10 - - - - 1,299 1,299
share-based incentives recognised directly in equity
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 Share capital £000 Own shares held Other reserves £000 Reverse acquisition reserve £000 Retained earnings £000 Total equity £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 10 - - - - 24 24
share-based incentives recognised directly in equity
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 10 - - - - 586 586
share-based incentives recognised directly in equity
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
- More to follow, for following part double click ID:nRSW7131FhRecent news on Rightmove
See all newsREG-Rightmove Plc: Notice of Results
AnnouncementREG-Rightmove Plc: Holding(s) in Company
AnnouncementREG-Rightmove Plc: Total Voting Rights
AnnouncementREG-Rightmove Plc: Holding(s) in Company
AnnouncementREG-Rightmove Plc: Holding(s) in Company
Announcement